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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

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

For the fiscal year ended December 31, 2015

[   ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
2018

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

Commission File Number:  1-13274 Mack-Cali Realty Corporation

Commission File Number:  333-57103: Mack-Cali Realty, L.P.

MACK-CALI REALTY CORPORATION

MACK-CALI REALTY, L.P.

(Exact Name of Registrant as specified in its charter)

MACK-CALI REALTY CORPORATION

Maryland (Mack-Cali Realty Corporation)

22-3305147 (Mack-Cali Realty Corporation)

(Exact Name of Registrant as specified in its charter)
Maryland    

Delaware (Mack-Cali Realty, L.P.)

22-3305147

22-3315804 (Mack-Cali Realty, L.P.)

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

343 Thornall Street, Edison,

Harborside 3, 210 Hudson St., Ste. 400, Jersey City, New Jersey

08837-2206

07311

(Address of principal executive offices)

(Zip code)

(732) 590-1000

590-1010

(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)

Mack-Cali Realty Corporation

Common Stock, $0.01 par value

New York Stock Exchange

Mack-Cali Realty, L.P.

None

None

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 ___


Mack-Cali Realty Corporation

YES x NO o

Mack-Cali Realty, L.P.

YES x NO o

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


Mack-Cali Realty Corporation

YES o NO x

Mack-Cali Realty, L.P.

YES o 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 ___


Mack-Cali Realty Corporation

YES x NO o

Mack-Cali Realty, L.P.

YES x NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes

Mack-Cali Realty Corporation

YES x NO o

Mack-Cali Realty, L.P.

YES x NO o

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  ]

x

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


Mack-Cali Realty Corporation:

Large accelerated filer x

Large accelerated filer  xAccelerated filer o

Non-accelerated filer o

Smaller reporting company o

Emerging growth company o

Mack-Cali Realty, L.P.:

Large accelerated filer x

Accelerated filer o

Non-accelerated filer o

Smaller reporting company ¨

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.       ¨


Non-accelerated filer  ¨ (Do not check if a smaller reporting company)                 Smaller reporting company  ¨

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


Mack-Cali Realty Corporation

YES o NO x

Mack-Cali Realty, L.P.

YES o NO x

As of June 30, 2015,2018, the aggregate market value of the voting stock held by non-affiliates of the registrantMack-Cali Realty Corporation was $1,613,161,608.$1,817,581,899.  The aggregate market value was computed with reference to the closing price on the New York Stock Exchange on such date.  This calculation does not reflect a determination that persons are affiliates for any other purpose.  The registrant has no non-voting common stock.


As of February 22, 2016, 89,594,39115, 2019, 90,320,744 shares of common stock, $0.01 par value, of the CompanyMack-Cali Realty Corporation (“Common Stock”) were outstanding.


Mack-Cali Realty, L.P. does not have any class of common equity that is registered pursuant to Section 12 of the Exchange Act.

LOCATION OF EXHIBIT INDEX:  The index of exhibits is contained herein on page number 117.129.


DOCUMENTS INCORPORATED BY REFERENCE:  Portions of the registrant’sMack-Cali Realty Corporation’s definitive proxy statement for fiscal year ended December 31, 20152018 to be issued in conjunction with the registrant’s annual meeting of shareholders expected to be held on June 1, 201612, 2019 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, 2015.2018.






Table of Contents

EXPLANATORY NOTE

This report combines the annual reports on Form 10-K for the year ended December 31, 2018 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. Unless stated otherwise or the context otherwise requires, references to the “Operating Partnership” mean Mack-Cali Realty, L.P., a Delaware limited partnership, and references to the “General Partner” mean Mack-Cali Realty Corporation, a Maryland corporation and real estate investment trust (“REIT”), and its subsidiaries, including the Operating Partnership. References to the “Company,” “we,” “us” and “our” mean collectively the General Partner, the Operating Partnership and those entities/subsidiaries consolidated by the General Partner.

The Operating Partnership conducts the business of providing leasing, management, acquisition, development, construction and tenant-related services for its General Partner.  The Operating Partnership, through its operating divisions and subsidiaries, including the Mack-Cali property-owning partnerships and limited liability companies is the entity through which all of the General Partner’s operations are conducted.  The General Partner is the sole general partner of the Operating Partnership and has exclusive control of the Operating Partnership’s day-to-day management.

As of December 31, 2018, the General Partner owned an approximate 89.8 percent common unit interest in the Operating Partnership. The remaining approximate 10.2 percent common unit interest is owned by limited partners.  The limited partners of the Operating Partnership are (1) persons who contributed their interests in properties to the Operating Partnership in exchange for common units (each, a “Common Unit”) or preferred units of limited partnership interest in the Operating Partnership or (2) recipients of long term incentive plan units of the Operating Partnership pursuant to the General Partner’s executive compensation plans.

A Common Unit of the Operating Partnership and a share of common stock of the General Partner (the “Common Stock”) have substantially the same economic characteristics in as much as they effectively share equally in the net income or loss of the Company.  The General Partner owns a number of common units of the Operating Partnership equal to the number of issued and outstanding shares of the General Partner’s common stock.  Common unitholders (other than the General Partner) have the right to redeem their Common Units, subject to certain restrictions under the Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership, as amended (the “Partnership Agreement”), and agreed upon at the time of issuance of the units that may restrict such right for a period of time, generally one year from issuance.  The redemption is required to be satisfied in shares of Common Stock of the General Partner, cash, or a combination thereof, calculated as follows:  one share of the General Partner’s Common Stock, or cash equal to the fair market value of a share of the General Partner’s Common Stock at the time of redemption, for each Common Unit.  The General Partner, in its sole discretion, determines the form of redemption of Common Units (i.e., whether a common unitholder receives Common Stock of the General Partner, cash, or any combination thereof).  If the General Partner elects to satisfy the redemption with shares of Common Stock of the General Partner as opposed to cash, the General Partner is obligated to issue shares of its Common Stock to the redeeming unitholder.  Regardless of the rights described above, the common unitholders may not put their units for cash to the Company or the General Partner under any circumstances.  With each such redemption, the General Partner’s percentage ownership in the Operating Partnership will increase. In addition, whenever the General Partner issues shares of its Common Stock other than to acquire Common Units, the General Partner must contribute any net proceeds it receives to the Operating Partnership and the Operating Partnership must issue to the General Partner an equivalent number of Common Units. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT.

The Company believes that combining the annual reports on Form 10-K of the General Partner and the Operating Partnership into this single report provides the following benefits:

·                  enhance investors’ understanding of the General Partner and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business of the Company;

·                  eliminate duplicative disclosure and provide a more streamlined and readable presentation because a substantial portion of the disclosure applies to both the General Partner and the Operating Partnership; and

·                  create time and cost efficiencies through the preparation of one combined report instead of two separate reports.

The Company believes it is important to understand the few differences between the General Partner and the Operating Partnership in the context of how they operate as a consolidated company.  The financial results of the Operating Partnership are consolidated into the financial statements of the General Partner.  The General Partner does not have any other significant assets, liabilities or operations, other than its interests in the Operating Partnership, nor does the Operating Partnership have employees of its own.  The Operating Partnership, not the General Partner, generally executes all significant business relationships other than transactions involving the securities of the General Partner.  The Operating Partnership holds substantially all of the assets of the General Partner, including ownership interests in joint ventures.  The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity.  Except for the net proceeds from equity offerings by the General Partner, which are contributed to the capital of the Operating Partnership in consideration of common or preferred units in the Operating Partnership, as applicable, the Operating Partnership generates all remaining capital required by the Company’s business. These sources include working capital, net cash provided by operating activities, borrowings under the Company’s

unsecured revolving credit facility and unsecured term loan facilities, the issuance of secured and unsecured debt and equity securities and proceeds received from the disposition of properties and joint ventures.

Shareholders’ equity, partners’ capital and noncontrolling interests are the main areas of difference between the consolidated financial statements of the General Partner and the Operating Partnership.  The limited partners of the Operating Partnership are accounted for as partners’ capital in the Operating Partnership’s financial statements as is the General Partner’s interest in the Operating Partnership.  The noncontrolling interests in the Operating Partnership’s financial statements comprise the interests of unaffiliated partners in various consolidated partnerships and development joint venture partners.  The noncontrolling interests in the General Partner’s financial statements are the same noncontrolling interests at the Operating Partnership’s level and include limited partners of the Operating Partnership.  The differences between shareholders’ equity and partners’ capital result from differences in the equity issued at the General Partner and Operating Partnership levels.

To help investors better understand the key differences between the General Partner and the Operating Partnership, certain information for the General Partner and the Operating Partnership in this report has been separated, as set forth below:

·          Item 6.         Selected Financial Data;

·          Item 7.         Management’s Discussion and Analysis of Financial Condition and Results of Operations includes information specific to each entity, where applicable;

·          Item 8.         Financial Statements and Supplementary Data which includes the following specific disclosures for Mack-Cali Realty Corporation and Mack-Cali Realty, L.P.:

·                  Note 2.               Significant Accounting Policies, where applicable;

·                  Note 14.        Redeemable Noncontrolling Interests;

·                  Note 15.  Mack-Cali Realty Corporation’s Stockholders’ Equity and Mack-Cali Realty, L.P.’s Partners’ Capital;

·                  Note 16.        Noncontrolling Interests in Subsidiaries;

·                  Note 17.        Segment Reporting, where applicable; and

·                  Note 19.        Condensed Quarterly Financial Information (unaudited).

This report also includes separate Part II, Item 9A. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of the General Partner and the Operating Partnership in order to establish that the requisite certifications have been made and that the General Partner and Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.

FORM 10-K

Table of Contents

Page No.

PART I

FORM 10-K

Item 1

Business

5

Item 1A

Risk Factors

11

Table of Contents
PART IPage No.
Item 1Business3
Item 1ARisk Factors10

Item 1B

Unresolved Staff Comments

20

22

Item 2

Properties

Properties21

23

Item 3

Legal Proceedings

35

34

Item 4

Mine Safety Disclosures

35

34

PART II

Item 5

Market for Registrant’s Common Equity, Related Stockholder Matters

and Issuer Purchases of Equity Securities

36

35

Item 6

Selected Financial Data

39

37

Item 7

Management’s Discussion and Analysis of Financial Condition and

Results of Operations

40

39

Item 7A

Quantitative and Qualitative Disclosures About Market Risk

61

64

Item 8

Financial Statements and Supplementary Data

62

64

Item 9

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

64

Financial Disclosure62

Item 9A

Controls and Procedures

62

64

Item 9B

Other Information

63

66

PART III

Item 10

Directors, Executive Officers and Corporate Governance

64

67

Item 11

Executive Compensation

64

67

Item 12

Security Ownership of Certain Beneficial Owners and Management

and Related Stockholder Matters

64

67

Item 13

Certain Relationships and Related Transactions, and Director Independence

64

67

Item 14

Principal Accounting Fees and Services

64

67

PART IV

Item 15

Exhibits and Financial Statement Schedules

65

68

Item 16

Form 10-K Summary

68

SIGNATURES

115

EXHIBIT INDEX

129

EXHIBIT INDEX

117

SIGNATURES

138



2


PART I


ITEM 1.BUSINESS


GENERAL

Mack-Cali Realty Corporation, a Maryland corporation, together with its subsidiaries (collectively the “Company”“General Partner”), is a fully-integrated, self-administered and self-managed real estate investment trust (“REIT”) that.  The General Partner controls Mack-Cali Realty, L.P., a Delaware limited partnership, together with its subsidiaries (collectively, the “Operating Partnership”), as its sole general partner and owned an 89.8 percent and 89.6 percent common unit interest in the Operating Partnership as of December 31, 2018 and December 31, 2017, respectively.  The General Partner’s business is the ownership of interests in and operation of the Operating Partnership and all of the General Partner’s expenses are incurred for the benefit of the Operating Partnership.  The General Partner is reimbursed by the Operating Partnership for all expenses it incurs relating to the ownership and operation of the Operating Partnership.

The Operating Partnership conducts the business of providing leasing, management, acquisition, development, construction and tenant-related services for its General Partner.  The Operating Partnership, through its operating divisions and subsidiaries, including the Mack-Cali property-owning partnerships and limited liability companies, is the entity through which all of the General Partner’s operations are conducted.  Unless stated otherwise or the context requires, the “Company” refers to the General Partner and its subsidiaries, including the Operating Partnership and its subsidiaries.

The Company owns and operates a real estate portfolio comprised predominantly of Class A office and office/flex properties located primarily in the Northeast with a recent emphasis on expansion into the multi-family rental sector in the same markets.  The Company performs substantially all real estate leasing, management, acquisition development and construction servicesdevelopment on an in-house basis.  Mack-Cali Realty Corporation was incorporated on May 24, 1994.  The Company’s executive offices are located at 343 ThornallHarborside 3, 210 Hudson Street, Edison,Suite 400, Jersey City, New Jersey 08837-2206,07311, and its telephone number is (732) 590-1000.590-1010.  The Company has an internet website at www.mack-cali.com.


As of December 31, 2015,2018, the Company owned or had interests in 275135 properties, consisting of 14756 office and 10955 flex properties, totaling approximately 29.915.4 million square feet, leased to approximately 1,900700 commercial tenants and 1924 multi-family rental properties containing 5,6446,910 residential units, plus developable land (collectively, the “Properties”).  The Properties are comprised of: (a) 223120 wholly-owned or Company-controlled properties consisting of 11152 office buildings and 10652 flex buildings aggregating approximately 24.214.9  million square feet and six16 multi-family properties totaling 1,301 apartments,3,988 apartment units, (collectively, the “Consolidated Properties”); and (b) 36four office properties totaling approximately 5.60.5 million square feet, 13eight multi-family properties totaling 4,343 apartments,2,922 apartment units, two retail properties totaling 81,700 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, 2015,2018, the Company’s core, stabilized office and flex properties included in the Consolidated Properties were 86.283.2 percent leased.  Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future, and leases that expire at the period end date.  Leases that expired as of December 31, 20152018 aggregate 69,52210,108 square feet, or 0.30.1 percent of the net rentable square footage.  The Properties are located in sevensix states, primarily in the Northeast, and the District of Columbia.  See Item 2: Properties.


On June 3, 2015, Mitchell E. Rudin joined the Company as its Chief Executive Officer and Michael J. DeMarco joined the Company as its President and Chief Operating Officer.  

The Company’s new management team assessed the Company’s historical strategy of focusinghas 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.  In September 2015, the Company announced a three-year strategic initiative to transform into a more concentrated owner of New Jersey Hudson River waterfront and transit-oriented office properties and a regional owner of luxury multi-family residential properties.  In furtherance of this strategy, the Company has commenced a comprehensive review of its portfolio and operations and is developing a business strategy that focuses on reshaping its portfolio over time.  As part of this plan, over the past three years, the Company anticipates thatsold or has contracted to sell multiple properties, primarily commercial office, which it may dispose of a significant portion of its properties thatbelieves do not meet its long-term goals, and, in September 2015, compiled a list of its properties that it considers as non-core to its ongoing operations.  Specifically, the Company considers a non-core property to have one or more of the following attributes:  (1) assets that do not offer an opportunity to create a competitive advantage; (2) assets that produce a low cash yield; (3) assets which have physical attributes that constrain their market competitiveness; and (4) assets located in low growth markets.  The Company believes that the potential sales of these non-core properties over time would result in total estimated sales proceeds ranging from approximately $600 million to $800 million. 


goals.

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 residents, and achieve high 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.

BUSINESS STRATEGIES

Operations

Reputation: The Company has established a reputation as a highly-regarded landlord with an emphasis on delivering quality customer service 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 residents and the attraction of new tenants

and residents.  The Company believes it provides a superior level of service to its customers which shouldthat is an important factor in turn, allow the Companyworking to maintain occupancy rates, at or above market levels,achieve positive leasing results as well as improveimproving tenant retention.

3


Communication with tenants: The Company emphasizes frequent communication with its customers to ensure first-class service to the Properties.  Property management personnel generally are located on site at the Properties to provide convenient access to management and to ensure that the Properties are well-maintained.  Property management’s primary responsibility is to ensure that buildings are operated at peak efficiency in order to meet both the Company’s and tenants’ needs and expectations.  Property management personnel additionally budget and oversee capital improvements and building system upgrades to enhance the Properties’ competitive advantages in their respective markets and to maintain the quality of the Properties.


The Company’s in-house leasing representatives for its office portfolio develop and maintain long-term relationships with the Company’s diverse tenant base and coordinate leasing, expansion, relocation and build-to-suit opportunities.  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.


The Company’s in-house multi-family rental management team emphasizes meticulous attention to detail and an unwavering commitment to customer service to complement the quality, design excellence and luxury living attributes of its multi-family rental properties.  The Company believes this strategy will enable the Company to buttress management’s reputation with the market-leading designs, amenities and features of its multi-family rental properties to attract quality residents.


Portfolio Management: The Company plans to continue to own and operate a portfolio of office and office/flex properties in high-barrier-to-entry markets, with a primary focus in the Northeast.  The Company also expects to continue to complement its core portfolio of office and office/flex properties by pursuing acquisition and development opportunities in the multi-family rental sector. 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.


The Company seeks to maximize the value of its existing office and office/flex portfolio through implementing operating strategies designed to produce the highest effective rental and occupancy rates and lowest tenant installation costs within the markets that it operates, and further within the parameters of those markets.  The Company continues to pursue internal growth through leasing vacant space, re-leasing space at the highest possible effective rents in light of current market conditions with contractual rent increases and developing or redeveloping office space for its diverse base of high credit quality tenants, including Daiichi Sankyo, Bank of Tokyo-Mitsubishi FUJI LtdUFJ Ltd; KPMG, LLP; and The United States of America - GSA.TD Ameritrade Services Company.  In addition, the Company seeks economies of scale through volume discounts to take advantage of its size and dominance in particular sub-markets, and operating efficiencies through the use of in-house management, leasing, marketing, financing, accounting, legal development and construction services.


development.

The Company continually reviews its portfolio and opportunities to divest office and office/flex properties that, among other things, no longer meet its long-term strategy, have reached their potential, are less efficient to operate or can be sold at attractive prices when market conditions are favorable.  The Company anticipates redeployingcontinuing to redeploy the proceeds from sales of office and office/flex properties to develop, redevelop and acquire multi-family rental properties, as well as reposition certain office properties into multi-family/mixed use properties, in its core Northeast sub-markets as part of its overall strategy to reposition its portfolio from office and office/flex to a mix of office, office/flex and multi-family rental properties.


The Company believes that the opportunity to invest in multi-family development properties at higher returns on cost will position the Company to potentially produce higher levels of net operating income than if the Company were to only purchase stabilized multi-family properties at market returns.  The Company anticipates that it will be several years before its multi-family development projects are income-producing.  The Company believes that the transition to a company with a greater proportion of its properties in the multi-family residential sector will ultimately result in the creation of greater shareholder value than remaining a primarily suburban commercial office company, in part due to the lower capitalization rates associated with the multi-family sector.


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 long-term yields; (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 is or 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.


The Company has entered into and may continue in the future to enter into joint ventures (including limited liability companies and partnerships) through which it would own an indirect economic interest of less than 100 percent of a property owned directly by such

joint ventures, and may include joint ventures that the Company does not control or manage, especially in connection with its expansion into the multi-family rental sector. The decision to pursue property acquisitions either directly or through joint ventures is based on a variety of factors and considerations, including: (i) the economic and tax terms required by a seller or co-developer of a property; (ii) the Company’s desire to diversify its portfolio by expanding into the multi-family rental sector and achieve a blended portfolio of office and multi-family rental properties by market and sub-market; (iii) the Company’s goal of maintaining a strong balance sheet; and (iv) the Company’s expectation that, in some circumstances, it will be able to achieve higher returns on its invested capital or reduce its risk if a joint venture vehicle is used.  Investments in joint ventures are not limited to a specified percentage of the Company’s assets.  Each joint venture agreement is individually negotiated, and the Company’s ability to operate and/or dispose of its interests in a joint venture in its sole discretion may be limited to varying degrees depending on the terms of the joint venture agreement.  Many of the Company’s joint venture agreements entitle it to receive leasing, management, development and similar fees and/or a promoted interest if certain return thresholds are met.  See Note 4: Investments in Unconsolidated Joint Ventures to the Company’s Financial Statements.

4


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.  The Company identifies development opportunities primarily through its local market presence.  Such development primarily will occur:  (i) in stable core Northeast sub-markets where the demand for such space exceeds available supply; and (ii) where the Company is, or can become, a significant and preferred owner and operator.  As part of the Company’s strategy to expand its multi-family rental portfolio, the Company may consider development opportunities with respect to improved land with existing commercial uses and seek to rezone the sites for multi-family rental use and development.  As a result of competitive market conditions for land suitable for development, the Company may be required to hold land prior to construction for extended periods while entitlements or rezoning is obtained.  The Company also may undertake repositioning opportunities that may require the expenditure of significant amounts of capital.


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.  As a result of this assessment during 2015, the Company has identified non-core office properties that it may sell over time for total estimated sales proceeds that it believes may be between approximately $600 million and $800 million.  The Company continually reviews its portfolio and opportunities to divest properties that, among other things, no longer meet its long-term strategy, have reached their potential, are less efficient to operate, or can be sold at attractive prices when market conditions are favorable.  Consistent with its strategic initiative announced in 2015, the Company completed the sale of rental property for aggregate gross sales proceeds of $385.1 million during 2018 and $415.6 million during 2017.

Financial


Financial

The Company currently intends to maintain a ratio of debt-to-undepreciated assets (total debt of the Company as a percentage of total undepreciated assets) of 50 percent or less, however there can be no assurance that the Company will be successful in maintaining this ratio.  As of December 31, 20152018 and 2014,2017, the Company’s total debt constituted approximately 39.045 percent and 37.347 percent of total undepreciated assets of the Company, respectively.  The decrease in this ratio in 2018 was primarily the result of using proceeds from property sales to repay outstanding debt during the year.  Although there is no limit in the Company’s organizational documents on the amount of indebtedness that the Company may incur, 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 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, joint venture capital, and short-term and long-term borrowings (including draws on the Company’s unsecured revolving credit facility), and the issuance of additional debt or equity securities.


EMPLOYEES


As of December 31, 2015,2018, the Company had approximately 530352 full-time employees.


COMPETITION


The leasing of real estate is highly competitive.  The Properties compete for tenants and residents with lessors and developers of similar properties located in their respective markets primarily on the basis of location, the quality of properties, leasing terms (including rent and other charges and allowances for tenant improvements), services or amenities provided, the design and condition of the Properties, and reputation as an owner and operator of quality properties in the relevant markets.  Additionally, the number of competitive multi-family rental properties in a particular area could have a material effect on the Company’s ability to lease residential units and on rents charged.  In addition, other forms of multi-family rental properties or single family housing provide alternatives to potential residents of multi-family properties.  The Company competes with other entities, some of which may have significant resources or who may be willing to accept lower returns or pay higher prices than the Company in terms of acquisition and development opportunities.  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

5


REGULATIONS

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


Under various laws and regulations relating to the protection of the environment and human health, 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 re­movalremoval or remediation of such substances at the disposal or treatment facility, whether or not such facility is owned or operated by such person.  Certain environmental laws impose liability for the release of asbestos-containing materials into the air, and third parties may also seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials and other hazardous or toxic substances.


In connection with the ownership (direct or indirect), operation, management and development of real properties, the Company may be considered an owner or operator of such properties or as having arranged for the disposal or treatment of hazardous or toxic substances and, therefore, potentially liable for removal or remediation costs, as well as certain other related costs, including governmental penalties and injuries to persons and property.


There can be no assurance that (i) future laws, ordinances or regulations will not impose any material environmental liability, (ii) the current environmental condition of the Properties will not be affected by tenants, by the condition of land or operations in the vicinity of the Properties (such as the presence of underground storage tanks), or by third parties unrelated to the Company, or (iii) the Company’s assessments reveal all environmental liabilities and that there are no material environmental liabilities of which the Company is aware.  If compliance with the various laws and regulations, now existing or hereafter adopted, exceeds the Company’s budgets for such items, the Company’s ability to make expected distributions to stockholders could be adversely affected.


There are no other laws or regulations which have a material effect on the Company’s operations, other than typical federal, state and local laws affecting the development and operation of real property, such as zoning laws.


INDUSTRY SEGMENTS


The Company operates in threetwo industry segments: (i) commercial and other real estate and (ii) multi-family real estate and (iii) multi-family services.  As of December 31, 2015,2018, the Company does not have any foreign operations and its business is not seasonal.  Please see our financial statements attached hereto and incorporated by reference herein for financial information relating to our industry segments.


SIGNIFICANT TENANTS


As of December 31, 2015,2018, no tenant accounted for more than 10 percent of the Company’s consolidated revenues.


RECENT DEVELOPMENTS

Acquisitions
On December 23, 2015,

Management Changes

In March 2018, the Company acquiredannounced the appointment of Michael J. DeMarco, Chief Executive Officer of the General Partner, to its Board of Directors effective March 14, 2018.  Mr. DeMarco’s addition to the Board expanded the total number of members from nine to ten.  In February 2019, the Company announced that the Board of Directors increased its size from ten to eleven members, effective immediately, and nominated a vacant 147,241 square-footslate of eleven candidates consisting of Lisa Myers, Laura Pomerantz and all of the current directors of the Company (other than Kenneth M. Duberstein, who decided not to stand for re-election and will retire from the Board of Directors at the Company’s 2019 annual meeting of shareholders) for election to the Board of Directors at the Company’s 2019 annual meeting of shareholders, which is expected to be held on June 12, 2019.

In January 2018, the Company announced the appointment of David J. Smetana as chief financial officer and Nicholas Hilton as executive vice president of leasing of the General Partner.  Mr. Smetana began to perform his duties as chief financial officer and Anthony Krug ceased to serve as chief financial officer immediately following the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.  Mr. Krug remained an employee of the Company and provided transition services through March 31, 2018.  Mr. Hilton’s employment commenced on February 12, 2018 following the departure of Christopher DeLorenzo.

In June 2018, the Company announced that the employment of Mitchell E. Rudin as Vice Chairman of the General Partner was terminated effective as of June 5, 2018.  In November 2018, the Company announced that the employment of Robert Andrew Marshall as President and Executive Vice President of Development of Roseland Residential Trust (“RRT”) was terminated effective as of October 31, 2018.  In addition, the Company also restructured certain other corporate and property management personnel during the year ended December 31, 2018.

Acquisitions

On February 6, 2019, the Company completed the acquisition of a 271,988 square foot office property located in Iselin, New Jersey, for a purchase price of $61.5 million, which was funded using funds available with the Mack-Cali Business CampusCompany’s qualified intermediary and borrowings under the Company’s unsecured revolving credit facility.

On January 25, 2019, the Company signed an agreement to acquire a 377-unit multi-family rental property located in Parsippany,Jersey City, New Jersey for approximately $10.3$264 million, subject to certain conditions.  The acquisition is expected to be completed in the second quarter 2019.

Consolidations

On August 2, 2018, the Company, which held a 24.27 percent subordinated interest in the unconsolidated joint venture, Marbella Tower Urban Renewal Associates LLC, a 412-unit multi-family operating property located in Jersey City, New Jersey, acquired its equity partner’s 50 percent interest for $65.6 million in cash.  The property was subject to a mortgage loan that had a principal balance of $95 million.  The cash portion of the acquisition was funded primarily through borrowings under the Company’s unsecured revolving credit facility.  This property is currentlyConcurrently with the closing, the joint venture repaid the $95 million mortgage loan in redevelopmentfull and obtained a new loan collateralized by the Company.



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On November 12, 2015,property in the amount of $131 million, which bears interest at 4.07 percent and matures in August 2026.  The venture distributed $37.4 million of the loan proceeds, of which the Company’s share was $30.4 million.  As a result of the acquisition, the Company acquiredincreased its ownership of the property from a 196,128 square-foot, 95.624.27 percent leasedsubordinated interest to a 74.27 percent controlling interest.  In accordance with Accounting Standards Codification (“ASC”) 810, Consolidation, the Company evaluated the acquisition and determined that the entity meets the criteria of a variable interest entity (“VIE”).  As such, the Company consolidated the asset upon acquisition and accordingly, remeasured its equity interests, as required by the FASB’s consolidation guidance, at fair value (based upon the income approach using current rates and market cap rates and discount rates).  As a result, the Company recorded a gain on change of control of interests of $14.2 million (a non-cash item) in the year ended December 31, 2018, when the Company accounted for the transaction as a VIE that is not a business in accordance with ASC 810-10-30-4.  Additional non-cash items included in the acquisition were the Company’s carrying value of its interest in the joint venture of $14 million and the noncontrolling interest’s fair value of $29.8 million.

Properties Commencing Initial Operations

During the year ended December 31, 2018, four multi-family rental properties and a hotel with a total of 1,317 apartment units and rooms commenced initial operations for total development costs of approximately $458 million.

Dispositions

During the year ended December 31, 2018, the Company disposed of 30 office properties and a developable land property adjacent to an existing Mack-Cali property located in Edison, New Jersey for approximately $53.1 million, which was funded primarily through borrowings under the Company’s unsecured revolving credit facility.


Dispositions
On June 26, 2015, the Company sold its 203,506 square foot office property located at 14 Sylvan Way in Parsippany,and New JerseyYork for net sales proceeds of approximately $80$370.0 million, with a gainnet gains of approximately $24.7$150.5 million from the sale.

Impairments on Properties Held and Used
In September 2015, thedispositions.

The Company announced a three-year strategic initiative to transform the Company into a more concentrated owner of New Jersey Hudson River waterfront and transit-orientedidentified as held for sale six office properties and a regional ownermulti-family rental property as of luxury multi-family residential properties.  In connection withDecember 31, 2018.  The total estimated sales proceeds, net of expected selling costs, from the transformationsales are expected to be approximately $124 million.  The Company determined that the carrying value of four of the Company’s portfolio, management began developing a disposition planproperties was not expected to be recovered from estimated net sales proceeds and accordingly recognized an unrealized loss allowance of $20.1 million for the year ended December 31, 2018.

Land Impairments

The Company owns two separate developable land parcels in September 2015, which will be an ongoing assessment process.  Through this plan,Conshohocken and Bala Cynwyd, Pennsylvania, that were being considered for development into multi-family rental properties.  During the fourth quarter 2018, the Company inmade the coming years, expectsdecision to dispose of primarily office properties considered non-core to its ongoing operations.  As a result, at September 30, 2015,pursue selling the Company evaluated the recoverability of the carrying values of these non-core properties, and determined that dueland parcels rather than developing them.  Due to the shortening of the expected periods of ownership, the Company determined that it was necessary to reduce the carrying values of 22 rental properties to their estimated fair values.  Accordingly, the Company recorded an impairment charge of $158.6 million at September 30, 2015 reducing the aggregate carrying values of these properties from $554.3 millionland parcels to their estimated fair values (ascertained by broker opinions of $395.7 million.  Atvalue obtained during the marketing process) and recorded total land impairments charges of $24.6 million at December 31, 2015, as2018.

Joint Venture Activity

On January 31, 2019, the Company, which held a 24.27 percent subordinated interest in the unconsolidated joint venture, Marbella Tower Urban Renewal Associates South LLC, a 311-unit multi-family operating property located in Jersey City, New Jersey, acquired

its equity partner’s 50 percent interest for $77.5 million in cash.  The acquisition was funded primarily using available cash.  Concurrently with the closing, the joint venture repaid in full the property’s $74.7 million mortgage loan and obtained a new loan in the amount of $117 million.

On December 11, 2018, the Company acquired one of its partner’s interest in the unconsolidated joint venture that owns the Metropolitan and Shops at 40 Park and the Lofts at 40 Park for $1.3 million.  As a result, of its periodic evaluation of the recoverability of the carrying values resulting from its ongoing assessment of non-core properties, the Company recorded an additional impairment charge of $33.7 million.


Four ofincreased its ownership from 12.5 percent interest to 25 percent interest in the Company’s office properties are collateral for a mortgage loan that matured on August 11, 2014, with a principal balance of $63.3 million as of December 31, 2015.  The loan was not repaidMetropolitan and Shops at maturity40 Park and from 25 percent interest to 50 percent interest in the Company is in discussions with the lender regarding potential options in satisfaction of the obligation (see Note 10: Mortgages, Loans Payable and Other Obligations).   As of September 30, 2015, the Company estimated that the carrying value of three of these properties, aggregating 479,877 square feet and located in Roseland and Parsippany, New Jersey, may not be recoverable over their anticipated holding periods.  In order to reduce the carrying values of the properties to their estimated fair values, the Company recorded impairment charges of $5.6 millionLofts at September 30, 2015, which resulted from the current decline in leasing activity and market rents of the properties identified.   The Company had previously recorded impairment charges on these properties at September 30, 2013 of $12.5 million.

40 Park.

Development Activity

On October 6,

In 2015, the Company entered into a 90-percent owned joint venture partnership with XS Port Imperial Hotel, LLC (“XS”) to form XS Hotel Urban Renewal Associates LLC, (“XS Hotel URA”) for the developmentwhich is developing a 372-key hotel (164 keys Residence Inn and ownership of a 364-key dual branded hotel property located208 keys Marriott Envue) in Weehawken, New Jersey (“Port Imperial Hotel”).  Concurrently,Jersey.  The Residence Inn opened in 4Q 2018 and the Company and XS entered into a separate joint venture partnershipMarriott Envue is expected to form XS Hotel Associates, L.L.C. (“XS Hotel”) for the management and operations of the completed hotel development.  The Company holds a 90 percent interest and XS holds the remaining 10 percent interestopen in the consolidated joint ventures, XS Hotel URA and XS Hotel, with the Company having full and complete authority, power, and discretion to manage and control the ventures’ business, affairs, and property.2Q 2019.   The construction of the Port Imperial Hotelproject is estimated to cost a total$159.9 million, with construction costs of $105.9$147.1 million which willincurred by the venture through December 31, 2018.  The project costs are expected to be funded byfrom a $94 million construction loan with the balance to be funded with members’ capital.  Upon closing, Mack-Cali’s initial contribution was $27.3(with $73.4 million which included a capital credit of $23.7 million for its contributed Hotel Condominium Land unit, and XS Hotel’s initial contribution was $3 million.  Asoutstanding as of December 31, 2015, the Company incurred development costs of $1.5 million and estimates it will need to fund an additional $3.3 million for the completion of the project.


2018).

The Company owns developable land to accommodateis developing a multi-phase development313-unit multi-family project of approximately 1,034-unit multi-family rental property locatedknown as Building 8/9 at Port Imperial in Malden, Massachusetts.  The initial phase commencedWeehawken, New Jersey, which began construction of 292 units in the third quarter of 2015 (the “Chase II Project”).2018.  The Chase II Projectconstruction project, which is estimated to cost a total$142.6 million, of $74.9which construction costs of $35.4 million (of which the Company hashave been incurred $22.1 million through December 31, 2015) and2018, is expected to be ready for occupancy by secondin fourth quarter 2017.2020.  The Company estimates it will needis expected to fund additional$50.6 million of the construction costs, of $4.8 million for the completion of the Chase II Project.  On December 16, 2015,which the Company obtained a construction loan with a maximum borrowing amount of $48has funded $35.4 million (with no outstanding balance as of December 31, 2015), which bears interest at a rate of LIBOR plus 2.25 percent, reducing to LIBOR plus 2.0 percent subject to achieving certain conditions and matures in December 2018.


On April 1, 2015, the Company acquired vacant land to accommodate a two-phase development of 365 multi-family residential units located in Worcester, Massachusetts (“the CitySquare Project”) for a purchase price of $3.1 million with an additional $1.25 million to be paid (which is accrued as of December 31, 2015), subject to certain conditions, in accordance with the terms of the purchase and sale agreement.  The purchase price for the acquisition was funded primarily through borrowing under the Company’s unsecured revolving credit facility.  The first phase with 237 units started construction in the third quarter 2015 with anticipated initial deliveries in the second quarter 2017.  The second phase, with 128 units, is projected to begin construction in 2017.  On December 10, 2015, the Company obtained a construction loan with a maximum borrowing amount of $41.5 million (with no outstanding balance as of December 31, 2015), which bears interest at a rate of LIBOR plus 2.5 percent, reducing to LIBOR plus 2.25 percent subject to achieving certain conditions and matures in December 2018.  Total development costs are estimated to be approximately $92.5 million (of which $9.1 million was incurred by the Company through December 31, 2015 and estimates it will need to fund an additional $41.9 million for the completion of the project).  
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On May 21, 2014, the Company entered into a joint venture agreement with Ironstate Harborside-A LLC (“ISA”) to form Harborside Unit A Urban Renewal, L.L.C. (“URL-Harborside”), a newly-formed joint venture that will develop, own and operate a high-rise tower of approximately 763 multi-family apartment units above a parking pedestal to be located on land contributed by the Company at its Harborside complex in Jersey City, New Jersey (the “URL Project”).  The Company owns an 85 percent interest in URL-Harborside2018 and the remaining interestconstruction costs are expected to be funded primarily from a $92 million construction loan.

The Company is owned by ISA, with shared control over major decisions suchdeveloping a 326-unit multi-family project known as approval of budgets, property financings and leasing guidelines.Chase III at Overlook Ridge, in Malden, Massachusetts, which began construction in third quarter 2018.  The construction of the URL Projectproject, which is estimated to cost a total$99.9 million of approximately $320 million (of which development costs of $210.2$20.2 million have been incurred by URL-Harborside through December 31, 2015).  The URL Project is projected to be ready for occupancy by the fourth quarter of 2016.  The venture has a construction/permanent loan with a maximum borrowing amount of $192 million (with $63.9 million outstanding as of December 31, 2015), which bears interest at a rate of 5.197 percent and matures in August 2029.  The Company does not expect to fund any future development costs of the project, as future development costs will be funded by using the loan financing.


The Company owns a 76.25 percent interest in a consolidated joint venture which is constructing a 108-unit multi-family development rental property located in Eastchester, New York (the “Eastchester Project”).  The project2018, is expected to be ready for occupancy by the secondin fourth quarter 2020.  The Company is expected to fund $37.9 million of 2016.  The Eastchester Project is estimated to cost a total of $50 million (of which developmentconstruction costs, of $29.6which the Company has funded $20.2 million have been incurred through December 31, 2015).  The venture has a $28.8 million construction loan (with $10.9 million outstanding as of December 31, 2015).  The Company expects2018 and the remaining construction costs are expected to fund approximately $20.9be funded primarily from a $62 million for the development of the project (of which, as of December 31, 2015, the Company has incurred $14.7 million of the development costs and estimates it will need to fund an additional $6.2 million for the completion of the project. 

Appointment of executive officers
On June 3, 2015, the Company announced the appointments of Mitchell E. Rudin as chief executive officer and Michael J. DeMarco as president and chief operating officer of the Company, effective immediately.  The Company entered into employment agreements dated June 3, 2015 with each of Messrs. Rudin and DeMarco (together, the “Executive Employment Agreements”) that each provide as follows:

·  A term that ends on December 31, 2018 (the “Employment Term”) unless earlier terminated;
·  An annual base salary for each of Messrs. Rudin and DeMarco of $700,000, subject to potential merit increases (but not decreases) each year;
·  A target annual bonus opportunity of one hundred percent (100%) of base salary, or $700,000, for each of Messrs. Rudin and DeMarco, with a threshold bonus of fifty percent (50%) of base salary, or $350,000, and a maximum bonus of two hundred percent (200%) of base salary, or $1,400,000, a pro rata bonus opportunity for 2015 based on the assessment of the Executive Compensation and Option Committee of the Board of Directors (“Committee”) of each executive’s development of a strategic plan for the Company and bonuses for 2016 and subsequent years to be based on objective performance goals to be established annually by the Committee;
·  2015 long-term incentive (“LTI”) awards under the Company’s 2013 Incentive Stock Plan (the “2015 LTI Awards”), consisting of the granting to each of Messrs. Rudin and DeMarco on June 5, 2015 of 18,775.27 restricted stock units (“RSUs”) subject to time-based vesting over three years, and of 56,325.82 performance share units (“PSUs”) which will vest from 0 to 150 percent of the number of PSUs granted based on the Company’s total shareholder return relative to a peer group of equity office REITs over a three-year performance period; and
·  
construction loan.

The grant on June 5, 2015 (the “Grant Date”) to each of Messrs. Rudin and DeMarco of options to purchase 400,000 shares of the Company’s common stock, exercisable for a period of ten years with an exercise price equal to the closing price of the Company’s common stock on the NYSE on the Grant Date (which price was $17.31 per share), with 200,000 of such options vesting in three equal annual installments commencing on the first anniversary of the Grant Date, and 200,000 of such options vesting if the Company’s common stock trades at or above $25.00 per share for 30 consecutive trading days while Mr. Rudin and Mr. DeMarco is employed, as applicable, or on or before June 30, 2019 if Mr. Rudin and Mr. DeMarco is employed for the entire Employment Term (except if the executive’s employment has been terminated by the Company for cause following expiration of the Employment Term). 

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Operations
Several of

Of the Company’s core office markets, have shownmost continue to show signs of recent improvement.rental rate improvement while the leased percentage has declined or stabilized.  The percentage leased in the Company’s consolidated portfolio of stabilized core operating commercial properties was 86.283.2 percent at December 31, 2015,2018, as compared to 84.287.6 percent at December 31, 20142017 and 86.190.6 percent at December 31, 2013.2016 (after adjusting for properties identified as non-core at the time).  Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future and leases that expire at the period end date.  Leases that expired as of December 31, 2015, 20142018, 2017 and 20132016 aggregate 69,522, 205,22010,108, 343,217 and 690,895151,655 square feet, respectively, or 0.3, 0.80.1, 2.3 and 2.50.7 percentage of the net rentable square footage, respectively.  TheWith the positive rental rate results the Company believes that commercial vacancy rates have stabilizedhas achieved in most of its markets andrecently, the Company believes that rental rates on new leases will generally be, on average, not lower than rates currently being paid.  If these recent leasing results do not prove to be sustaining during 2019, the Company may decrease in some of its markets through 2016.


receive less revenue from the same space.

FINANCING ACTIVITY


On January 7, 2016,

During the year ended December 31, 2018, the Company obtained new mortgage debt aggregating approximately $328 million, collateralized by 3 properties, with effective interest rates ranging from 4.17 percent to 4.56 percent.  On August 2, 2018, the Company obtained $131 million of mortgage debt in connection with the Company’s acquisition and consolidation of its joint venture partner’s majority ownership interest in Marbella.  On December 7, 2018, the Company retired $70 million of construction debt associated with the Portside 5/6 development project, replacing it with a new $350$97 million unsecured term loan,permanent mortgage. On December 17, 2018, the Company retired $70.1 million of construction debt associated with the River House 11 development project, replacing it with a $100 million permanent mortgage. On January 8, 2018, the Company prepaid mortgage debt of approximately $209 million that encumbered the Company’s property at Harborside Plaza 5, for which matures in January 2019 with two one-year extension options.  The interest rate for the new term loan is currently 140 basis points over LIBOR, subject to adjustment on a sliding scale based on the Company's unsecured debt ratings, or at the Company's option, a defined leverage ratio.  The Company entered into interest rate swap arrangements to fix LIBOR for the durationit incurred costs of the term loan. Including costs, the loan provides for a current all-in fixed rate of 3.12 percent.  The proceeds from the loan were used primarily to repay outstanding borrowings on its unsecured revolving credit facility and to repay the Company's $200 million, 5.8 percent senior unsecured notes that matured on January 15, 2016.


approximately $8.4 million.

AVAILABLE INFORMATION


The Company’s internet website is www.mack-cali.com.  The Company makes available free of charge on or through its website itsthe 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 by the General Partner or the Operating Partnership 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’sGeneral Partner’s corporate governance principles, charters of various committees of the Board of Directors of

the General Partner and the Company’sGeneral Partner’s code of business conduct and ethics applicable to all employees, officers and directors.  The CompanyGeneral Partner intends to disclose on itsthe Company’s 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,Harborside 3, 210 Hudson St., Ste. 400, Jersey City, NJ  08837-2206.


07311.

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,” “potential,” “projected,” “should,” “expect,” “anticipate,” “estimate,” “continue”“target,” “continue,” or comparable terminology.  Forward-looking statements are inherently subject to certain risks, trends 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:


·  risks and uncertainties affecting the general economic climate and conditions, which in turn may have a negative effect on the fundamentals of our business and the financial condition of our tenants and residents;
·  the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis;
·  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 our properties;
·  changes in interest rate levels and volatility in the securities markets;
·  our ability to complete construction and development activities on time and within budget, including without limitation obtaining regulatory permits and the availability and cost of materials, labor and equipment;
·  forward-looking financial and operational information, including information relating to future development projects, potential acquisitions or dispositions, and projected revenue and income;
·  changes in operating costs;
·  our ability to obtain adequate insurance, including coverage for terrorist acts;
·  our credit worthiness and the availability of financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities and refinance existing debt and our future interest expense;
·  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 or residents will not take occupancy or pay rent, or that development or operating costs may be greater than anticipated.
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·                  risks and uncertainties affecting the general economic climate and conditions, which in turn may have a negative effect on the fundamentals of our business and the financial condition of our tenants and residents;

·                  the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis;

·                  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 our properties;

·                  changes in interest rate levels and volatility in the securities markets;

·                  our ability to complete construction and development activities on time and within budget, including without limitation obtaining regulatory permits and the availability and cost of materials, labor and equipment;

·                  forward-looking financial and operational information, including information relating to future development projects, potential acquisitions or dispositions, leasing activities, capitalization rates, and projected revenue and income;

·                  changes in operating costs;

·                  our ability to obtain adequate insurance, including coverage for terrorist acts;

·                  our credit worthiness and the availability of financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities and refinance existing debt and our future interest expense;

·                  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 or residents will not take occupancy or pay rent, or that development or operating costs may be greater than anticipated.

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



ITEM 1A.RISK FACTORS


Our results from operations and ability to make distributions on our equity and debt service on our indebtedness may be affected by the risk factors set forth below.  All investors should consider the following risk factors before deciding to purchase securities of the Company.  The Company refers to itself as “we” or “our” in the following risk factors.


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


Our business may be affected by the continuing volatility in the financial and credit markets, the general global economic conditions,

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


·  significant job losses in the financial and professional services industries may occur, which may decrease demand for our office space, causing market rental rates and property values to be negatively impacted;
·  our ability to borrow on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from both our existing operations and our acquisition and development activities and increase our future interest expense;
·  reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans;
·  the value and liquidity of our short-term investments and cash deposits could be reduced as a result of a deterioration of the financial condition of the institutions that hold our cash deposits or the institutions or assets in which we have made short-term investments, the dislocation of the markets for our short-term investments, increased volatility in market rates for such investments or other factors;
·  reduced liquidity in debt markets and increased credit risk premiums for certain market participants may impair our ability to access capital; and
·  one or more lenders under our line of credit could refuse or be unable to fund their financing commitment to us and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all.

·                  significant job losses in the financial and professional services industries may occur, which may decrease demand for our office space, causing market rental rates and property values to be negatively impacted;

·                  our ability to borrow on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from both our existing operations and our acquisition and development activities and increase our future interest expense;

·                  reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans;

·                  the value and liquidity of our short-term investments and cash deposits could be reduced as a result of a deterioration of the financial condition of the institutions that hold our cash deposits or the institutions or assets in which we have made short-term investments, the dislocation of the markets for our short-term investments, increased volatility in market rates for such investments or other factors;

·                  reduced liquidity in debt markets and increased credit risk premiums for certain market participants may impair our ability to access capital; and

·                  one or more lenders under our line of credit could refuse or be unable to fund their financing commitment to us and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all.

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

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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.properties.  Such events or conditions could include:


·  changes in the general economic climate and conditions;
·  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;
·  an oversupply or reduced demand for multi-family apartments caused by a decline in household formation, decline in employment or otherwise;

·                  changes in the general economic climate and conditions;

·                  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;

·                  an oversupply or reduced demand for multi-family apartments caused by a decline in household formation, decline in employment or otherwise;

·decreased attractiveness of our properties to tenants and residents;

·                  competition from other office and office/flex and multi-family properties;

·                  development by competitors of competing multi-family communities;

·                  unwillingness of tenants to pay rent increases;

·  rent control or rent stabilization laws, or other housing laws and regulations that could prevent us from raising multi-family rents to offset increases in operating costs;

·                  rent control or rent stabilization laws, or other housing laws and regulations that could prevent us from raising multi-family rents to offset increases in operating costs;

·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, landlord/tenant and other  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 or residents to pay rent;
·  our inability to rent office or multi-family rental 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.

                  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, landlord/tenant and other 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 or residents to pay rent;

·                  our inability to rent office or multi-family rental 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.

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


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, we cannot evict the tenant solely because of the bankruptcy and a potential court judgment rejecting and terminating such tenant’s lease (which would subject all future unpaid rent to a statutory cap) could adversely affect our ability to make distributions or payments to our investors as we may be unable to replace the defaulting tenant with a new tenant at a comparable rental rate without incurring significant expenses or a reduction in rental income.


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


Adverse developments concerning some of our major tenants and industry concentrations could have a negative impact on our revenue: We have tenants concentrated in various industries that may be experiencing adverse effects of current economic conditions.  For instance, 14.820.3 percent of our revenue is derived from tenants in the Securities, Commodity Contracts and Other Financial industry, 10.711.8 percent from tenants in the Credit Intermediation and Related Activities industry and 11.3 percent from tenants in the Insurance Carriers and Related Activities industry and 7.5 percent from tenants in the Manufacturing industry.  Our business could be adversely affected if any of these industries suffered a downturn and/or these tenants or any other tenants became insolvent, declared bankruptcy or otherwise refused to pay rent in a timely manner or at all.

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Our insurance coverage on our properties may be inadequate or our insurance providers may default on their obligations to pay claims: We currently carry comprehensive insurance on all of our properties, including insurance for liability, fire and flood.  We cannot guarantee that the limits of our current policies will be sufficient in the event of a catastrophe to our properties.  We cannot guarantee that we will be able to renew or duplicate our current insurance coverage in adequate amounts or at reasonable prices.  In addition, while our current insurance policies insure us against loss from terrorist acts and toxic mold, in the future, insurance companies may no longer offer coverage against these types of losses, or, if offered, these types of insurance may be prohibitively expensive.  If any or all of the foregoing should occur, we may not have insurance coverage against certain types of losses and/or there may be decreases in the limits of insurance available.  Should an uninsured loss or a loss in excess of our insured limits occur, we could lose all or a portion of the capital we have invested in a property or properties, as well as the anticipated future revenue from the property or properties.  Nevertheless, we might remain obligated for any mortgage debt or other financial obligations related to the property or properties.  We cannot guarantee that material losses in excess of insurance proceeds will not occur in the future.  If any of our properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property.  Such events could adversely affect our ability to make distributions or payments to our investors.  If one or more of our insurance providers were to fail to pay a claim as a result of insolvency, bankruptcy or otherwise, the nonpayment of such claims could have an adverse effect on our financial condition and results of operations.  In addition, if one or more of our insurance providers were to become subject to insolvency, bankruptcy or other proceedings and our insurance policies with the provider were terminated or canceled as a result of those proceedings, we cannot guarantee that we would be able to find alternative coverage in adequate amounts or at reasonable prices.  In such case, we could experience a lapse in any or adequate insurance coverage with respect to one or more properties and be exposed to potential losses relating to any claims that may arise during such period of lapsed or inadequate coverage.


Illiquidity of real estate limits our ability to act quickly: Real estate investments are relatively illiquid.  Such illiquidity may limit our ability to react quickly in response to changes in economic and other conditions.  If we want to sell an investment, we might not be able to dispose of that investment in the time period we desire, and the sales price of that investment might not recoup or exceed the amount of our investment.  The prohibition in the Internal Revenue Code of 1986, as amended (the “Code”“IRS 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 the Operating Partnership 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.  AsThese restrictions expired in February 2016.  Upon the expiration of December 31, 2015, seven of our properties, with an aggregate net book value of approximately $57.1 million, were subject to these restrictions which expire in 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.  110After the effects of tax-free exchanges on certain of the

originally contributed properties, either wholly or partially, over time, 79 of our properties, with an aggregate net bookcarrying value of approximately $1.3$1.4 billion, have lapsed restrictions and are subject to these conditions.  The above limitations on our ability to sell our investments could adversely affect our ability to make distributions or payments to our investors.


We may not be able to dispose of non-core office assets within our anticipated timeframe or at favorable prices: In connection with our three year strategic initiative announced in September 2015, we identified non-core office propertiesThe Company is currently considering that weit may sell over time properties at total estimated sales proceeds we believe will range between $600of up to $570 million and $800 million.(including its remaining flex portfolio of assets).  While we intend to dispose of these properties opportunistically over time, there can be no assurance that these dispositions will be completed during the three year period of our strategic initiative.  In addition, market conditions will impact our ability to dispose of these properties, and there can be no assurance that we will be successful in disposing of these properties for their estimated sales prices.  A failure to dispose of these properties for their estimated market values as planned could have a material adverse effect on our ability to finance our acquisition and development plans.


New acquisitions, including acquisitions of multi-family rental real estate, may fail to perform as expected and will subject us to additional new risks: We intend to and may acquire new properties, primarily in the multi-family rental sector, assuming that we are able to obtain capital on favorable terms.  Such newly acquired properties may not perform as expected and may subject us to unknown liability with respect to liabilities relating to such properties for clean-up of undisclosed environmental contamination or claims by tenants, residents, vendors or other persons against the former owners of the properties.  Inaccurate assumptions regarding future rental or occupancy rates could result in overly optimistic estimates of future revenues.  In addition, future operating expenses or the costs necessary to bring an acquired property up to standards established for its intended market position may be underestimated. The search for and process of acquiring such properties will also require a substantial amount of management’s time and attention.  As our portfolio shifts from primarily commercial office properties to increasingly more multi-family rental properties we will face additional and new risks such as:

·

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·  shorter-term leases of one-year on average for multi-family rental communities, which allow residents to leave after the term of the lease without penalty;
·  increased competition from other housing sources such as other multi-family rental communities, condominiums and single-family houses that are available for rent as well as for sale;
·  dependency on the convenience and attractiveness of the communities or neighborhoods in which our multi-family rental properties are located and the quality of local schools and other amenities;
·  dependency on the financial condition of Fannie Mae or Freddie Mac which provide a major source of financing to the multi-family rental sector; and
·  compliance with housing and other new regulations.

                  shorter-term leases of one-year on average for multi-family rental communities, which allow residents to leave after the term of the lease without penalty;

·                  increased competition from other housing sources such as other multi-family rental communities, condominiums and single-family houses that are available for rent as well as for sale;

·                  dependency on the convenience and attractiveness of the communities or neighborhoods in which our multi-family rental properties are located and the quality of local schools and other amenities;

·                  dependency on the financial condition of Fannie Mae or Freddie Mac which provide a major source of financing to the multi-family rental sector; and

·                  compliance with housing and other new regulations.

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, lead paint and asbestos) may adversely affect our ability to rent, sell or borrow against contaminated property and may impose liability upon us for personal injury to persons exposed to such substances.  Various laws and regulations also impose liability on persons who arrange for the disposal or treatment of hazardous or toxic substances at another location for the costs of removal or remediation of such substances at the disposal or treatment facility.  These laws often impose liability whether or not the person arranging for such disposal ever owned or operated the disposal facility.  Certain other environmental laws and regulations impose liability on owners or operators of property for injuries relating to the release of asbestos-containing or other materials into the air, water or otherwise into the environment.  As owners and operators of property and as potential arrangers for hazardous substance disposal, we may be liable under such laws and regulations for removal or remediation costs, governmental penalties, property damage, personal injuries and related expenses.  Payment of such costs and expenses could adversely affect our ability to make distributions or payments to our investors.


We face risks associated with property acquisitions: We have acquired in the past, and our long-term strategy is to continue to pursue the acquisition of properties and portfolios of properties in New Jersey, New York and Pennsylvania and in the Northeast generally, and

particularly residential properties, including large real estate portfolios that could increase our size and result in alterations to our capital structure.  We may be competing for investment opportunities with entities that have greater financial resources.  Several 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.

              ��   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.

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


·  adequate financing to complete acquisitions may not be available on favorable terms or at all as a result of the continuing volatility in the financial and credit markets;
·  even if we enter into an acquisition agreement for a property, we may be unable to complete that acquisition and risk the loss of certain non-refundable deposits and incurring certain other acquisition-related costs;
·  the actual costs of repositioning or redeveloping acquired properties may be greater than our estimates;
·  any acquisition agreement will likely contain conditions to closing, including completion of due diligence investigations to our satisfaction or other conditions that are not within our control, which may not be satisfied; and
·  we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and acquired properties may fail to perform as expected; which may adversely affect our results of operations and financial condition.
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·                  adequate financing to complete acquisitions may not be available on favorable terms or at all as a result of the continuing volatility in the financial and credit markets;

·                  even if we enter into an acquisition agreement for a property, we may be unable to complete that acquisition and risk the loss of certain non-refundable deposits and incurring certain other acquisition-related costs;

·                  the actual costs of repositioning or redeveloping acquired properties may be greater than our estimates;

·                  any acquisition agreement will likely contain conditions to closing, including completion of due diligence investigations to our satisfaction or other conditions that are not within our control, which may not be satisfied; and

·                  we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and acquired properties may fail to perform as expected; which may adversely affect our results of operations and financial condition.

Development of real estate, including the development of multi-family rental 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;
·  failure to complete construction and lease-up on schedule or within budget may increase debt service expense and construction and other costs; and
·  failure to rent the development at all or at rent levels originally contemplated.

                  financing for development projects may not be available on favorable terms;

·                  long-term financing may not be available upon completion of construction;

·                  failure to complete construction and lease-up on schedule or within budget may increase debt service expense and construction and other costs; and

·                  failure to rent the development at all or at rent levels originally contemplated.

Property ownership through joint ventures could subject us to the contrary business objectives of our co-venturers: We, from time to time, invest in joint ventures or partnerships in which we do not hold a controlling interest in the assets underlying the entities in which we invest, including joint ventures in which (i) we own a direct interest in an entity which controls such assets, or (ii) we own a direct interest in an entity which owns indirect interests, through one or more intermediaries, of such assets.  These investments involve risks that do not exist with properties in which we own a controlling interest with respect to the underlying assets, including the possibility that (i) our co-venturers or partners may, at any time, become insolvent or otherwise refuse to make capital contributions when due, (ii) we may be responsible to our co-venturers or partners for indemnifiable losses, (iii) we may become liable with respect to guarantees of payment or performance by the joint ventures, (iv) we may become subject to buy-sell arrangements which could cause us to sell our interests or acquire our co-venturer’s or partner’s interests in a joint venture, or (v) 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 performance is subject to risks associated with repositioning a significant portion of the Company’s portfolio from office to multi-family rental properties.

Repositioning the Company’s office portfolio may result in impairment charges or less than expected returns on office properties:There can be no assurance that the Company, as it seeks to reposition a portion of its portfolio from office to the multi-family rental sector will be able to sell office properties and purchase multi-family rental properties at prices that in the aggregate are profitable for the Company or are efficient use of its capital or that would not result in a reduction of the Company’s cash flow. Because real estate investments are relatively illiquid, it also may be difficult for the Company to promptly sell its office properties that are held or may be designated for

sale promptly or on favorable terms, which could have a material adverse effect on the Company’s financial condition.  In addition, as the Company identifies non-core office properties that may be held for sale or that it intends to hold for a shorter period of time than previously, it may determine that the carrying value of a property is not recoverable over the anticipated holding period of the property.  As a result, the Company may incur impairment charges for certain of these properties to reduce their carrying values to the estimated fair market values.  See Note 3: Recent Transactions – Impairments on Properties Held and Used.  Moreover, as the Company seeks to reposition a portion of its portfolio from office to the multi-family rental sector, the Company may be subject to a Federal income tax on gain from sales of properties due to limitations in the IRS Code and related regulations on a real estate investment trust’s ability to sell properties.  The Company intends to structure its property dispositions in a tax-efficient manner and avoid the prohibition in the IRS Code against a real estate investment trust holding properties for sale.  There is no guaranty, however, that such dispositions can be achieved without the imposition of federal income tax on any gain recognized.



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Unfavorable changes in market and economic conditions could adversely affect multi-family rental occupancy, rental rates, operating expenses, and the overall market value of our assets, including joint ventures. Local conditions that may adversely affect conditions in multi-family residential markets include the following:

·:                  plant closings, industry slowdowns and other factors that adversely affect the local economy;

·


·  plant closings, industry slowdowns and other factors that adversely affect the local economy;
·  an oversupply of, or a reduced demand for, apartment units;
·  a decline in household formation or employment or lack of employment growth;
·  the inability or unwillingness of residents to pay rent increases;
·  rent control or rent stabilization laws, or other laws regulating housing, that could prevent us from raising rents to offset increases in operating costs; and
·  economic conditions that could cause an increase in our operating expenses, such as increases in property taxes, utilities, compensation of on-site associates and routine maintenance.

                  an oversupply of, or a reduced demand for, apartment units;

·                  a decline in household formation or employment or lack of employment growth;

·                  the inability or unwillingness of residents to pay rent increases;

·                  rent control or rent stabilization laws, or other laws regulating housing, that could prevent us from raising rents to offset increases in operating costs; and

·                  economic conditions that could cause an increase in our operating expenses, such as increases in property taxes, utilities, compensation of on-site associates and routine maintenance.

Changes in applicable laws, or noncompliance with applicable laws, could adversely affect our operations or expose us to liability: We must develop, construct and operate our communities in compliance with numerous federal, state and local laws and regulations, some of which may conflict with one another or be subject to limited judicial or regulatory interpretations.  These laws and regulations may include zoning laws, building codes, landlord tenant laws and other laws generally applicable to business operations.  Noncompliance with applicable laws could expose us to liability.  Lower revenue growth or significant unanticipated expenditures may result from our need to comply with changes in (i) laws imposing remediation requirements and the potential liability for environmental conditions existing on properties or the restrictions on discharges or other conditions, (ii) rent control or rent stabilization laws or other residential landlord/tenant laws, or (iii) other governmental rules and regulations or enforcement policies affecting the development, use and operation of our communities, including changes to building codes and fire and life-safety codes.


Failure to succeed in new markets, or with new brands and community formats, or in activities other than the development, ownership and operation of residential rental communities may have adverse consequences: We are actively engaged in development and acquisition activity in new submarkets within our core, Northeast markets where we have owned and operated our historical portfolio of office properties.  Our historical experience with properties in our core, Northeast markets in developing, owning and operating properties does not ensure that we will be able to operate successfully in the new multi-family submarkets.  We will be exposed to a variety of risks in the multi-family submarkets, including:

·


·  an inability to accurately evaluate local apartment market conditions;
·  an inability to obtain land for development or to identify appropriate acquisition opportunities;
·  
                  an inability to accurately evaluate local apartment market conditions;

·                  an inability to obtain land for development or to identify appropriate acquisition opportunities;

·                  an acquired property may fail to perform as we expected in analyzing our investment;

·                  our estimate of the costs of repositioning or developing an acquired property may prove inaccurate; and

·                  lack of familiarity with local governmental and permitting procedures.

an acquired property may fail to perform as we expected in analyzing our investment;

·  our estimate of the costs of repositioning or developing an acquired property may prove inaccurate; and
·  lack of familiarity with local governmental and permitting procedures.

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

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


Debt financing could adversely affect our economic performance.

Scheduled debt payments and refinancing could adversely affect our financial condition: We are subject to the risks normally associated

with debt financing.  These risks, including the following, may adversely affect our ability to make distributions or payments to our investors:

·


·  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.
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                  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, 2015,2018, we had total outstanding indebtedness of $2.2$2.8 billion comprised of $1.3 billion$570 million of senior unsecured notes, borrowings of $674 million under unsecured term loans, outstanding borrowings of $155$117 million under our unsecured revolving credit facility and approximately $731 million$1.4 billion of mortgages, loans payable and other obligations.  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 or adjust our capital expenditures in general or with respect to our strategy of acquiring multi-family residential properties and development opportunities in particular;
·  prevailing interest rates or other factors at the time of refinancing could increase interest rates and, therefore, our interest expense;
·  we may be subject to an event of default pursuant to covenants for our indebtedness;
·  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 Code.

·                  we may need to dispose of one or more of our properties upon disadvantageous terms or adjust our capital expenditures in general or with respect to our strategy of acquiring multi-family residential properties and development opportunities in particular;

·                  prevailing interest rates or other factors at the time of refinancing could increase interest rates and, therefore, our interest expense;

·                  we may be subject to an event of default pursuant to covenants for our indebtedness;

·                  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 IRS 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 unsecured revolving credit facility and unsecured term loanloans each contains customary requirements, including restrictions and other limitations on our ability to incur debt, debt to assets ratios, secured debt to total assets ratios, interest coverage ratios and minimum ratios of unencumbered assets to unsecured debt.  The indentures under which our senior unsecured debt have been issued contain financial and operating covenants including coverage ratios and limitations on our ability to incur secured and unsecured debt.  These covenants limit our flexibility in conducting our operations and create a risk of default on our indebtedness if we cannot continue to satisfy them.  Some of our debt instruments are cross-collateralized and contain cross default provisions with other debt instruments.  Due to this cross-collateralization, a failure or default with respect to certain debt instruments or properties could have an adverse impact on us or our properties that are subject to the cross-collateralization under the applicable debt instrument.  Failure to comply with these covenants could cause a default under the agreements and, in certain circumstances, our lenders may be entitled to accelerate our debt obligations.  Defaults under our debt agreements could materially and adversely affect our financial condition and results of operations.


Rising interest rates may adversely affect our cash flow: As of December 31, 2015,2018, outstanding borrowings of approximately $155$117 million under our unsecured revolving credit facility and approximately $137$197 million of our mortgage indebtedness bear interest at variable rates.  We may incur additional indebtedness in the future that 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 unsecured 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.  OurThe 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 the Operating Partnership’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.



16


We are dependent on external sources of capital for future growth: To qualify as a real estate investment trust under the IRS Code, wethe General Partner must distribute to ourits shareholders each year at least 90 percent of ourits 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.


Adverse changes in our credit ratings could adversely affect our business and financial condition:The credit ratings assigned to our senior unsecured notes by nationally recognized statistical rating organizations (the “NRSROs”) are based on our operating performance, liquidity and leverage ratios, overall financial position and other factors employed by the NRSROs in their rating analyses of us.  These ratings and similar ratings of us and any debt or preferred securities we may issue are subject to ongoing evaluation by the NRSROs, and we cannot assure you that any such ratings will not be changed by the NRSROs if, in their judgment, circumstances warrant.  Our credit ratings can affect the amount of capital we can access, as well as the terms of any financings we may obtain. There can be no assurance that we will be able to maintain our current credit ratings, and in the event our current credit ratings are downgraded, we would likely incur higher borrowing costs and may encounter difficulty in obtaining additional financing. 


See “Item 7. Management’s Discussion & Analysis of Financial Condition and Results of Operations - Executive Overview” for a discussion of the Company’s current credit ratings.”

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 key personnel for strategic business direction and real estate experience, including our chief executive officer, our president and chief operating officer, and our chief financial officer, chief investment officer, chief legal officergeneral counsel, executive vice president of leasing and chairman of Roseland.RRT.  While we believe that we could find replacements for these key personnel, loss of their services could adversely affect our operations.  We do not have key man life insurance for our key personnel.  In addition, as the Company seeks to reposition a portion of its portfolio from office to the multi-family rental sector, the Company may become increasingly dependent on non-executive personnel with residential development and leasing expertise to effectively execute the Company’s long-term strategy.


Certain provisions of Maryland law and ourthe General Partner’s charter and bylaws could hinder, delay or prevent changes in control.

Certain provisions of Maryland law ourand General Partner’s charter and our bylaws 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 The General Partner’s Board of Directors iswas previously divided into three classes with staggered terms of office of three years each.

At our 2014the 2015 annual meeting of stockholders, stockholders approved amendments to ourthe General Partner’s charter and bylaws to declassify ourits Board of Directors over a three year period from 2015 through 2017 such that each director whose term expiresexpired at the annual meeting of stockholders in 2015 through 2017 willwould be elected to hold office until the next annual meeting of stockholders following their election, instead of the third-succeeding annual meeting, and until their successors are elected and qualify.  During this transition period, ourEffective at the 2017 annual meeting of stockholders, the General Partner’s Board of Directors will remain classified with respect to the directors whose three year terms have not yet expired during such period, andwas fully declassified.  However, Maryland law permits a board of directors to classify itself at any time, and the General Partner’s Board of Directors has reserved the right to re-classifydo so under Maryland law.  The classification of the General Partner’s Board of Directors at any time.  The classification and staggered terms of office of our directorswould make it more difficult for a third party to gain control of our boardthe General Partner’s Board of directors.Directors.  At least two annual meetings of stockholders, instead of one, generally would be required to affect a change in a majority of the boardGeneral Partner’s Board of directors.

Directors.

Removal of Directors: Under ourthe General Partner’s 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 ourthe General Partner’s charter define the term “cause.”  As a result, removal for “cause” is subject to Maryland common law and to judicial interpretation and review in the context of the facts and circumstances of any particular situation.


Number of Directors, Board Vacancies, Terms of Office: We have,The General Partner has, in ourits 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.  We have,The General Partner has, in ourits corporate governance principles, adopted a mandatory retirement age of 80 years old for directors.

17


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


Advance Notice Provisions for Stockholder Nominations and Proposals: OurThe General Partner’s 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 ourthe General Partner’s charter, ourits 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 ourits stockholders.  As a result, ourits Board of Directors may establish a series of preferred stock that could delay or prevent a transaction or a change in control.


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 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.  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 ourthe General Partner’s status as a real estate investment trust under the IRS Code, ourits charter generally prohibits any single stockholder, or any group of affiliated stockholders, from beneficially owning more than 9.8 percent of ourits outstanding capital stock unless ourits 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 certain business combinations, including mergers, consolidations, share exchanges or, in circumstances specified in the statute, asset transfers, issuances or reclassifications 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.  OurThe General Partner’s board of directors has exempted from this statute business combinations between the Company and certain affiliated individuals and entities.  However, unless ourits 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 holders of “control shares” of a corporation acquired in a “control share acquisition” shall have no voting rights with respect to the control shares 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.



18


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.  OurIn 2018, the General Partner’s bylaws contain a provision exemptingwere amended to exempt any acquisition of the General Partner’s shares from the Maryland Control Share Acquisition Act.  If the General Partner’s bylaws are amended to repeal or limit the exemption from the Maryland Control Share Acquisition Act, any acquisitionsit may make it more difficult for a third party to obtain control of shares by certain affiliated individualsus and entities, any directors, officers or employeesincrease the difficulty of consummating a change in control.

The enactment of significant new tax legislation, generally effective for tax years beginning after December 31, 2017, could have a material and adverse effect on us and the market price of our shares.

On December 22, 2017, Pub. L. No. 115-97 (informally known as the Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted into law.  The Tax Reform Act makes significant changes to the IRS Code, including changes that impact REITs and their shareholders, among others.  In particular, the Tax Reform Act reduces the maximum corporate tax rate from 35% to 21%.  By reducing the corporate tax rate, it is possible that the Tax Reform Act will reduce the relative attractiveness to investors (as compared with potential alternative investments) of the Company and any person approved bysingle level of taxation on REIT distributions. However, the board of directors priorTax Reform Act also made certain other changes to the acquisition by such personIRS Code are generally advantageous to REITs and their shareholder.  For instance, for tax years beginning before January 1, 2026, the Tax Reform Act permits up to a 20% deduction for individuals, trusts, and estates with respect to their receipt of control shares.  Any control shares acquired in a control share acquisition“qualified REIT dividends”, which are dividends from a REIT that are not exempt undercapital gain dividends and are not qualified dividend income.  These changes generally result in an effective maximum U.S. federal income tax rate on such dividends of 29.6%, if the foregoingdeduction is allowed in full.  The full ramifications of the Tax Reform Act remain unclear and will likely remain unclear until further Treasury guidance is issued. Key provisions of the Tax Reform Act that could impact us and the market price of our bylawsshares include:

·                  temporarily reducing individual U.S. federal income tax rates on ordinary income; the highest individual U.S. federal income tax rate was reduced from 39.6% to 37% (through tax years beginning before January 1, 2026);

·                  eliminating miscellaneous itemized deductions and limiting state and local tax deductions;

·                  reducing the maximum corporate income tax rate from 35% to 21%, which reduces, but does not eliminate, the competitive advantage that REITs enjoy relative to non-REIT corporations;

·                  permitting individuals, trusts, and estates (subject to certain limitations) to deduct up to 20% of certain pass-through business income, including, as noted above, dividends received by our shareholders that are not designated by us as capital gain dividends or qualified dividend income, which will generally result in an effective maximum U.S. federal income tax rate of 29.6% on such dividends, if the deduction is allowed in full (through tax years beginning before January 1, 2026);

·                  reducing the highest rate of withholding with respect to our distributions to non-U.S. shareholders that are treated as attributable to gains from the sale or exchange of U.S. real property interests from 35% to 21%;

·                  limiting our deduction for net operating losses incurred after December 31, 2017 to 80% of taxable income (prior to the application of the dividends paid deduction), where taxable income is determined without regarding to the net operating loss deduction itself, and generally eliminating net operating loss carrybacks and allowing unused net operating losses to be carried forward indefinitely;

·                  creating a new limitation on the deduction of net interest expense for all businesses other than certain real estate businesses that make an election to not be subject to such limitation This provision could have the Maryland Control Share Acquisition Act.


effect that we or any of our subsidiaries, including any of our taxable REIT subsidiaries (each, a “TRS”), are unable to deduct a portion of our annual interest expense to the extent that we or any such subsidiary chooses not to make or is otherwise ineligible to make, such election. To the extent any of our entities do elect out of this interest limitation provision, such entity would be required to extend the depreciable lives of its properties owned, resulting in a reduced annual depreciation deduction.;

·                  expanding the ability of businesses to deduct the cost of certain purchases of property in the year in which such property is purchased; and

·                  eliminating the corporate alternative minimum tax.

In addition to the foregoing, the Tax Reform Act may impact our tenants, the real estate market, and the overall economy, which may have an effect on us.  It is not possible to state with certainty at this time the effect of the Tax Reform Act on us and on an investment in our shares.

Consequences of the General Partner’s failure to qualify as a real estate investment trust could adversely affect our financial condition.

Failure to maintain ownership limits could cause usthe General Partner to lose ourits qualification as a real estate investment trust: In order for usthe General Partner to maintain ourits qualification as a real estate investment trust under the IRS Code, not more than 50 percent in value of ourits outstanding stock may be actually and/or constructively owned by five or fewer individuals (as defined in the IRS Code to include certain entities).  We haveThe General Partner has limited the ownership of ourits outstanding shares of our common stock by any single stockholder to 9.8 percent of the outstanding shares of ourits common stock.  OurIts Board of Directors could waive this restriction if they wereit was satisfied, based upon the advice of tax counsel or otherwise, that such action would be in ourthe best interests of the General Partner and

its stockholders and would not affect ourits qualification as a real estate investment trust under the IRS Code.  Common stock acquired or transferred in breach of the limitation may be redeemed by us for the lesser of the price paid and the average closing price for the 10 trading days immediately preceding redemption or sold at the direction of us.  Wethe General Partner.  The General Partner 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 usthe General Partner to be in violation of any ownership limit, will be deemed void.  Although wethe General Partner currently intendintends to continue to operate in a manner which will enable usit to continue to qualify as a real estate investment trust under the IRS Code, it is possible that future economic, market, legal, tax or other considerations may cause ourits Board of Directors to revoke the election for usthe General Partner’s to qualify as a real estate investment trust.  Under ourthe General Partner’s organizational documents, ourits Board of Directors can make such revocation without the consent of ourits stockholders.


In addition, the consent of the holders of at least 85 percent of the Operating Partnership’s partnership units is required: (i) to merge (or permit the merger of) usthe Operating Partnership with another unrelated person, pursuant to a transaction in which the Operating Partnership is not the surviving entity; (ii) to dissolve, liquidate or wind up the Operating Partnership; or (iii) to convey or otherwise transfer all or substantially all of the Operating Partnership’s assets.  As of February 22, 2016, as general partner, we own15, 2019, the General Partner, owns approximately 89.589.8 percent of the Operating Partnership’s outstanding common partnership units.


Tax liabilities as a consequence of failure to qualify as a real estate investment trust: We haveThe General Partner has elected to be treated and havehas operated so as to qualify as a real estate investment trust for federal income tax purposes since ourthe General Partner’s taxable year ended December 31, 1994.  Although we believe wethe General Partner believes it will continue to operate in such manner, weit cannot guarantee that weit 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 IRS Code.  Because few judicial or administrative interpretations of such provisions exist and qualification determinations are fact sensitive, wethe General Partner cannot assure you that weit will qualify as a real estate investment trust for any taxable year.


If we failthe General Partner fails to qualify as a real estate investment trust in any taxable year, weit 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.

·                  it will not be allowed a deduction for dividends paid to shareholders;

·                  it will be subject to federal income tax at regular corporate rates, including any alternative minimum tax, if applicable; and

·                  unless it is entitled to relief under certain statutory provisions, it will not be permitted to qualify as a real estate investment trust for the four taxable years following the year during which was disqualified.

A loss of ourthe General Partner’s 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 wethe General Partner pay dividends to ourits stockholders.


In addition, any such dividends that the General Partner does pay to its stockholders would not constitute qualified REIT dividends and would accordingly not qualify for a deduction of up to 20 percent.

Other tax liabilities: Even if we qualifythe General Partner qualifies as a real estate investment trust under the IRS Code, we areits subject to certain federal, state and local taxes on our income and property and, in some circumstances, certain other state and local taxes.  From time to time changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability. A shortfall in tax revenues for states and municipalities in which we operate may lead to an increase in the frequency and amount of such increase.  These actions could adversely affect our financial condition and results of operations. 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.

19


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 such legislative action may prospectively or retroactively modify our and the Operating Partnership’s tax treatment and, therefore, may adversely affect taxation of us, the Operating Partnership, and/or our investors.


Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our tenants and business partners, including personally identifiable information of our tenants and employees, in our data centers and on our networks.  Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions.  Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations, and damage our reputation, which could adversely affect our business.


We face possible risks associated with the physical effects of climate change.

We cannot predict with certainty whether climate change is occurring and, if so, at what rate.  However, the physical effects of climate change could have a material adverse effect on our properties, operations and business.  For example, many of our properties are located along the East coast, particularly those in New Jersey, New York and Connecticut.  To the extent climate change causes changes in weather patterns, our markets could experience increases in storm intensity and rising sea-levels.  Over time, these conditions could result in declining demand for office space in our buildings or the inability of us to operate the buildings at all.  Climate change may also have indirect effects on our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of energy and increasing the cost of snow removal or related costs at our properties.  Proposed legislation to address climate change could increase utility and other costs of operating our properties which, if not offset by rising rental income, would reduce our net income.  There can be no assurance that climate change will not have a material adverse effect on our properties, operations or business.


Changes in market conditions could adversely affect the market price of ourthe General Partner’s common stock.

As with other publicly traded equity securities, the value of ourthe General Partner’s common stock depends on various market conditions, which may change from time to time.  The market price of ourthe General Partner’s common stock could change in ways that may or may not be related to our business, ourthe General Partner’s industry or our operating performance and financial condition.  Among the market conditions that may affect the value of ourthe General Partner’s common stock are the following:


·  the extent of your interest in us;
·  the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies;
·  our financial performance; and
·  general stock and bond market conditions.

·                  the extent of your interest in us;

·                  the general reputation of REITs and the attractiveness of the General Partner’s equity securities in comparison to other equity securities, including securities issued by other real estate-based companies;

·                  our financial performance; and

·                  general stock and bond market conditions.

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



ITEM 1B.UNRESOLVED STAFF COMMENTS


None.


20


ITEM 2.PROPERTIES


PROPERTY LIST


As of December 31, 2015,2018, the Company’s Consolidated Properties consisted of 217104 in-service commercial office and flex properties, as well as six16 multi-family properties.  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 24.214.9 million square feet of commercial space and 1,301 apartments3,988 apartment units with the individual commercial 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 commercial 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.


         
Office Properties        
         
   Percentage2015  20152015
  NetLeasedBase  AverageAverage
  Rentableas ofRentPercentage Base RentEffective Rent
 YearArea12/31/15($000’s)of Total 2015 Per Sq. Ft.Per Sq. Ft.
Property LocationBuilt(Sq. Ft.)(%) (a) (b) (c)Base Rent (%) ($) (c) (d)($) (c) (e)
         
NEW JERSEY        
         
BERGEN COUNTY        
Fort Lee        
One Bridge Plaza1981200,00092.24,6420.97 25.1722.30
2115 Linwood Avenue198168,00098.21,1710.24 17.5413.93
Montvale        
135 Chestnut Ridge Road198166,15066.69220.19 20.9318.09
Paramus        
15 East Midland Avenue1988259,82353.63,1050.65 22.3018.65
140 East Ridgewood Avenue1981239,680100.04,1160.86 17.1713.81
461 From Road1988253,55498.14,2100.88 16.9313.94
650 From Road1978348,51079.46,1021.27 22.0518.26
61 South Paramus Road (f)1985269,19181.74,1710.87 18.9716.36
Rochelle Park        
120 West Passaic Street197252,00046.27090.15 29.5127.76
365 West Passaic Street1976212,57882.93,5350.74 20.0617.89
395 West Passaic Street1979100,58975.61,3760.29 18.0915.27
Upper Saddle River        
10 Mountainview Road1986192,00063.62,9540.62 24.1920.55
Woodcliff Lake        
400 Chestnut Ridge Road198289,200100.02,1420.45 24.0121.04
50 Tice Boulevard1984235,00095.65,5441.16 24.6821.30
300 Tice Boulevard1991230,00095.46,0691.27 27.6624.90
         
ESSEX COUNTY        
Millburn        
150 J.F. Kennedy Parkway1980247,47697.24,7580.99 19.7816.07
Borough of Roseland        
4 Becker Farm Road1983281,76294.96,9751.45 26.0924.97
6 Becker Farm Road1982129,73277.52,5670.54 25.5324.36
101 Eisenhower Parkway1980237,00080.64,3940.92 23.0018.86
103 Eisenhower Parkway1985151,54577.72,4020.50 20.4016.23
105 Eisenhower Parkway2001220,00038.12,0650.43 24.6418.47
75 Livingston Avenue198594,22164.21,2530.26 20.7118.47
85 Livingston Avenue1985124,59581.82,4620.51 24.1622.06
         
HUDSON COUNTY        
Jersey City        
Harborside Plaza 11983400,000100.011,3312.36 28.3324.67
Harborside Plaza 21990761,20058.111,2812.35 25.5121.29
Harborside Plaza 31990725,60083.519,6504.10 32.4329.50
Harborside Plaza 4-A2000207,67098.66,5461.36 31.9724.72
Harborside Plaza 52002977,22599.032,4426.77 33.5329.63
101 Hudson Street19921,246,28390.229,6686.19 26.3923.29
         

21

Office Properties

 

 

 

 

 

 

Percentage

 

2018

 

 

 

2018

 

2018

 

 

 

 

 

Net

 

Leased

 

Base

 

 

 

Average

 

Average

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Percentage

 

Base Rent

 

Effective Rent

 

 

 

Year

 

Area

 

12/31/18

 

($000’s)

 

of Total 2018

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

Base Rent (%)

 

($) (c) (d)

 

($) (c) (e)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW JERSEY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BERGEN COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fort Lee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One Bridge Plaza

 

1981

 

200,000

 

76.8

%

4,712

 

1.12

 

30.67

 

27.85

 

2115 Linwood Avenue (i)

 

1981

 

68,000

 

86.1

%

1,481

 

0.35

 

25.29

 

20.34

 

Paramus

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

650 From Road (h)

 

1978

 

348,510

 

68.4

%

5,979

 

1.42

 

25.07

 

22.79

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESSEX COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short Hills

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

150 J.F. Kennedy Parkway

 

1980

 

247,476

 

84.2

%

7,207

 

1.71

 

34.60

 

27.91

 

51 J.F. Kennedy Parkway

 

1988

 

260,741

 

98.3

%

13,350

 

3.16

 

52.08

 

46.91

 

101 J.F. Kennedy Parkway

 

1981

 

197,196

 

98.4

%

8,591

 

2.03

 

44.26

 

40.34

 

103 J.F. Kennedy Parkway

 

1981

 

123,000

 

100.0

%

5,106

 

1.21

 

41.51

 

36.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HUDSON COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hoboken

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

111 River Street

 

2002

 

566,215

 

77.1

%

21,204

 

5.02

 

48.57

 

45.47

 

Jersey City

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Harborside Plaza 1

 

1983

 

400,000

 

48.6

%

7,032

 

1.67

 

36.17

 

31.47

 

Harborside Plaza 2

 

1990

 

761,200

 

80.7

%

18,398

 

4.36

 

29.95

 

24.84

 

Harborside Plaza 3 (c)

 

1990

 

725,600

 

85.4

%

21,012

 

4.98

 

33.91

 

29.08

 

Harborside Plaza 4-A

 

2000

 

207,670

 

95.6

%

6,419

 

1.52

 

32.34

 

26.17

 

Harborside Plaza 5

 

2002

 

977,225

 

57.0

%

24,614

 

5.83

 

44.19

 

37.72

 

101 Hudson Street

 

1992

 

1,246,283

 

76.8

%

32,977

 

7.81

 

34.45

 

27.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MERCER COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Princeton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Overlook Center

 

1988

 

149,600

 

95.4

%

2,572

 

0.61

 

18.02

 

15.86

 

5 Vaughn Drive

 

1987

 

98,500

 

44.0

%

1,224

 

0.29

 

28.26

 

23.90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MIDDLESEX COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Edison

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

333 Thornall Street

 

1984

 

196,128

 

100.0

%

5,396

 

1.28

 

27.51

 

23.13

 

343 Thornall Street

 

1991

 

195,709

 

95.5

%

6,278

 

1.49

 

33.58

 

28.97

 

Iselin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101 Wood Avenue South

 

1990

 

262,841

 

100.0

%

9,214

 

2.18

 

35.06

 

31.31

 

Plainsboro

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

500 College Road East (f)(h)

 

1984

 

158,235

 

72.6

%

2,871

 

0.68

 

24.99

 

20.62

 

Woodbridge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

581 Main Street

 

1991

 

200,000

 

99.0

%

2,792

 

0.66

 

14.10

 

9.44

 

Office Properties

(Continued)

 

 

 

 

 

 

Percentage

 

2018

 

 

 

2018

 

2018

 

 

 

 

 

Net

 

Leased

 

Base

 

 

 

Average

 

Average

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Percentage

 

Base Rent

 

Effective Rent

 

 

 

Year

 

Area

 

12/31/18

 

($000’s)

 

of Total 2018

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

Base Rent (%)

 

($) (c) (d)

 

($) (c) (e)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MONMOUTH COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Holmdel

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23 Main Street

 

1977

 

350,000

 

100.0

%

4,566

 

1.08

 

13.05

 

10.33

 

Middletown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One River Centre Bldg 1

 

1983

 

122,594

 

97.6

%

3,049

 

0.72

 

25.49

 

22.50

 

One River Centre Bldg 2

 

1983

 

120,360

 

100.0

%

3,017

 

0.71

 

25.07

 

21.19

 

One River Centre Bldg 3

 

1984

 

194,518

 

37.7

%

2,317

 

0.55

 

31.58

 

27.41

 

Neptune

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3600 Route 66

 

1989

 

180,000

 

100.0

%

4,364

 

1.03

 

24.24

 

18.82

 

Red Bank

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

200 Schultz Drive

 

1988

 

102,018

 

71.7

%

1,685

 

0.40

 

23.05

 

18.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MORRIS COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Florham Park

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

325 Columbia Turnpike

 

1987

 

168,144

 

100.0

%

4,157

 

0.98

 

24.72

 

21.21

 

Madison

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Giralda Farms

 

1982

 

154,417

 

97.0

%

4,942

 

1.17

 

33.00

 

29.12

 

7 Giralda Farms

 

1997

 

236,674

 

60.1

%

4,509

 

1.07

 

31.72

 

27.35

 

Morris Plains

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

201 Littleton Road (h)

 

1979

 

88,369

 

37.5

%

711

 

0.17

 

21.47

 

18.03

 

Parsippany

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4 Campus Drive

 

1983

 

147,475

 

83.0

%

2,535

 

0.60

 

20.72

 

15.84

 

6 Campus Drive

 

1983

 

148,291

 

84.7

%

2,796

 

0.66

 

22.27

 

18.59

 

7 Campus Drive

 

1982

 

154,395

 

86.8

%

2,949

 

0.70

 

22.00

 

18.91

 

8 Campus Drive

 

1987

 

215,265

 

72.3

%

4,317

 

1.02

 

27.75

 

20.63

 

9 Campus Drive

 

1983

 

156,495

 

90.7

%

2,735

 

0.65

 

19.27

 

15.07

 

2 Dryden Way

 

1990

 

6,216

 

100.0

%

99

 

0.02

 

15.93

 

14.64

 

4 Gatehall Drive

 

1988

 

248,480

 

72.3

%

4,928

 

1.17

 

27.42

 

23.36

 

2 Hilton Court

 

1991

 

181,592

 

100.0

%

6,523

 

1.55

 

35.92

 

32.83

 

1 Sylvan Way

 

1989

 

150,557

 

81.7

%

3,623

 

0.86

 

29.47

 

26.56

 

3 Sylvan Way (g)

 

2018

 

147,241

 

55.7

%

1,576

 

0.37

 

28.62

 

23.97

 

5 Sylvan Way

 

1989

 

151,383

 

94.2

%

3,699

 

0.88

 

25.94

 

22.72

 

7 Sylvan Way (c)

 

1987

 

145,983

 

70.8

%

1,418

 

0.34

 

13.73

 

10.55

 

5 Wood Hollow Road

 

1979

 

317,040

 

100.0

%

6,486

 

1.54

 

20.46

 

15.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SOMERSET COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bridgewater

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

721 Route 202/206 (i)

 

1989

 

192,741

 

0.0

%

258

 

0.06

 

0.00

 

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total New Jersey Office

 

 

 

11,670,377

 

78.7

%(l)

285,688

 

67.68

 

31.21

 

26.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW YORK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WESTCHESTER COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elmsford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Clearbrook Road (c)

 

1975

 

60,000

 

84.9

%

928

 

0.22

 

18.22

 

16.86

 

Hawthorne

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Skyline Drive

 

1980

 

20,400

 

99.0

%

409

 

0.10

 

20.25

 

19.16

 

2 Skyline Drive

 

1987

 

30,000

 

100.0

%

542

 

0.13

 

18.07

 

13.80

 

7 Skyline Drive

 

1987

 

109,000

 

94.8

%

2,389

 

0.56

 

23.13

 

20.23

 

17 Skyline Drive (f)

 

1989

 

85,000

 

100.0

%

1,934

 

0.46

 

22.75

 

22.58

 

Yonkers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Executive Boulevard

 

1982

 

112,000

 

78.7

%

2,190

 

0.52

 

24.84

 

22.59

 

3 Executive Boulevard

 

1987

 

58,000

 

93.1

%

1,678

 

0.40

 

31.09

 

28.68

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total New York Office

 

 

 

474,400

 

91.0

%(l)

10,070

 

2.39

 

23.33

 

21.34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL OFFICE PROPERTIES

 

 

 

12,144,777

 

79.1

%(l)

295,758

 

70.07

 

30.86

 

26.35

 

Office/Flex Properties

 

 

 

 

 

 

Percentage

 

2018

 

 

 

2018

 

2018

 

 

 

 

 

Net

 

Leased

 

Base

 

 

 

Average

 

Average

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Percentage

 

Base Rent

 

Effective Rent

 

 

 

Year

 

Area

 

12/31/18

 

($000’s)

 

of Total 2018

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

Base Rent (%)

 

($) (c) (d)

 

($) (c) (e)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW YORK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WESTCHESTER COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elmsford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11 Clearbrook Road

 

1974

 

31,800

 

100.0

%

553

 

0.13

 

17.39

 

16.29

 

75 Clearbrook Road

 

1990

 

32,720

 

100.0

%

466

 

0.11

 

14.24

 

14.24

 

125 Clearbrook Road

 

2002

 

33,000

 

100.0

%

634

 

0.15

 

19.21

 

14.64

 

150 Clearbrook Road

 

1975

 

74,900

 

100.0

%

1,145

 

0.27

 

15.29

 

13.79

 

175 Clearbrook Road

 

1973

 

98,900

 

96.7

%

1,532

 

0.36

 

16.02

 

14.47

 

200 Clearbrook Road

 

1974

 

94,000

 

99.8

%

1,321

 

0.31

 

14.07

 

12.90

 

250 Clearbrook Road

 

1973

 

155,000

 

97.1

%

1,565

 

0.37

 

10.40

 

9.02

 

50 Executive Boulevard

 

1969

 

45,200

 

28.9

%

140

 

0.03

 

10.70

 

7.95

 

77 Executive Boulevard

 

1977

 

13,000

 

100.0

%

263

 

0.06

 

20.23

 

19.08

 

85 Executive Boulevard

 

1968

 

31,000

 

81.2

%

148

 

0.04

 

5.88

 

4.25

 

101 Executive Boulevard (g)

 

2018

 

35,000

 

100.0

%

535

 

0.13

 

16.70

 

15.74

 

300 Executive Boulevard

 

1970

 

60,000

 

100.0

%

790

 

0.19

 

13.17

 

12.47

 

350 Executive Boulevard

 

1970

 

15,400

 

99.4

%

247

 

0.06

 

16.14

 

14.57

 

399 Executive Boulevard

 

1962

 

80,000

 

100.0

%

1,172

 

0.28

 

14.65

 

14.08

 

400 Executive Boulevard

 

1970

 

42,200

 

100.0

%

824

 

0.20

 

19.53

 

16.37

 

500 Executive Boulevard

 

1970

 

41,600

 

100.0

%

756

 

0.18

 

18.17

 

16.39

 

525 Executive Boulevard

 

1972

 

61,700

 

97.9

%

1,133

 

0.27

 

18.76

 

17.09

 

1 Westchester Plaza

 

1967

 

25,000

 

100.0

%

419

 

0.10

 

16.76

 

16.40

 

2 Westchester Plaza

 

1968

 

25,000

 

96.1

%

391

 

0.09

 

16.28

 

12.78

 

3 Westchester Plaza

 

1969

 

93,500

 

100.0

%

1,614

 

0.38

 

17.26

 

15.14

 

4 Westchester Plaza

 

1969

 

44,700

 

100.0

%

696

 

0.16

 

15.57

 

13.29

 

5 Westchester Plaza

 

1969

 

20,000

 

90.4

%

322

 

0.08

 

17.80

 

14.32

 

6 Westchester Plaza

 

1968

 

20,000

 

100.0

%

314

 

0.07

 

15.70

 

14.10

 

7 Westchester Plaza

 

1972

 

46,200

 

100.0

%

806

 

0.19

 

17.45

 

15.45

 

8 Westchester Plaza

 

1971

 

67,200

 

96.6

%

1,200

 

0.29

 

18.48

 

15.35

 

Hawthorne

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

200 Saw Mill River Road

 

1965

 

51,100

 

100.0

%

775

 

0.18

 

15.17

 

13.62

 

4 Skyline Drive

 

1987

 

80,600

 

95.4

%

1,332

 

0.32

 

17.32

 

14.81

 

5 Skyline Drive

 

1980

 

124,022

 

97.9

%

1,826

 

0.43

 

15.04

 

11.09

 

6 Skyline Drive

 

1980

 

44,155

 

100.0

%

797

 

0.19

 

18.05

 

14.56

 

8 Skyline Drive

 

1985

 

50,000

 

48.1

%

183

 

0.04

 

7.61

 

6.36

 

10 Skyline Drive

 

1985

 

20,000

 

68.5

%

331

 

0.08

 

24.16

 

22.48

 

11 Skyline Drive (f)

 

1989

 

45,000

 

100.0

%

1,001

 

0.24

 

22.24

 

21.42

 

12 Skyline Drive (f)

 

1999

 

46,850

 

70.1

%

623

 

0.15

 

18.96

 

17.29

 

15 Skyline Drive (f)

 

1989

 

55,000

 

86.6

%

881

 

0.21

 

18.49

 

16.35

 

Yonkers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Corporate Boulevard

 

1987

 

78,000

 

98.3

%

1,956

 

0.46

 

25.51

 

24.37

 

200 Corporate Boulevard South

 

1990

 

84,000

 

86.0

%

1,572

 

0.37

 

21.76

 

18.88

 

4 Executive Plaza

 

1986

 

80,000

 

93.9

%

1,744

 

0.41

 

23.22

 

21.48

 

6 Executive Plaza

 

1987

 

80,000

 

100.0

%

1,861

 

0.44

 

23.26

 

21.54

 

1 Odell Plaza

 

1980

 

106,000

 

94.3

%

1,660

 

0.40

 

16.60

 

14.78

 

3 Odell Plaza

 

1984

 

71,065

 

100.0

%

2,198

 

0.52

 

30.93

 

28.66

 

5 Odell Plaza

 

1983

 

38,400

 

99.6

%

641

 

0.15

 

16.75

 

15.42

 

7 Odell Plaza

 

1984

 

42,600

 

100.0

%

756

 

0.18

 

17.75

 

15.40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total New York Office/Flex

 

 

 

2,383,812

 

94.3

%

39,123

 

9.27

 

17.43

 

15.52

 

Office/Flex Properties (continued)

and Retail Properties, and Land Leases

 

 

 

 

 

 

Percentage

 

2018

 

 

 

2018

 

2018

 

 

 

 

 

Net

 

Leased

 

Base

 

 

 

Average

 

Average

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Percentage

 

Base Rent

 

Effective Rent

 

 

 

Year

 

Area

 

12/31/18

 

($000’s)

 

of Total 2018

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

Base Rent (%)

 

($) (c) (d)

 

($) (c) (e)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONNECTICUT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FAIRFIELD COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stamford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

419 West Avenue

 

1986

 

88,000

 

100.0

%

1,669

 

0.40

 

18.97

 

17.34

 

500 West Avenue

 

1988

 

25,000

 

100.0

%

494

 

0.12

 

19.76

 

15.84

 

550 West Avenue

 

1990

 

54,000

 

13.0

%

61

 

0.01

 

8.71

 

8.71

 

600 West Avenue

 

1999

 

66,000

 

100.0

%

1,012

 

0.24

 

15.33

 

13.95

 

650 West Avenue

 

1998

 

40,000

 

100.0

%

725

 

0.17

 

18.13

 

12.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Connecticut Office/Flex

 

 

 

273,000

 

82.8

%

3,961

 

0.94

 

17.53

 

15.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL OFFICE/FLEX PROPERTIES

 

 

 

2,656,812

 

93.1

%

43,084

 

10.21

 

17.44

 

15.47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW JERSEY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HUDSON COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weehawken

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Avenue at Port Imperial

 

2016

 

8,400

 

100.0

%

299

 

0.07

 

35.60

 

34.29

 

500 Avenue at Port Imperial

 

2013

 

16,736

 

98.2

%

438

 

0.10

 

26.66

 

23.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total New Jersey Retail Properties

 

 

 

25,136

 

98.8

%

737

 

0.17

 

29.68

 

27.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW YORK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WESTCHESTER COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tarrytown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

230 White Plains Road (h)

 

1984

 

9,300

 

100.0

%

335

 

0.08

 

36.02

 

33.66

 

Yonkers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2 Executive Boulevard

 

1986

 

8,000

 

100.0

%

305

 

0.07

 

38.13

 

37.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total New York Retail Properties

 

 

 

17,300

 

100.0

%(l)

640

 

0.15

 

36.99

 

35.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Retail Properties

 

 

 

42,436

 

99.3

%

1,377

 

0.32

 

32.68

 

30.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW JERSEY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MORRIS COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hanover

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wegmans Land Lease

 

 

 

 

1,786

 

0.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Land Leases

 

 

 

 

 

1,786

 

0.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL COMMERCIAL PROPERTIES

 

 

 

14,844,025

 

83.2

%(l)

342,005

 

81.02

 

27.76

 

23.85

 

Multi-Family Properties

 

 

 

 

Net

 

 

 

Percentage

 

2018

 

Percentage

 

2018

 

 

 

 

 

Rentable

 

 

 

Leased

 

Base

 

of Total

 

Average

 

 

 

 

 

Commercial

 

 

 

as of

 

Rent

 

2018

 

Base Rent

 

 

 

Year

 

Area

 

Number

 

12/31/18

 

($000’s)

 

Base Rent

 

Per Home

 

 

 

Built

 

(Sq. Ft.)

 

of Units

 

(%) (a)

 

(b) (c)

 

(%)

 

($) (c) (j)

 

NEW JERSEY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HUDSON COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jersey City

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RoseGarden Monaco North

 

2011

 

 

243

 

93.0

 

9,739

 

2.31

 

3,591

 

RoseGarden Monaco South

 

2011

 

 

280

 

94.6

 

10,436

 

2.47

 

3,282

 

Marbella I (g)

 

2003

 

 

412

 

94.2

 

6,008

 

1.42

 

3,099

 

Riverhouse 11 at Port Imperial (g)

 

2018

 

 

295

 

97.6

 

2,110

 

0.50

 

1,456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MIDDLESEX COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Brunswick

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Richmond Court

 

1997

 

 

82

 

96.6

 

1,597

 

0.38

 

1,685

 

Riverwatch Commons

 

1995

 

 

118

 

96.6

 

2,255

 

0.54

 

1,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MORRIS COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Morris Plains

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Place (g)

 

2018

 

 

197

 

94.9

 

1,828

 

0.43

 

1,081

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNION COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rahway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Park Square (i)

 

2011

 

5,934

 

159

 

95.6

 

3,638

 

0.86

 

1,995

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total New Jersey Multi-Family

 

 

 

5,934

 

1,786

 

95.1

 

37,611

 

8.91

 

2,430

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW YORK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WESTCHESTER COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eastchester

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarry Place at Tuckahoe

 

2016

 

3,275

 

108

 

95.4

 

3,609

 

0.86

 

2,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total New York Multi-Family

 

 

 

3,275

 

108

 

95.4

 

3,609

 

0.86

 

2,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MASSACHUSETTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MIDDLESEX COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Malden

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Chase at Overlook Ridge

 

2014

 

 

664

 

97.1

 

14,595

 

3.46

 

1,886

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUFFOLK COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Boston

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portside at Pier One

 

2014

 

3,690

 

175

 

97.2

 

5,421

 

1.28

 

2,657

 

Portside 5/6 (g)

 

2018

 

 

296

 

91.6

 

2,530

 

0.60

 

1,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revere

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alterra at Overlook Ridge IA

 

2004

 

 

310

 

95.2

 

6,293

 

1.49

 

1,778

 

Alterra at Overlook Ridge IB

 

2008

 

 

412

 

95.9

 

8,472

 

2.01

 

1,787

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WORCESTER COUNTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Worcester

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

145 Front at City Square (g)

 

2018

 

 

237

 

74.7

 

1,562

 

0.37

 

877

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Massachusetts Multi-Family

 

 

 

3,690

 

2,094

 

93.3

 

38,873

 

9.21

 

1,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Multi-Family Properties

 

 

 

12,899

 

3,988

 

94.2

 

80,093

 

18.98

 

1,997

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL PROPERTIES

 

 

 

14,856,924

 

3,988

 

N/A

 

422,098

(k)

100.00

 

 

 




         
Office Properties        
(Continued)        
         
   Percentage2015  20152015
  NetLeasedBase  AverageAverage
  Rentableas ofRentPercentage Base RentEffective Rent
 YearArea12/31/15($000’s)of Total 2015 Per Sq. Ft.Per Sq. Ft.
Property LocationBuilt(Sq. Ft.)(%) (a) (b) (c)Base Rent (%) ($) (c) (d)($) (c) (e)
         
MERCER COUNTY        
Hamilton Township        
3 AAA Drive198135,27083.06110.13 20.8716.36
600 Horizon Drive200295,000100.01,1910.25 12.5411.53
700 Horizon Drive2007120,000100.02,5290.53 21.0818.73
2 South Gold Drive197433,96272.05750.12 23.5120.37
         
Princeton        
103 Carnegie Center198496,00090.32,1830.46 25.1820.80
2 Independence Way198167,4010.03330.07 0.000.00
3 Independence Way1983111,300100.02,2780.48 20.4714.84
100 Overlook Center1988149,60089.63,8040.79 28.3825.37
5 Vaughn Drive198798,50091.92,6190.55 28.9325.22
         
MIDDLESEX COUNTY        
East Brunswick        
377 Summerhill Road197740,000100.03720.08 9.308.98
Edison        
333 Thornall Street (g) (h)1984196,12895.67330.15 28.5425.27
343 Thornall Street (c)1991195,709100.04,0020.84 20.4517.06
Plainsboro        
500 College Road East (f)1984158,23555.82,0190.42 22.8719.60
Woodbridge        
581 Main Street1991200,00099.35,1691.08 26.0322.07
         
MONMOUTH COUNTY        
Freehold        
2 Paragon Way198944,52462.65380.11 19.3016.43
3 Paragon Way199166,89889.21,1810.25 19.7917.13
4 Paragon Way200263,98991.76790.14 11.5710.52
100 Willow Brook Road198860,55755.08300.17 24.9222.88
Holmdel        
23 Main Street1977350,000100.04,1780.87 11.949.11
Middletown        
One River Centre Bldg 11983122,59497.63,0300.63 25.3221.03
One River Centre Bldg 21983120,36097.52,8810.60 24.5520.39
One River Centre Bldg 3 and 41984214,51888.74,5510.95 23.9221.57
Neptune        
3600 Route 661989180,000100.04,1650.87 23.1417.97
Wall Township        
1305 Campus Parkway198823,35092.45030.10 23.3118.26
1350 Campus Parkway199079,74799.99200.19 11.5510.97
         
MORRIS COUNTY        
Florham Park        
325 Columbia Turnpike1987168,144100.03,9160.82 23.2919.66
Morris Plains        
201 Littleton Road197988,36975.41,2540.26 18.8214.80
Parsippany        
4 Campus Drive1983147,47578.82,1360.45 18.3814.30
6 Campus Drive1983148,29179.42,5880.54 21.9818.68
7 Campus Drive1982154,39586.32,8890.60 21.6818.04
8 Campus Drive1987215,26569.53,7990.79 25.3922.20
9 Campus Drive1983156,49587.19620.20 7.066.05
4 Century Drive1981100,03652.31,0600.22 20.2617.28
5 Century Drive198179,73959.71,0090.21 21.2018.36
6 Century Drive1981100,03650.58370.17 16.5714.71
2 Dryden Way19906,216100.0990.02 15.9314.64
4 Gatehall Drive1988248,48093.05,3021.11 22.9419.92

22



         
Office Properties        
(Continued)        
         
   Percentage2015  20152015
  NetLeasedBase  AverageAverage
  Rentableas ofRentPercentage Base RentEffective Rent
 YearArea12/31/15($000’s)of Total 2015 Per Sq. Ft.Per Sq. Ft.
Property LocationBuilt(Sq. Ft.)(%) (a) (b) (c)Base Rent (%) ($) (c) (d)($) (c) (e)
         
2 Hilton Court1991181,592100.06,5251.36 35.9332.84
600 Parsippany Road197896,00095.51,7170.36 18.7315.59
1 Sylvan Way1989150,55797.74,1780.87 28.4022.90
5 Sylvan Way1989151,38385.82,9920.62 23.0420.25
7 Sylvan Way1987145,9830.0100.00 0.000.00
20 Waterview Boulevard1988225,55095.04,7340.99 22.0919.97
35 Waterview Boulevard1990172,49895.74,0620.85 24.6122.23
5 Wood Hollow Road1979317,04098.64,1020.86 13.1210.21
         
PASSAIC COUNTY        
Totowa        
999 Riverview Drive198856,06686.48850.18 18.2714.66
         
SOMERSET COUNTY        
Basking Ridge        
222 Mount Airy Road198649,00082.28100.17 20.1115.99
233 Mount Airy Road198766,00067.59030.19 20.2716.59
Bridgewater        
440 Route 22 East1990198,37691.14,6620.97 25.8021.64
721 Route 202/2061989192,74197.54,5960.96 24.4621.63
         
UNION COUNTY        
Clark        
100 Walnut Avenue1985182,55594.14,3610.91 25.3922.38
Cranford        
6 Commerce Drive197356,00088.71,0950.23 22.0418.62
11 Commerce Drive198190,00067.01,5770.33 26.1522.75
12 Commerce Drive196772,26084.79290.19 15.1813.17
14 Commerce Drive197167,189100.01,2950.27 19.2716.40
20 Commerce Drive1990176,600100.04,1230.86 23.3519.99
25 Commerce Drive197167,74977.21,1790.25 22.5419.62
65 Jackson Drive198482,77834.28470.18 29.9223.49
New Providence        
890 Mountain Avenue197780,00049.61,2070.25 30.4227.95
         
Total New Jersey Office 16,035,08485.0323,07667.41 24.0520.75
         
NEW YORK        
         
NEW YORK COUNTY        
New York        
125 Broad Street1970524,476100.017,7453.70 33.8328.13
         
WESTCHESTER COUNTY        
Elmsford        
100 Clearbrook Road (c)197560,00091.71,0480.22 19.0517.34
Hawthorne        
1 Skyline Drive198020,40099.04230.09 20.9419.86
2 Skyline Drive198730,000100.05420.11 18.0713.73


23



         
Office Properties        
(Continued)        
         
   Percentage2015  20152015
  NetLeasedBase  AverageAverage
  Rentableas ofRentPercentage Base RentEffective Rent
 YearArea12/31/15($000’s)of Total 2015 Per Sq. Ft.Per Sq. Ft.
Property LocationBuilt(Sq. Ft.)(%) (a) (b) (c)Base Rent (%) ($) (c) (d)($) (c) (e)
         
7 Skyline Drive1987109,00085.92,1210.44 22.6519.32
17 Skyline Drive (f)198985,000100.01,9320.40 22.7322.28
White Plains        
1 Barker Avenue197568,00087.31,4830.31 24.9822.29
3 Barker Avenue198365,30093.91,3770.29 22.4619.68
50 Main Street1985309,00086.47,5931.58 28.4423.81
11 Martine Avenue1987180,00070.74,1170.86 32.3528.37
1 Water Street197945,70057.67480.16 28.4224.88
Yonkers        
1 Executive Boulevard1982112,000100.02,7640.58 24.6822.27
3 Executive Boulevard198758,000100.01,7190.36 29.6427.71
         
Total New York Office 1,666,87691.243,6129.10 28.7024.66
         
DISTRICT OF COLUMBIA        
         
WASHINGTON        
1201 Connecticut Avenue, NW1940169,54992.66,7361.41 42.9037.74
1400 L Street, NW1987159,000100.06,2381.30 39.2335.16
         
Total District of Columbia Office 328,54996.212,9742.71 41.0636.44
         
MARYLAND        
 ��       
PRINCE GEORGE'S COUNTY        
Greenbelt        
9200 Edmonston Road197338,690100.01,0570.22 27.3226.78
6301 Ivy Lane1979112,00368.81,6460.34 21.3619.31
6303 Ivy Lane1980112,04717.74150.09 20.9318.66
6305 Ivy Lane1982112,02282.21,9120.40 20.7618.31
6404 Ivy Lane1987165,23468.82,5610.54 22.5318.75
6406 Ivy Lane1991163,85777.02,9950.62 23.7419.05
6411 Ivy Lane1984138,40574.72,3110.48 22.3519.36
Lanham        
4200 Parliament Place1989122,00031.81,7680.37 45.5743.51
         
Total Maryland Office 964,25863.214,6653.06 24.0521.00
         
TOTAL OFFICE PROPERTIES 18,994,76784.6394,32782.28 24.8221.44



24



         
Office/Flex Properties        
         
   Percentage2015  20152015
  NetLeasedBase  AverageAverage
  Rentableas ofRentPercentage Base RentEffective Rent
 YearArea12/31/15($000’s)of Total 2015 Per Sq. Ft.Per Sq. Ft.
Property LocationBuilt(Sq. Ft.)(%) (a) (b) (c)Base Rent (%) ($) (c) (d)($) (c) (e)
         
NEW JERSEY        
         
BURLINGTON COUNTY        
Burlington        
3 Terri Lane199164,50093.25680.12 9.458.27
5 Terri Lane199274,555100.06210.13 8.336.72
Moorestown        
2 Commerce Drive198649,00074.12320.05 6.395.45
101 Commerce Drive198864,700100.02750.06 4.253.85
102 Commerce Drive198738,400100.02690.06 7.015.57
201 Commerce Drive198638,40045.81030.02 5.864.09
202 Commerce Drive198851,20083.61360.03 3.182.94
1 Executive Drive198920,570100.02080.04 10.117.29
2 Executive Drive198860,80081.93820.08 7.675.80
101 Executive Drive199029,35599.73000.06 10.259.36
102 Executive Drive199064,000100.04740.10 7.417.30
225 Executive Drive199050,60064.61490.03 4.563.70
97 Foster Road198243,20083.31480.03 4.113.31
1507 Lancer Drive199532,700100.01460.03 4.463.43
1245 North Church Street199852,81083.32210.05 5.024.27
1247 North Church Street199852,79093.82300.05 4.643.70
1256 North Church Street198463,495100.04770.10 7.516.58
840 North Lenola Road199538,30047.01450.03 8.067.39
844 North Lenola Road199528,670100.02060.04 7.195.93
915 North Lenola Road199852,488100.02910.06 5.545.01
2 Twosome Drive200048,600100.04110.09 8.467.57
30 Twosome Drive199739,67599.02600.05 6.625.12
31 Twosome Drive199884,200100.04230.09 5.024.50
40 Twosome Drive199640,265100.03170.07 7.876.93
41 Twosome Drive199843,05088.92730.06 7.135.77
50 Twosome Drive199734,07556.01220.02 6.395.87
         
MERCER COUNTY        
Hamilton Township        
100 Horizon Center Boulevard198913,275100.01510.03 11.376.78
200 Horizon Drive199145,77092.97060.15 16.6014.84
300 Horizon Drive198969,78074.25740.12 11.098.92
500 Horizon Drive199041,20593.85770.12 14.9313.01
         
MONMOUTH COUNTY        
Wall Township        
1325 Campus Parkway198835,000100.06120.13 17.4914.20
1340 Campus Parkway199272,50268.88980.19 18.0015.50
1345 Campus Parkway199576,30087.69490.20 14.2011.48
1433 Highway 34198569,02098.17020.15 10.377.61
1320 Wyckoff Avenue198620,336100.02280.05 11.218.65
1324 Wyckoff Avenue198721,16892.71850.04 9.436.78
         
PASSAIC COUNTY        
Totowa        
1 Center Court199938,961100.05710.12 14.6612.55
2 Center Court199830,600100.03890.08 12.716.11
11 Commerce Way198947,025100.05520.11 11.748.68
20 Commerce Way199242,54095.54770.10 11.7410.98
         



25



         
Office/Flex Properties        
(Continued)        
         
   Percentage2015  20152015
  NetLeasedBase  AverageAverage
  Rentableas ofRentPercentage Base RentEffective Rent
 YearArea12/31/15($000’s)of Total 2015 Per Sq. Ft.Per Sq. Ft.
Property LocationBuilt(Sq. Ft.)(%) (a) (b) (c)Base Rent (%) ($) (c) (d)($) (c) (e)
         
29 Commerce Way199048,930100.05840.12 11.949.83
40 Commerce Way198750,57686.35590.12 12.819.10
45 Commerce Way199251,207100.05750.12 11.239.92
60 Commerce Way198850,33344.13590.06 16.1711.89
80 Commerce Way199622,500100.02640.05 11.739.73
100 Commerce Way199624,60088.62880.06 13.2110.97
120 Commerce Way19949,024100.01060.02 11.7510.42
140 Commerce Way199426,88199.53170.07 11.8510.54
         
Total New Jersey Office/Flex 2,167,93189.218,0103.76 9.317.69
         
NEW YORK        
         
WESTCHESTER COUNTY        
Elmsford        
11 Clearbrook Road197431,800100.04070.08 12.809.94
75 Clearbrook Road199032,720100.02050.04 6.275.44
125 Clearbrook Road200233,000100.05760.12 17.4511.33
150 Clearbrook Road197574,900100.09960.21 13.3011.71
175 Clearbrook Road197398,90096.71,5750.33 16.4714.90
200 Clearbrook Road197494,00093.51,2480.26 14.2012.72
250 Clearbrook Road1973155,00096.81,2650.26 8.437.08
50 Executive Boulevard196945,20062.82740.06 9.658.10
77 Executive Boulevard197713,000100.02490.05 19.1517.77
85 Executive Boulevard196831,00050.02170.04 14.0010.39
300 Executive Boulevard197060,000100.07290.15 12.1511.18
350 Executive Boulevard197015,40099.42300.05 15.0312.80
399 Executive Boulevard196280,000100.01,0630.22 13.2912.71
400 Executive Boulevard197042,20063.15280.11 19.8315.74
500 Executive Boulevard197041,600100.07650.16 18.3916.73
525 Executive Boulevard197261,700100.01,0490.22 17.0015.46
1 Westchester Plaza196725,000100.03520.07 14.0811.16
2 Westchester Plaza196825,000100.03970.08 15.8812.48
3 Westchester Plaza196993,50085.18520.18 10.718.32
4 Westchester Plaza196944,700100.07050.15 15.7712.68
5 Westchester Plaza196920,000100.03080.06 15.4012.65
6 Westchester Plaza196820,000100.02870.06 14.3510.80
7 Westchester Plaza197246,200100.07200.15 15.5814.85
8 Westchester Plaza197167,20099.71,2250.26 18.2815.30
Hawthorne        
200 Saw Mill River Road196551,100100.07260.15 14.2113.03
4 Skyline Drive198780,60093.01,2800.27 17.0813.70
5 Skyline Drive1980124,02299.81,8510.39 14.9513.12
6 Skyline Drive198044,155100.05300.11 12.007.93
8 Skyline Drive198550,00048.16670.14 27.7323.49
10 Skyline Drive198520,000100.03920.08 19.6015.75
11 Skyline Drive (f)198945,000100.09970.21 22.1621.47
12 Skyline Drive (f)199946,85085.15880.12 14.7513.19
15 Skyline Drive (f)198955,00086.63640.08 7.647.01
Yonkers        
100 Corporate Boulevard198778,00098.31,5720.33 20.5019.24
200 Corporate Boulevard South199084,00058.29310.19 19.0415.67
4 Executive Plaza198680,000100.01,5230.32 19.0416.49
6 Executive Plaza198780,00095.81,6800.35 21.9219.96
1 Odell Plaza1980106,000100.01,7250.36 16.2714.83
3 Odell Plaza198471,065100.01,5960.33 22.4620.83


26



         
Office/Flex Properties (continued)
 
and Industrial/Warehouse, Retail Properties, and Land Leases      
         
   Percentage2015  20152015
  NetLeasedBase  AverageAverage
  Rentableas ofRentPercentage Base RentEffective Rent
 YearArea12/31/15($000’s)of Total 2015 Per Sq. Ft.Per Sq. Ft.
Property LocationBuilt(Sq. Ft.)(%) (a) (b) (c)Base Rent (%) ($) (c) (d)($) (c) (e)
         
5 Odell Plaza198338,40099.66500.14 17.0015.45
7 Odell Plaza198442,600100.06990.15 16.4113.97
         
Total New York Office/Flex 2,348,81293.133,9937.09 15.5513.55
         
CONNECTICUT        
         
FAIRFIELD COUNTY        
Stamford        
419 West Avenue198688,000100.01,5500.32 17.6114.98
500 West Avenue198825,000100.04820.10 19.2816.00
550 West Avenue199054,00081.37940.17 18.0916.86
600 West Avenue199966,000100.06700.14 10.159.55
650 West Avenue199840,000100.06000.13 15.0011.75
         
Total Connecticut Office/Flex 273,00096.34,0960.86 15.5813.53
         
         
TOTAL OFFICE/FLEX PROPERTIES 4,789,74391.556,09911.71 12.8010.96
         
NEW YORK        
         
WESTCHESTER COUNTY        
Elmsford        
1 Warehouse Lane (f)19576,600100.01070.02 16.2115.00
2 Warehouse Lane (f)195710,900100.01600.03 14.6813.76
3 Warehouse Lane (f)195777,200100.03990.08 5.174.96
4 Warehouse Lane (f)1957195,50097.02,2360.47 11.7910.50
5 Warehouse Lane (f)195775,10097.19620.20 13.1911.93
6 Warehouse Lane (f)198222,100100.05550.12 25.1124.43
         
Total Industrial/Warehouse Properties 387,40097.94,4190.92 11.6510.63
         
NEW JERSEY        
         
HUDSON COUNTY        
Weehawken        
500 Avenue at Port Imperial201316,73661.200.00 0.000.00
         
Total New Jersey Retail Properties 16,73661.200.00 0.000.00
         
NEW YORK        
         
WESTCHESTER COUNTY        
Tarrytown        
230 White Plains Road19849,300100.0670.01 7.206.99
Yonkers        
2 Executive Boulevard19868,000100.03050.07 38.1337.88
         
Total New York Retail Properties 17,300100.03720.08 21.5021.27
         
Total Retail Properties 34,03680.93720.08 13.5113.36
         
NEW YORK        
         
WESTCHESTER COUNTY        
Elmsford        
700 Executive Boulevard - - -1600.03  ---


27



         
Land Leases        
(continued)        
         
   Percentage2015  20152015
  NetLeasedBase  AverageAverage
  Rentableas ofRentPercentage Base RentEffective Rent
 YearArea12/31/15($000’s)of Total 2015 Per Sq. Ft.Per Sq. Ft.
Property LocationBuilt(Sq. Ft.)(%) (a) (b) (c)Base Rent (%) ($) (c) (d)($) (c) (e)
         
Yonkers        
1 Enterprise Boulevard - - -1970.04  - -
         
Total New York Land Leases  - -3570.07  - -
         
MARYLAND��       
         
PRINCE GEORGE'S COUNTY        
Greenbelt        
Capital Office Park Parcel A - - -1530.03  - -
         
Total Maryland Land Leases  - -1530.03  - -
         
Total Land Leases  - -5100.10  - -
         
TOTAL COMMERCIAL PROPERTIES 24,205,94686.2455,72795.09 22.0719.06
         
Multi-Family Properties        
         
         
  Net Percentage2015 Percentage2015
  Rentable LeasedBase of TotalAverage
  Commercial as ofRent 2015Base Rent
 YearAreaNumber12/31/15($000’s) Base RentPer Home
 Built(Sq. Ft.)of Units(%) (a) (b) (c)  (%)($) (c) (i)
         
NEW JERSEY        
         
MIDDLESEX COUNTY        
New Brunswick        
Richmond Court1997 -8295.11,444 0.301,543
Riverwatch Commons1995 -11893.22,080 0.431,576
         
UNION COUNTY        
Rahway        
Park Square2011 5,934 15995.03,679 0.772,030
         
Total New Jersey Multi-Family  5,934 35994.47,203 1.501,771
         
MASSACHUSETTS        
         
ESSEX COUNTY        
Andover        
Andover Place1988 -22099.13,396 0.711,298
         
SUFFOLK COUNTY        
Revere        
Alterra at Overlook Ridge IA2004 -31095.85,511 1.151,546
Alterra at Overlook Ridge IB2008 -41297.17,439 1.551,550
         
Total Massachusetts Multi-Family  -94297.116,346 3.411,489
         
Total Multi-Family Properties 5,9341,30196.423,549 4.911,565
         
TOTAL PROPERTIES 24,211,8801,301 479,276(j)100.00 


28


Footnotes to Property List (dollars in thousands, except per square foot amounts):



(a)

(a)

Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future and leases expiring December 31, 20152018 aggregating 69,52210,108 square feet (representing 0.30.1 percent of the Company’s total net rentable square footage) for which no new leases were signed.

(b)

Total base rent for the 12 monthsyear ended December 31, 2015,2018, determined in accordance with generally accepted accounting principles (“GAAP”). Substantially all of the commercial 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. For the 12 months ended December 31, 2015,2018, total escalations and recoveries from tenants were: $49,480,$36,153, or $3.11$4.48 per leased square foot, for office properties; $10,213,and $1,142, or $2.33$0.46 per leased square foot, for office/flex properties; and $1,769, or $4.30 per leased square foot, for other properties.

(c)

Excludes space leased by the Company.

(d)

Base rent for the 12 months ended December 31, 20152018 divided by net rentable commercial square feet leased at December 31, 2015.2018.

(e)

Total base rent, determined in accordance with GAAP, for 20152018 minus 20152018 amortization of tenant improvements, leasing commissions and other concessions and costs, determined in accordance with GAAP, divided by net rentable square feet leased at December 31, 2015.2018.

(f)

This property is located on land leased by the Company.

(g)

As this property was acquired, commenced initial operations or initially consolidated by the Company during the 12 months ended December 31, 2015,2018, the amounts represented in 20152018 base rent reflect only that portion of those 12 months during which the Company owned or consolidated the property. Accordingly, these amounts may not be indicative of the property’s full year results. For comparison purposes, the amounts represented in 20152018 average base rent per sq. ft. and per unit for this property have been calculated by taking the 12 months ended December 31, 20152018 base rent for such property and annualizing these partial-year results, dividing such annualized amounts by the net rentable square feet leased or occupied units at December 31, 2015.2018. These annualized per square foot and per unit amounts may not be indicative of the property’s results had the Company owned or consolidated the property for the entirety of the 12 months ended December 31, 2015.2018.

(h)

Acquired on November 12, 2015. Amounts reflect period of ownership.

Property being considered for repositioning, redevelopment or potential disposition.

(i)

This property was disposed of by the Company in January 2019.

(j)

Annualized base rent for the 12 months ended December 31, 20152018 divided by units occupied at December 31, 2015,2018, divided by 12.

(j)

(k)

Excludes $7.8approximately $14.1 million from properties which were solddisposed of or removed from service during the year ended December 31, 2015.2018.

(l)

Excludes properties being considered for repositioning, redevelopment, potential sale, or being prepared for lease up.


PERCENTAGE LEASED


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


  
 Percentage of
December 31,Square Feet Leased (%) (a)
201586.2
  
201484.2
  
201386.1
  
201287.2
  
201188.3
  
(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.  Excludes properties being prepared for lease up.

29

 

 

Percentage of

 

December 31,

 

Square Feet Leased (%) (a)

 

2018

 

83.2

(b)

2017

 

87.6

(b)

2016

 

90.6

(b)

2015

 

86.2

 

2014

 

84.2

 



(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.  For all years, excludes properties being prepared for lease up.

(b)         Excludes properties being considered for repositioning, redevelopment or potential sale.  Inclusive of such properties, percentage of square feet leased as of December 31, 2018, 2017 and 2016 was 81.7, 85.6 and 89.6 percent, respectively.

SIGNIFICANT TENANTS


The following table sets forth a schedule of the Company’s 50 largest commercial tenants for the Consolidated Properties as of December 31, 20152018 based upon annualized base rental revenue:


       
   Percentage of   
  AnnualizedCompanySquarePercentageYear of
 Number ofBase RentalAnnualized BaseFeetTotal CompanyLease
 PropertiesRevenue ($) (a)Rental Revenue (%)LeasedLeased Sq. Ft. (%)Expiration
       
DB Services New Jersey, Inc.212,335,2162.5409,1662.02017
National Union Fire Insurance      
  Company of Pittsburgh, PA211,191,0572.3388,6511.9(b)
Bank Of Tokyo-Mitsubishi FUJI, Ltd.110,540,7162.1282,6061.4(c)
United States of America-GSA129,357,7071.9287,1691.4(d)
Forest Research Institute, Inc.19,070,8921.8215,6591.12017
ICAP Securities USA, LLC27,608,7021.5180,9460.9(e)
Montefiore Medical Center77,432,8281.5314,0491.5(f)
KPMG, LLP36,483,4111.3224,3641.1(g)
Daiichi Sankyo, Inc.16,381,9821.3171,9000.82022
TD Ameritrade Online Holdings16,223,3231.3188,7760.92020
Merrill Lynch Pierce Fenner26,173,8161.2303,5451.5(h)
CohnReznick, LLP34,983,6811.0170,1410.8(i)
New Cingular Wireless PCS, LLC24,841,5641.0212,8161.0(j)
HQ Global Workplaces, LLC154,691,8730.9244,1201.2(k)
Vonage America, Inc.14,515,0000.9350,0001.72023
Arch Insurance Company14,005,5630.8106,8150.52024
AECOM Technology Corporation13,707,7520.791,4140.42029
Brown Brothers Harriman & Co.13,673,5360.7114,7980.62026
Morgan Stanley Smith Barney33,665,9650.7129,8960.6(l)
UBS Financial Services, Inc.33,606,7590.7127,4290.6(m)
Allstate Insurance Company53,250,9620.7135,8160.7(n)
SunAmerica Asset Management, LLC13,167,7560.669,6210.32018
Alpharma, LLC13,142,5800.6112,2350.62018
Tullett Prebon Holdings Corp.13,127,9700.6100,7590.52023
TierPoint New York, LLC23,014,1500.6131,0780.62024
E*Trade Financial Corporation12,930,7570.6106,5730.52022
Natixis North America, Inc.12,823,5690.689,9070.42021
AAA Mid-Atlantic, Inc.22,779,8290.6129,7840.6(o)
SUEZ Water Management & Services Inc.12,727,3830.6121,2170.6(p)
Plymouth Rock Management Company      
  of New Jersey22,725,8110.6106,6180.52020
Tradeweb Markets, LLC12,721,0700.665,2420.32027
New Jersey Turnpike Authority12,605,7980.5100,2230.52017
Continental Casualty Company22,596,5840.594,2240.5(q)
Lowenstein Sandler LLP12,565,6020.598,6770.52017
Connell Foley, LLP22,475,3140.595,1300.5(r)
Bunge Management Services, Inc.12,372,3870.591,5090.4(s)
Movado Group, Inc.12,359,8240.598,3260.52018
Bozzuto & Associates, Inc.12,359,5420.5104,6360.52025
Herzfeld & Rubin, P.C.12,337,3630.556,3220.32030
AMTrust Financial Services, Inc.12,306,7600.576,8920.42023
Savvis Communications Corporation12,287,1680.571,4740.42025
Norris, McLaughlin & Marcus, PA12,259,7380.586,9130.42017
Barr Laboratories, Inc.12,209,1070.489,5100.42016
Sumitomo Mitsui Banking Corp.22,170,1670.471,1530.32021
New Jersey City University12,084,6140.468,3480.32035
Sun Chemical Management, LLC12,034,7980.466,0650.32019
Syncsort, Inc.11,991,4390.473,7570.42018
Jeffries, LLC11,945,6530.462,7630.32023
American General Life Insurance Company11,854,9750.474,1990.42024
Bressler, Amery & Ross, P.C.11,766,8500.470,6740.32023
       
Totals 205,486,86341.57,233,90535.1 

 

 

 

 

 

 

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

 

MUFG Bank Ltd.

 

1

 

11,465,968

 

3.4

 

282,606

 

2.4

 

 

(b)

Merrill Lynch Pierce Fenner

 

3

 

10,974,626

 

3.2

 

430,926

 

3.7

 

 

(c)

John Wiley & Sons, Inc.

 

1

 

10,888,238

 

3.2

 

290,353

 

2.5

 

2033

 

Dun & Bradstreet Corporation

 

2

 

7,464,280

 

2.2

 

192,280

 

1.6

 

2023

 

Montefiore Medical Center

 

7

 

7,327,505

 

2.2

 

296,572

 

2.5

 

 

(d)

Daiichi Sankyo, Inc.

 

1

 

6,773,878

 

2.0

 

171,900

 

1.5

 

2022

 

TD Ameritrade Services Company, Inc.

 

1

 

6,762,294

 

2.0

 

193,873

 

1.6

 

2020

 

DB Services New Jersey, Inc.

 

1

 

6,453,195

 

1.9

 

125,916

 

1.1

 

2019

 

E*Trade Financial Corporation

 

1

 

5,290,600

 

1.6

 

132,265

 

1.1

 

2030

 

KPMG, LLP

 

2

 

5,181,897

 

1.5

 

120,947

 

1.0

 

 

(e)

Plymouth Rock Management Company of New Jersey

 

2

 

5,141,920

 

1.5

 

159,326

 

1.4

 

 

(f)

Vonage America, Inc.

 

1

 

4,732,000

 

1.4

 

350,000

 

3.0

 

2023

 

HQ Global Workplaces, LLC

 

7

 

4,566,054

 

1.3

 

152,441

 

1.3

 

 

(g)

Investors Bank

 

2

 

4,392,845

 

1.3

 

139,296

 

1.2

 

 

(h)

Pfizer, Inc.

 

1

 

4,306,008

 

1.3

 

113,316

 

1.0

 

2024

 

Sumitomo Mitsui Banking Corp.

 

1

 

4,156,989

 

1.2

 

111,105

 

0.9

 

2036

 

ICAP Securities USA, LLC

 

2

 

4,079,450

 

1.2

 

121,871

 

1.0

 

 

(i)

Arch Insurance Company

 

1

 

4,005,563

 

1.2

 

106,815

 

0.9

 

2024

 

Brown Brothers Harriman & Co.

 

1

 

3,673,536

 

1.1

 

114,798

 

1.0

 

2026

 

First Data Corporation

 

1

 

3,641,873

 

1.1

 

88,374

 

0.8

 

 

(j)

Natixis North America, Inc.

 

1

 

3,093,290

 

0.9

 

89,907

 

0.8

 

2021

 

Cardinia Real Estate LLC

 

1

 

3,051,241

 

0.9

 

79,771

 

0.7

 

2032

 

National Union Fire Insurance Company of Pittsburgh, PA

 

1

 

3,045,068

 

0.9

 

117,118

 

1.0

 

2019

 

TierPoint New York, LLC

 

2

 

3,038,971

 

0.9

 

131,078

 

1.1

 

2024

 

Zurich American Insurance Company

 

1

 

2,707,320

 

0.8

 

64,414

 

0.5

 

2032

 

Leo Pharma Inc.

 

1

 

2,694,297

 

0.8

 

78,479

 

0.7

 

2027

 

Hackensack Meridian Health, Inc.

 

1

 

2,518,203

 

0.7

 

69,841

 

0.6

 

2027

 

AMTrust Financial Services, Inc.

 

1

 

2,460,544

 

0.7

 

76,892

 

0.7

 

2023

 

Tradeweb Markets, LLC

 

1

 

2,283,470

 

0.7

 

65,242

 

0.6

 

2027

 

Wells Fargo Advisors, LLC

 

2

 

2,217,342

 

0.7

 

57,870

 

0.5

 

 

(k)

New Jersey City University

 

1

 

2,212,209

 

0.7

 

68,348

 

0.6

 

2035

 

Movado Group, Inc.

 

1

 

2,206,225

 

0.7

 

90,050

 

0.8

 

2030

 

Jeffries, LLC

 

1

 

2,133,942

 

0.6

 

62,763

 

0.5

 

2023

 

Torre Lazur Healthcare Group, Inc.

 

1

 

2,126,340

 

0.6

 

70,878

 

0.6

 

2030

 

The Prudential Insurance Company of America

 

1

 

2,086,629

 

0.6

 

60,482

 

0.5

 

2023

 

Trustees of Princeton Univ.

 

1

 

2,058,079

 

0.6

 

67,478

 

0.6

 

2027

 

B&G Foods, Inc.

 

1

 

1,927,693

 

0.6

 

66,934

 

0.6

 

2026

 

GBT US LLC

 

1

 

1,920,566

 

0.6

 

49,563

 

0.4

 

2026

 

PBF Holding Company, LLC

 

1

 

1,919,223

 

0.6

 

57,721

 

0.5

 

2022

 

Savvis Communications, LLC

 

1

 

1,858,324

 

0.5

 

71,474

 

0.6

 

2025

 

American General Life Insurance Company

 

1

 

1,854,975

 

0.5

 

74,199

 

0.6

 

2024

 

SunAmerica Asset Management, LLC

 

1

 

1,853,136

 

0.5

 

36,336

 

0.3

 

2023

 

Fujifilm Medical Systems U.S.A., Inc.

 

1

 

1,848,000

 

0.5

 

88,000

 

0.7

 

2019

 

UBS Financial Services, Inc.

 

3

 

1,842,643

 

0.5

 

53,987

 

0.5

 

 

(l)

Bressler, Amery & Ross, P.C.

 

1

 

1,766,850

 

0.5

 

70,674

 

0.6

 

2023

 

Sumitomo Mitsui Trust Bank (U.S.A.) Limited

 

1

 

1,711,454

 

0.5

 

38,134

 

0.3

 

2024

 

Budd Larner, P.C.

 

1

 

1,699,436

 

0.5

 

47,670

 

0.4

 

2024

 

Securitas Security Services

 

1

 

1,693,571

 

0.5

 

87,561

 

0.7

 

 

(m)

Gannett Satellite Information Network, Inc.

 

1

 

1,674,975

 

0.5

 

66,999

 

0.6

 

2024

 

Global Aerospace Inc.

 

1

 

1,556,457

 

0.5

 

47,891

 

0.4

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

 

 

186,339,192

 

54.9

 

5,802,734

 

49.5

 

 

 

See footnotes on subsequent page.

30



Significant Tenants Footnotes



(a)

(a)

Annualized base rental revenue is based on actual December 20152018 billings times 12. For leases whose rent commences after January 1, 2016,2019, 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)

271,533 square feet expire in 2018; 117,118 square feet expire in 2019.
(c) 20,649 square feet expire in 2018; 24,607

45,256 square feet expire in 2019; 237,350 square feet expire in 2029.

(d)

(c)

70,163

9,356 square feet expire in 2016; 147,6062019; 33,363 square feet expire in 2018; 28,1022021; 388,207 square feet expire in 2020; 21,5962027.

(d)

650 square feet expire in 2019; 295,922 square feet expire in 2032.

(e)

66,606 square feet expire in 2024; 54,341 square feet expire in 2026.

(f)

29,540 square feet expire in 2019; 129,786 square feet expire in 2031.

(g)

17,855 square feet expire in 2021; 38,930 square feet expire in 2023; 59,853 square feet expire in 2024; 20,395 square feet expire in 2026; 15,408 square feet expire in 2027.

(h)

82,936 square feet expire in 2026; 56,360 square feet expire in 2030.

(i)

63,372 square feet expire in 2023; 21,112 square feet expire in 2025; 37,387 square feet expire in 2033.

(j)

8,014 square feet expire in 2026; 80,360 square feet expire in 2029.

(k)

25,762 square feet expire in 2022; 19,70232,108 square feet expire in 2023.2024.

(e)

(l)

159,834 square feet expire in 2017; 21,112 square feet expire in 2025.
(f)26,535 square feet expire in 2016; 75,814 square feet expire in 2017; 36,385 square feet expire in 2018; 133,763 square feet expire in 2019; 8,600 square feet expire in 2020; 14,842 square feet expire in 2021; 9,610 square feet expire in 2022; 8,500 square feet expire in 2023.
(g)88,652 square feet expire in 2017; 81,371 square feet expire in 2019; 54,341 square feet expire in 2026.
(h)294,189 square feet expire in 2017; 9,356 square feet expire in 2019.
(i)15,085 square feet expire in 2017; 1,021 square feet expire in 2018; 154,035 square feet expire in 2020.
(j)65,751 square feet expire in 2016; 147,065 square feet expire in 2018.
(k)12,407 square feet expire in 2017; 41,549 square feet expire in 2019; 21,008 square feet expire in 2020; 32,579 square feet expire in 2021; 15,523 square feet expire in 2023; 105,646 square feet expire in 2024; 15,408 square feet expire in 2027.
(l)26,262 square feet expire in 2018; 61,239 square feet expire in 2025; 42,395 square feet expire in 2026.
(m)42,360 square feet expire in 2016; 13,340

27,274 square feet expire in 2022; 26,713 square feet expire in 2024; 45,0162024.

(m)

6,279 square feet expire in 2026.

(n)4,0142021; 81,282 square feet expire in 2016; 75,740 square feet expire in 2017; 51,606 square feet expire in 2018; 4,456 square feet expire in 2019.
(o)9,784 square feet expire in 2017; 120,000 square feet expire in 2027.
(p)4,857 square feet expire in 2016; 116,360 square feet expire in 2035.
(q)19,416 square feet expire in 2016; 74,808 square feet expire in 2031.
(r)77,719 square feet expire in 2016; 17,411 square feet expire in 2026.
(s)25,206 square feet expire in 2016; 66,303 square feet expire in 2025.





31


SCHEDULE OF LEASE EXPIRATIONS


The following table sets forth a schedule of lease expirations for the total of the Company’s office, office/flex, industrial/warehouse and stand-alone retail properties included in the Consolidated Commercial Properties beginning January 1, 2016,2019, assuming that none of the tenants exercise renewal or termination options:

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Base

 

 

 

 

 

 

 

 

 

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 (%)

 

2019

 

116

 

1,173,185

 

10.0

 

33,533,699

 

28.58

 

9.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

106

 

701,983

 

6.0

 

19,169,051

 

27.31

 

5.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

100

 

1,050,810

 

8.9

 

31,078,420

 

29.58

 

9.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

105

 

985,721

 

8.4

 

24,964,494

 

25.33

 

7.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

95

 

1,861,636

 

15.8

 

50,369,288

 

27.06

 

14.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2024

 

86

 

1,359,720

 

11.6

 

39,325,965

 

28.92

 

11.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2025

 

37

 

601,439

 

5.1

 

15,728,808

 

26.15

 

4.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2026

 

47

 

740,426

 

6.3

 

23,098,690

 

31.20

 

6.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2027

 

21

 

763,605

 

6.5

 

20,924,676

 

27.40

 

6.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2028

 

13

 

257,312

 

2.2

 

7,840,005

 

30.47

 

2.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2029

 

18

 

497,080

 

4.2

 

18,207,547

 

36.63

 

5.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2030 and thereafter

 

38

 

1,757,833

 

15.0

 

55,493,892

 

31.57

 

16.3

 

Totals/Weighted Average

 

782

 

11,750,750

 

100.0

 

339,734,535

 

28.91

 

100.0

 




        
      Average 
      Annual Base 
   Percentage Of Rent Per Net 
  Net RentableTotal LeasedAnnualizedRentablePercentage Of
  Area SubjectSquare FeetBase RentalSquare FootAnnual Base
 Number OfTo ExpiringRepresentedRevenue UnderRepresentedRent Under
Year OfLeasesLeasesBy ExpiringExpiringBy ExpiringExpiring
ExpirationExpiring (a)(Sq. Ft.)Leases (%)Leases ($) (b)Leases ($)Leases (%)
        
20162671,572,681 7.736,045,59722.927.3
        
20173293,591,173 17.690,429,37225.1818.3
        
20182972,893,301 14.266,931,42923.1313.5
        
20192522,459,708 12.153,078,24321.5810.7
        
20202181,748,600 8.638,862,23222.227.9
        
20211561,511,466 7.439,344,31126.038.0
        
20221041,100,641 5.427,239,44624.755.5
        
2023771,580,626 7.836,177,98022.897.3
        
2024631,127,620 5.528,279,52825.085.7
        
202537679,680 3.315,737,16923.153.2
        
202639803,722 4.022,626,63028.154.6
        
2027 and thereafter291,303,149 6.439,674,09930.448.0
Totals/Weighted       
  Average1,86820,372,367(c) (d)100.0494,426,03624.27100.0

(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 20152018 billings times 12. For leases whose rent commences after January 1, 20162019 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, 20152018 aggregating 69,52210,108 square feet and representing annualized rent of $1,564,211$375,809 for which no new leases were signed.

(d)

Reconciliation to Company’s total net rentable commercial square footage is as follows:


Square Feet

Square Feet

Square footage leased to commercial tenants

20,372,367

11,750,750

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

492,866

350,470

Square footage unleased

3,346,647

2,717,669

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

24,211,880

14,818,889




32


INDUSTRY DIVERSIFICATION


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



     
 AnnualizedPercentage of Percentage of
 Base RentalCompanySquareTotal Company
 RevenueAnnualized BaseFeet LeasedLeased
Industry Classification (a)($) (b) (c) (d)Rental Revenue (%)(c) (d)Sq. Ft. (%)
Securities, Commodity Contracts & Other Financial73,300,94614.82,411,91911.8
Insurance Carriers & Related Activities53,005,69710.71,909,8589.4
Manufacturing37,064,0347.51,727,0338.5
Legal Services33,985,8306.91,256,5076.2
Credit Intermediation & Related Activities31,980,2986.51,043,9295.1
Computer System Design Services23,435,9384.7998,3294.9
Accounting/Tax Prep.22,512,8244.6811,5354.0
Health Care & Social Assistance21,929,1194.41,141,5785.6
Wholesale Trade17,043,4543.41,145,4785.6
Telecommunications16,633,3093.4904,0124.4
Scientific Research/Development15,345,8953.1506,6222.5
Public Administration15,001,2873.0532,0842.6
Architectural/Engineering13,795,4482.8535,3682.6
Admin & Support, Waste Mgt. & Remediation Services13,677,9672.8669,0303.3
Management/Scientific11,518,0922.3440,5802.2
Other Services (except Public Administration)11,505,4222.3464,9512.3
Other Professional10,851,0132.2495,7272.4
Real Estate & Rental & Leasing8,304,3711.7441,0612.2
Advertising/Related Services7,942,7011.6286,7541.4
Retail Trade7,842,3521.6467,8332.3
Utilities7,376,7261.5325,8891.6
Transportation6,309,9821.3315,4841.5
Construction4,983,0501.0276,4481.4
Educational Services4,651,3560.9192,5760.9
Data Processing Services3,963,3350.8144,9470.7
Publishing Industries3,776,8400.8185,5770.9
Arts, Entertainment & Recreation3,300,4990.7240,1021.2
Agriculture, Forestry, Fishing & Hunting2,372,3870.591,5090.4
Information Services2,031,7890.467,0210.3
Broadcasting1,812,2240.452,7320.3
Other7,171,8511.4289,8941.5
     
TOTAL494,426,036100.020,372,367100.0

(a)  The Company’s tenants are classified according to the U.S. Government’s North American Industrial Classification System (NAICS).
(b)  Annualized base rental revenue is based on actual December 2015 billings times 12.  For leases whose rent commences after January 1, 2016, 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 in effect as of the period end date, some of which have commencement dates in the future, and leases expiring December 31, 2015 aggregating 69,522 square feet and representing annualized rent of $1,564,211 for which no new leases were signed.
(d)  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.


33

 

 

Annualized

 

Percentage of

 

 

 

Percentage of

 

 

 

Base Rental

 

Company

 

Square

 

Total Company

 

 

 

Revenue

 

Annualized Base

 

Feet Leased

 

Leased

 

Industry Classification (a)

 

($) (b) (c) (d)

 

Rental Revenue (%)

 

(c) (d)

 

Sq. Ft. (%)

 

Securities, Commodity Contracts & Other Financial

 

68,916,174

 

20.3

 

2,071,256

 

17.6

 

Credit Intermediation & Related Activities

 

40,138,788

 

11.8

 

1,042,325

 

8.9

 

Insurance Carriers & Related Activities

 

38,363,491

 

11.3

 

1,196,679

 

10.2

 

Manufacturing

 

27,458,189

 

8.1

 

915,091

 

7.8

 

Health Care & Social Assistance

 

16,072,397

 

4.7

 

663,800

 

5.6

 

Other Professional

 

15,420,013

 

4.5

 

472,440

 

4.0

 

Publishing Industries

 

13,957,417

 

4.1

 

431,189

 

3.7

 

Computer System Design Svcs.

 

13,121,158

 

3.9

 

472,148

 

4.0

 

Wholesale Trade

 

13,087,555

 

3.9

 

738,635

 

6.3

 

Legal Services

 

10,569,814

 

3.1

 

336,393

 

2.9

 

Advertising/Related Services

 

8,637,528

 

2.5

 

276,876

 

2.4

 

Educational Services

 

7,131,814

 

2.1

 

264,995

 

2.3

 

Telecommunications

 

7,110,280

 

2.1

 

440,984

 

3.8

 

Accounting/Tax Prep.

 

7,072,387

 

2.1

 

243,860

 

2.1

 

Real Estate & Rental & Leasing

 

6,627,048

 

2.0

 

221,356

 

1.9

 

Management/Scientific

 

5,416,157

 

1.6

 

185,140

 

1.6

 

Admin & Support, Waste Mgt. & Remediation Svcs.

 

5,247,174

 

1.5

 

236,351

 

2.0

 

Architectural/Engineering

 

4,238,760

 

1.2

 

166,967

 

1.4

 

Retail Trade

 

3,926,950

 

1.2

 

193,230

 

1.6

 

Public Administration

 

3,720,994

 

1.1

 

140,936

 

1.2

 

Arts, Entertainment & Recreation

 

3,539,687

 

1.0

 

253,701

 

2.2

 

Other Services (except Public Administration)

 

2,944,201

 

0.9

 

132,147

 

1.1

 

Construction

 

2,801,808

 

0.8

 

138,293

 

1.2

 

Transportation

 

2,050,136

 

0.6

 

82,231

 

0.7

 

Data Processing Services

 

1,975,038

 

0.6

 

75,963

 

0.6

 

Mining

 

1,919,223

 

0.6

 

57,721

 

0.5

 

Scientific Research/Developmnt

 

1,791,019

 

0.5

 

61,333

 

0.5

 

Specialized Design Services

 

1,692,793

 

0.5

 

60,992

 

0.5

 

Accommodation & Food Services

 

1,312,475

 

0.4

 

52,936

 

0.5

 

Information Services

 

1,230,649

 

0.4

 

51,373

 

0.4

 

Other

 

2,243,418

 

0.6

 

73,409

 

0.5

 

 

 

 

 

 

 

 

 

 

 

TOTAL

 

339,734,535

 

100.0

 

11,750,750

 

100.0

 



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

(b)         Annualized base rental revenue is based on actual December 2018 billings times 12. For leases whose rent commences after January 1, 2019, 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 in effect as of the period end date, some of which have commencement dates in the future, and leases expiring December 31, 2018 aggregating 10,108 square feet and representing annualized base rent of $375,809 for which no new leases were signed.

(d)         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.

MARKET DIVERSIFICATION


The following table lists the Company’s markets, based on annualized commercial contractual base rent of the Consolidated Properties:



      
   Percentage Of  
   Company  
  Annualized BaseAnnualizedTotal Property 
  Rental RevenueBase RentalSize RentablePercentage Of
Market ($) (a) (b) (c)Revenue (%)Area (b) (c)Rentable Area (%)
Jersey City, NJ119,195,76124.14,334,71417.9
Newark, NJ    
 (Essex-Morris-Union Counties)110,195,10422.35,420,94022.4
Westchester-Rockland, NY69,084,33714.03,895,91216.1
Bergen-Passaic, NJ63,016,23512.73,315,51813.7
Middlesex-Somerset-Hunterdon, NJ29,242,4825.91,316,6555.4
Monmouth-Ocean, NJ28,543,7355.81,620,8636.7
Washington, DC-MD-VA-WV26,863,6355.41,292,8075.3
Trenton, NJ18,347,6753.7956,5974.0
New York (Manhattan)17,966,6973.6524,4762.2
Southern NJ7,746,3221.61,260,3985.2
Stamford-Norwalk, CT4,224,0530.9273,0001.1
     
Totals494,426,036100.024,211,880100.0

(a)  Annualized base rental revenue is based on actual December 2015 billings times 12.  For leases whose rent commences after January 1, 2016, annualized base rental revenue is based on the first full month’s billing times 12.  As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above.
(b)  Includes leases in effect as of the period end date, some of which have commencement dates in the future, and leases expiring December 31, 2015 aggregating 69,522 square feet and representing annualized rent of $1,564,211 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.



34

 

 

 

 

Percentage Of

 

 

 

 

 

 

 

 

 

Company

 

 

 

 

 

 

 

Annualized Base

 

Annualized

 

Total Property

 

 

 

 

 

Rental Revenue

 

Base Rental

 

Size Rentable

 

Percentage Of

 

Market

 

($) (a) (b) (c)

 

Revenue (%)

 

Area (b) (c)

 

Rentable Area (%)

 

Jersey City, NJ

 

123,921,192

 

36.5

 

4,884,193

 

33.0

 

Newark, NJ (Essex-Morris-Union Counties)

 

94,560,948

 

27.9

 

3,646,430

 

24.6

 

Westchester-Rockland, NY

 

51,202,380

 

15.1

 

2,875,512

 

19.4

 

Middlesex-Somerset-Hunterdon, NJ

 

26,876,028

 

7.9

 

1,047,419

 

7.1

 

Monmouth-Ocean, NJ

 

19,324,272

 

5.7

 

1,069,490

 

7.2

 

Bergen-Passaic, NJ

 

11,063,736

 

3.3

 

616,510

 

4.2

 

Trenton, NJ

 

8,392,644

 

2.5

 

406,335

 

2.7

 

Stamford-Norwalk, CT

 

3,868,548

 

1.1

 

273,000

 

1.8

 

 

 

 

 

 

 

 

 

 

 

Totals

 

339,209,748

 

100.0

 

14,818,889

 

100.0

 



(a)         Annualized base rental revenue is based on actual December 31, 2018 billings times 12. For leases whose rent commences after January 1, 2019, annualized base rental revenue is based on the first full month’s billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above.

(b)         Includes leases in effect as of the period end date, some of which have commencement dates in the future, and leases expiring December 31, 2018 aggregating 10,108 square feet and representing annualized base rent of $375,809 for which no new leases were signed.

(c)          Includes office, office/flex, industrial/warehouse and stand-alone retail tenants only. Excludes leases for amenity, retail, parking and month-to-month tenants. Some tenants have multiple leases.

ITEM 3.LEGAL PROCEEDINGS


There are no material pending legal proceedings, other than ordinary routine litigation incidental to the Company’s business, to which the Company is a party or to which any of the Properties is subject.


ITEM 4.MINE SAFETY DISCLOSURES


Not applicable.




35


PART II


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

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

MARKET INFORMATION


The shares of the Company’sGeneral Partner’s common stock are traded on the New York Stock Exchange (“NYSE”) under the symbol “CLI.”


  There is no established public trading market for the Operating Partnership’s common units.

The following table sets forth the quarterly high, low, and closing price per share of the General Partner’s Common Stock reported on the NYSE for the years ended December 31, 20152018 and 2014,2017, respectively:



         
For the Year Ended December 31, 2015        
         
  High  Low  Close
First Quarter$20.11 $18.01 $19.28
Second Quarter$19.73 $16.85 $18.43
Third Quarter$21.12 $18.01 $18.88
Fourth Quarter$24.26 $18.67 $23.35
         
For the Year Ended December 31, 2014        
         
  High  Low  Close
First Quarter$23.23 $19.75 $20.79
Second Quarter$22.44 $19.98 $21.48
Third Quarter$22.05 $18.95 $19.11
Fourth Quarter$20.11 $17.92 $19.06

For the Year Ended December 31, 2018

 

 

High

 

Low

 

Close

 

First Quarter

 

$

21.98

 

$

15.86

 

$

16.71

 

Second Quarter

 

$

20.86

 

$

16.23

 

$

20.28

 

Third Quarter

 

$

21.92

 

$

18.92

 

$

21.26

 

Fourth Quarter

 

$

22.26

 

$

19.02

 

$

19.59

 

For the Year Ended December 31, 2017

 

 

High

 

Low

 

Close

 

First Quarter

 

$

29.70

 

$

26.31

 

$

26.94

 

Second Quarter

 

$

28.57

 

$

25.96

 

$

27.14

 

Third Quarter

 

$

27.75

 

$

22.70

 

$

23.71

 

Fourth Quarter

 

$

24.04

 

$

21.18

 

$

21.56

 

On February 22, 2016,15, 2019, the closing Common Stock price reported on the NYSE was $18.88$21.08 per share.


On May 18, 2015,July 10, 2018, the CompanyGeneral Partner 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 CompanyGeneral Partner was in compliance with all of the listing standards of the NYSE.


HOLDERS


On February 22, 2016,15, 2019, the CompanyGeneral Partner had 373301 common shareholders of record.  Thisrecord (this does not include beneficial owners for whom Cede & Co. or others act as nominee.


nominee) and the Operating Partnership had 86 owners of limited partnership units and one owner of General Partnership units.

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


During the three months ended December 31, 2015,2018, the CompanyGeneral Partner issued 273,29812,500 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(a)(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 holders of the common units were converted into an equal number of shareseach received one share of common stock.stock for each common unit that they redeemed.  The CompanyGeneral Partner has registered the resale of such shares under the Securities Act.


DIVIDENDS AND DISTRIBUTIONS


During the year ended December 31, 2015, the Company declared four quarterly cash dividends on its common stock and common units of $0.15 per share and unit for each of the first to the fourth quarters.

During the year ended December 31, 2014, the Company declared four quarterly cash dividends on its common stock and common units of $0.30 per share and unit for the first quarter and $0.15 per share and unit for each of the second to the fourth quarters.
36


The declaration and payment of dividends and distributions will continue to be determined by the Board of Directors of the General Partner in light of conditions then existing, including the Company’s earnings, cash flows, financial condition, capital requirements, debt maturities, the availability of debt and equity capital, applicable REIT and legal restrictions and the general overall economic conditions and other factors.


PERFORMANCE GRAPH

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 FTSE NAREIT Equity REIT Index (“NAREIT”).  The graph assumes that the value of the investment in the Company’sGeneral Partner’s Common Stock and in the S&P 500 and NAREIT indices was $100 at December 31, 20102013 and that all dividends were reinvested.  The price of the Company’sGeneral Partner’s Common Stock on December 31, 20102013 (on which the graph is based) was $33.06.$21.48.  The past stockholder return shown on the following graph is not necessarily indicative of future performance.


Comparison of Five-Year Cumulative Total Return



37


SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS


Equity Compensation Plan Information
The following table summarizes information, as of December 31, 2015, relating to equity compensation plans of the Company (including individual compensation arrangements) pursuant to which equity securities of the Company are authorized for issuance.

         
Plan Category
(a)
Number of Securities to be
Issued Upon Exercise of
Outstanding Options and
Rights
 
(b)
Weighted-Average
Exercise Price of
Outstanding Options
and Rights
 
(c)
Number of Securities
Remaining Available
for Future Issuance
Under Equity Compensation
Plans (excluding
securities reflected
in column(a))
Equity Compensation Plans        
Approved by        
Stockholders……………………1,056,213(2) 17.33(3) 3,416,581 
Equity Compensation Plans        
Not Approved by        
Stockholders(1)…………………178,039  N/A  N/A(4)
Total1,234,252  N/A  3,416,581 

(1)The only plan included in the table that was adopted without stockholder approval was the Directors’ Deferred Compensation Plan.  See Note 15: Mack-Cali Realty Corporation Stockholders’ Equity - Deferred Stock Compensation Plan For Directors.

(2)Includes 98,669 shares of unvested restricted common stock, 805,000 unvested options, 38,136 unvested restricted stock units (RSUs), including unvested dividend equivalents thereon, and 114,408 unvested performance share units (PSUs), including unvested dividend equivalents thereon.

(3)Weighted average exercise price of outstanding options; excludes restricted common stock, RSUs and PSUs.

(4)The Directors’ Deferred Compensation Plan does not limit the number of stock units issuable thereunder, but applicable SEC and NYSE rules restricted the aggregate number of stock units issuable thereunder to one percent (1%) of the Company’s outstanding shares when the plan commenced on January 1, 1999.


38


ITEM 6.SELECTED FINANCIAL DATA


The following table sets forth selected financial data on a consolidated basis for the Company.General Partner.  The consolidated selected operating and balance sheet data of the CompanyGeneral Partner as of December 31, 2018, 2017, 2016, 2015 2014, 2013, 2012 and 2011,2014, and for the years then ended have been derived from the Company’sGeneral Partner’s financial statements for the respective periods.



               
Operating Data (a)            Year Ended December 31,
In thousands, except per share data 2015  2014  2013  2012  2011
Total revenues$ 594,883  $ 636,799  $ 667,031  $ 650,632  $ 652,235 
Property expenses (b)$ 246,604  $ 276,193  $ 254,474  $ 241,955  $ 248,107 
Direct construction costs$ - $ - $ 14,945  $ 12,647  $ 11,458 
Real estate services expenses$ 25,583  $ 26,136  $ 22,716  $ 3,746  $ 1,065 
General and administrative (c)$ 49,147  $ 71,051  $ 47,040  $ 41,891  $ 35,137 
Impairments$ 197,919  $ - $ 110,853  $ 9,845  $ -
Interest expense$ 103,051  $ 112,878  $ 123,701  $ 122,039  $ 123,858 
Realized gains (losses) on disposition of              
  rental property, net$ 53,261  $ 54,848  $ - $ - $ -
Income (loss) from continuing operations$ (142,052) $ 31,391  $ (89,686) $ 37,566  $ 59,499 
Discontinued operations: Realized gains (losses)              
  and unrealized losses on disposition of              
  rental property and impairments, net$ - $ - $ 59,520  $ (13,175) $ -
Net income (loss) available to common shareholders$ (125,752) $ 28,567  $ (14,909) $ 40,922  $ 69,684 
Income (loss) from continuing operations              
  per share – basic$ (1.41) $ 0.32  $ (0.88) $ 0.38  $ 0.59 
Income (loss) from continuing operations              
  per share – diluted$ (1.41) $ 0.32  $ (0.88) $ 0.38  $ 0.59 
Net income (loss) per share – basic$ (1.41) $ 0.32  $ (0.17) $ 0.47  $ 0.81 
Net income (loss) per share – diluted$ (1.41) $ 0.32  $ (0.17) $ 0.47  $ 0.81 
Dividends declared per common share$ 0.60  $ 0.75  $ 1.35  $ 1.80  $ 1.80 
Basic weighted average shares outstanding  89,291    88,727    87,762    87,742    86,047 
Diluted weighted average shares outstanding  100,222    100,041    99,785    99,996    98,962 
               
Balance Sheet Data December 31,
In thousands 2015  2014  2013  2012  2011
Rental property, before accumulated              
  depreciation and amortization$ 4,807,718  $ 4,958,179  $ 5,129,933  $ 5,379,436  $ 5,279,770 
Total assets$ 4,063,490  $ 4,192,247  $ 4,515,328  $ 4,526,045  $ 4,295,759 
Total debt (d)$ 2,154,920  $ 2,088,654  $ 2,362,766  $ 2,204,389  $ 1,914,215 
Total liabilities$ 2,379,782  $ 2,310,236  $ 2,596,873  $ 2,457,538  $ 2,141,759 
Total Mack-Cali Realty Corporation              
  stockholders’ equity$ 1,455,676  $ 1,624,781  $ 1,642,359  $ 1,766,974  $ 1,889,564 
Total noncontrolling interests in subsidiaries$ 228,032  $ 257,230  $ 276,096  $ 301,533  $ 264,436 

(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)Amount for the year ended December 31, 2014 includes $23.8 million of severance costs related to the departure of the Company’s former chief executive officer and departure of certain of the Company’s other executive officers in 2014.
(d)Total debt is calculated by taking the sum of senior unsecured notes, revolving credit facilities, and mortgages, loans payable and other obligations.


39

Operating Data (a)

 

Year Ended December 31,

 

In thousands, except per share data

 

2018

 

2017

 

2016

 

2015

 

2014

 

Total revenues

 

$

530,606

 

$

616,200

 

$

613,398

 

$

594,883

 

$

636,799

 

Property expenses (b)

 

$

206,235

 

$

231,341

 

$

240,957

 

$

246,604

 

$

276,193

 

Real estate services expenses

 

$

17,919

 

$

23,394

 

$

26,260

 

$

25,583

 

$

26,136

 

General and administrative (c) 

 

$

53,988

 

$

50,949

 

$

51,979

 

$

49,147

 

$

71,051

 

Property Impairments

 

$

 

$

 

$

 

$

197,919

 

$

 

Land impairments

 

$

24,566

 

$

 

$

 

$

 

$

 

Interest expense

 

$

83,754

 

$

93,388

 

$

94,889

 

$

103,051

 

$

112,878

 

Gain on change of control of interests

 

$

14,217

 

$

 

$

15,347

 

$

 

$

 

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

 

$

99,436

 

$

2,364

 

$

109,666

 

$

53,261

 

$

54,848

 

Gain on disposition of developable land

 

$

30,939

 

$

 

$

 

$

 

$

 

Gain on sale of investment in unconsolidated joint venture

 

$

 

$

23,131

 

$

5,670

 

$

6,448

 

$

 

Loss from extinguishment of debt, net

 

$

(10,750

)

$

(421

)

$

(30,540

)

$

 

$

(582

)

Net income (loss) available to common shareholders

 

$

84,111

 

$

23,185

 

$

117,224

 

$

(125,752

)

$

28,567

 

Net income (loss) per share — basic

 

$

0.80

 

$

0.06

 

$

1.31

 

$

(1.41

)

$

0.32

 

Net income (loss) per share — diluted

 

$

0.80

 

$

0.06

 

$

1.30

 

$

(1.41

)

$

0.32

 

Dividends declared per common share

 

$

0.80

 

$

0.75

 

$

0.60

 

$

0.60

 

$

0.75

 

Basic weighted average shares outstanding

 

90,388

 

90,005

 

89,746

 

89,291

 

88,727

 

Diluted weighted average shares outstanding

 

100,724

 

100,703

 

100,498

 

100,222

 

100,041

 

Balance Sheet Data (a)

 

December 31,

 

In thousands

 

2018

 

2017

 

2016

 

2015

 

2014

 

Rental property, before accumulated depreciation and amortization

 

$

5,306,017

 

$

5,102,844

 

$

4,804,867

 

$

4,807,718

 

$

4,958,179

 

Total assets

 

$

5,060,644

 

$

4,957,885

 

$

4,296,766

 

$

4,053,963

 

$

4,182,933

 

Total debt (d)

 

$

2,792,651

 

$

2,809,568

 

$

2,340,009

 

$

2,145,393

 

$

2,079,340

 

Total liabilities

 

$

3,033,004

 

$

3,076,954

 

$

2,570,079

 

$

2,370,255

 

$

2,300,922

 

Redeemable noncontrolling interests

 

$

330,459

 

$

212,208

 

$

 

$

 

$

 

Total Mack-Cali Realty Corporation stockholders’ equity

 

$

1,486,658

 

$

1,476,295

 

$

1,527,171

 

$

1,455,676

 

$

1,624,781

 

Total noncontrolling interests in subsidiaries

 

$

210,523

 

$

192,428

 

$

199,516

 

$

228,032

 

$

257,230

 


(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)          Amount for the year ended December 31, 2018 includes $6.5 million of severance and related expenses related to executive management and other personnel changes during the year.  Amount for the year ended December 31, 2014 includes $23.8 million of severance costs related to the departure of the Company’s former chief executive officer and certain of the other executive officers in 2014.

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

The following table sets forth selected financial data on a consolidated basis for the Operating Partnership.  The consolidated selected operating and balance sheet data of the Operating Partnership as of December 31, 2018, 2017, 2016, 2015 and 2014, and for the years then ended have been derived from the Operating Partnership’s financial statements for the respective periods.

Operating Data (a)

 

Year Ended December 31,

 

In thousands, except per unit data

 

2018

 

2017

 

2016

 

2015

 

2014

 

Total revenues

 

$

530,606

 

$

616,200

 

$

613,398

 

$

594,883

 

$

636,799

 

Property expenses (b)

 

$

206,235

 

$

231,341

 

$

240,957

 

$

246,604

 

$

276,193

 

Real estate services expenses

 

$

17,919

 

$

23,394

 

$

26,260

 

$

25,583

 

$

26,136

 

General and administrative (c)

 

$

53,988

 

$

50,949

 

$

51,979

 

$

49,147

 

$

71,051

 

Property Impairments

 

$

 

$

 

$

 

$

197,919

 

$

 

Land impairments

 

$

24,566

 

$

 

$

 

$

 

$

 

Interest expense

 

$

83,754

 

$

93,388

 

$

94,889

 

$

103,051

 

$

112,878

 

Gain on change of control of interests

 

$

14,217

 

$

 

$

15,347

 

$

 

$

 

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

 

$

99,436

 

$

2,364

 

$

109,666

 

$

53,261

 

$

54,848

 

Gain on disposition of developable land

 

$

30,939

 

$

 

$

 

$

 

$

 

Gain on sale of investment in unconsolidated joint venture

 

$

 

$

23,131

 

$

5,670

 

$

6,448

 

$

 

Loss from extinguishment of debt, net

 

$

(10,750

)

$

(421

)

$

(30,540

)

$

 

$

(582

)

Net income (loss) available to common unitholders

 

$

93,638

 

$

25,896

 

$

130,945

 

$

(141,008

)

$

32,169

 

Net income (loss) per unit — basic

 

$

0.80

 

$

0.06

 

$

1.31

 

$

(1.41

)

$

0.32

 

Net income (loss) per unit — diluted

 

$

0.80

 

$

0.06

 

$

1.30

 

$

(1.41

)

$

0.32

 

Distributions declared per common unit

 

$

0.80

 

$

0.75

 

$

0.60

 

$

0.60

 

$

0.75

 

Basic weighted average units outstanding

 

100,634

 

100,410

 

100,245

 

100,222

 

99,999

 

Diluted weighted average units outstanding

 

100,724

 

100,703

 

100,498

 

100,222

 

100,041

 

Balance Sheet Data (a)

 

December 31,

 

In thousands

 

2018

 

2017

 

2016

 

2015

 

2014

 

Rental property, before accumulated depreciation and amortization

 

$

5,306,017

 

$

5,102,844

 

$

4,804,867

 

$

4,807,718

 

$

4,958,179

 

Total assets

 

$

5,060,644

 

$

4,957,885

 

$

4,296,766

 

$

4,053,963

 

$

4,182,933

 

Total debt (d)

 

$

2,792,651

 

$

2,809,568

 

$

2,340,009

 

$

2,145,393

 

$

2,079,340

 

Total liabilities

 

$

3,033,004

 

$

3,076,954

 

$

2,570,079

 

$

2,370,255

 

$

2,300,922

 

Redeemable noncontrolling interests

 

$

330,459

 

$

212,208

 

$

 

$

 

$

 

Total equity

 

$

1,697,181

 

$

1,668,723

 

$

1,726,687

 

$

1,683,708

 

$

1,882,011

 



(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)          Amount for the year ended December 31, 2018 includes $6.5 million of severance and related expenses related to executive management and other personnel changes during the year.  Amount for the year ended December 31, 2014 includes $23.8 million of severance costs related to the departure of the Company’s former chief executive officer and of certain of the other executive officers in 2014.

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

ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated Financial Statements of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. and the notes thereto (collectively, the “Financial Statements”).  Certain defined terms used herein have the meaning ascribed to them in the Financial Statements.



Executive Overview


Mack-Cali Realty Corporation together with its subsidiaries, (collectively, the “General Partner”), including Mack-Cali Realty, L.P. (the “Company”“Operating Partnership”), has been involved in all aspects of commercial real estate development, management and ownership for over 60 years and the General Partner has been a publicly-tradedpublicly traded real estate investment trust (REIT) since 1994.

The Operating Partnership conducts the business of providing leasing, management, acquisition, development, construction and tenant-related services for its General Partner.  The Operating Partnership, through its operating divisions and subsidiaries, including the Mack-Cali property-owning partnerships and limited liability companies, is the entity through which all of the General Partner’s operations are conducted.  Unless stated otherwise or the context requires, the “Company” refers to the General Partner and its subsidiaries, including the Operating Partnership and its subsidiaries.  The Company owns or has interests in 275135 properties (collectively, the “Properties”), consisting of 14756 office and 10955 flex properties, primarily class A office and office/flex buildings, totaling approximately 29.915.4 million square feet which are leased to approximately 1,900700 commercial tenants and 1924 multi-family rental properties containing 5,644 residential6,910 apartment units.  The Properties are located primarily in the Northeast, some with adjacent, Company-controlled developable land sites able to accommodate up to 5.3approximately 3.4 million square feet of additional commercial space and approximately 11,30010,000 apartment units.


The Company’s historical 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.  In September 2015, the Company announced a three-year strategic initiative to transform into a more concentrated owner of New Jersey Hudson River waterfront and transit-oriented office properties and a regional owner of luxury multi-family residential properties.  In furtherance of this strategy, the Company has commenced a comprehensive review of its portfolio and operations and is developing a business strategy that focuses on reshaping its portfolio over time.  As part of this plan, over the past three years, the Company anticipates thathas sold or has contracted to sell multiple properties, primarily commercial office, which it may dispose of a significant number of its properties thatbelieves do not meet its long-term goals, and, in September 2015, compiled a list of its properties that it considers as non-core to its ongoing operations.  Specifically, the Company considers a non-core property to have one or more of the following attributes:  (1) assets that do not offer an opportunity to create a competitive advantage; (2) assets that produce a low cash yield; (3) assets which have physical attributes that constrain their market competitiveness; and (4) assets located in low growth markets.  The Company believes that the potential sales of these non-core properties over time would result in total estimated sales proceeds ranging from approximately $600 million to $800 million. 


As a result of this disposition strategy, for the year ended December 31, 2015, the Company evaluated the recoverability of the carrying values of non-core properties and determined that due to the shortening of the expected periods of ownership it was necessary to reduce the carrying values of 22 rental properties to their estimated fair values and recorded an impairment charge on these properties of $192.3 million.
goals.

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


·
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;
·
the value of our office properties and the cash flow from the sale of such properties;
·
operating expenses;
·
anticipated acquisition and development costs for office and multi-family rental properties and the revenues and earnings from these properties;
·
cost of capital; and
·
the extent of acquisitions, development and sales of real estate, including the execution of the Company’s current strategic initiative.

·                  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;

·                  the value of our office properties and the cash flow from the sale of such properties;

·                  operating expenses;

·                  anticipated acquisition and development costs for office and multi-family rental properties and the revenues and earnings from these properties;

·                  cost of capital; and

·                  the extent of acquisitions, development and sales of real estate, including the execution of the Company’s current strategic initiative.

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.

40

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 the Company’s product types or competition within the market.

Of the Company’s 10 core office markets, several have recently shownmost continue to show signs of rental rate improvement, while others havethe lease percentage has declined or stabilized.  The percentage leased in the Company’s consolidated portfolio of stabilized core operating commercial properties

aggregating 2414.1 million, 2514.7 million and 2820.9 million square feet at December 31, 2015, 20142018, 2017 and 2013,2016, respectively, was 86.283.2 percent leased at December 31, 2015,2018, as compared to 84.287.6 percent leased at December 31, 20142017 and 86.190.6 percent leased at December 31, 2013.2016 (after adjusting for properties identified as non-core at the time).  Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future and leases that expire at the period end date.  Leases that expired as of December 31, 2015, 20142018, 2017 and 20132016 aggregate 69,522, 205,22010,108, 343,217 and 690,895151,655 square feet, respectively, or 0.3, 0.80.1, 2.3 and 2.50.7 percentage of the net rentable square footage, respectively.  Rental rates (including escalations) on the Company’s commercial space that was renewed (based on first rents payable) during the year ended December 31, 20152018 (on 2,513,087950,548 square feet of renewals) increased an average of 0.221.7 percent compared to rates that were in effect under the prior leases, as compared to a 4.71.7 percent decreaseincrease during 20142017 (on 1,649,1451,680,687 square feet of renewals) and a 7.110.9 percent decreaseincrease in 20132016 (on 2,420,4831,559,046 square feet of renewals).  Estimated lease costs for the renewed leases in 20152018 averaged $2.85$3.46 per square foot per year for a weighted average lease term of 3.64.7 years, estimated lease costs for the renewed leases in 20142017 averaged $2.33$2.16 per square foot per year for a weighted average lease term of 4.07.2 years and estimated lease costs for the renewed leases in 20132016 averaged $2.22$4.04 per square foot per year for a weighted average lease term of 3.85.1 years.  The Company has achieved positive leasing results in its core markets recently.  It believes that commercial vacancy rates may decreaseat its commercial properties have begun to bottom by the end of 2018 as the majority of the known move-outs at its waterfront portfolio have already occurred, and commercial rental rates may increase in some of its markets in 2016 and possibly beyond.2019.  As of December 31, 2015,2018, commercial leases which comprise approximately 7.39.9 and 18.35.6 percent of the Company’s annualized base rent are scheduled to expire during the years ended December 31, 20162019 and 2017,2020, respectively.  With the positive leasingrental rate results the Company has achieved in manymost of its markets recently, the Company believes that rental rates it is likely to achieve on new leases will generally be, on average, not lower than rates currently being paid.  Although the Company has recently achieved positive leasing activity, primarily in its core markets, if theIf these recent leasing results do not prove to be sustaining during 2016 and beyond,in 2019, the Company’s rental rates itCompany may achieve on new leases may be lower than the rates currently being paid, resulting in the potential forreceive less revenue from the same space.


As part of

During 2017, Moody’s downgraded its strategic initiative described above,investment grade rating on the Company may dispose of properties it considers non-core,Company’s senior unsecured debt to sub-investment grade and it may actively asset manage other low-growth real estate assets in a different way. The Company will selectively purchase assets in markets that it believes will offer above market returns.  The Company believes that the opportunity to invest in multi-family development properties at higher returns on cost will position the Company to potentially produce higher levels of net operating income than if the Company were to only purchase stabilized multi-family rental properties at market returns.  The Company anticipates that it will be several years before many of its multi-family development projects are income-producing.


The Company believes that there is a potential for Moody’s orduring 2018, Standard & Poor’s to lower their currentlowered its investment grade ratingsrating on the Company’s senior unsecured debt to sub-investment grade.  Amongst other things, any such downgrade by both Moody’s and Standard & Poor’s will increasewould have increased the interest rate on outstanding borrowings under the Company’s current $600 million unsecured revolving credit facility (which was amended in January 2017) from LIBORthe London Inter-Bank Offered Rate (“LIBOR”) plus 130120 basis points to LIBOR plus 170155 basis points and the annual credit facility fee it pays will increasewould have increased from 3025 to 3530 basis points.  Additionally, any such downgrade would have increased the current interest rate on each of the Company’s $350 million unsecured term loan and $325 million unsecured term loan from LIBOR plus 140 basis points to LIBOR plus 185 points.  Effective March 6, 2018, the Company elected to utilize the leverage grid pricing available under the unsecured revolving credit facility and both unsecured term loans.  This resulted in an interest rate of LIBOR plus 130 basis points for the Company’s unsecured revolving credit facility and 25 basis points for the facility fee and LIBOR plus 155 basis points for both unsecured term loans at the Company’s current total leverage ratio.  In addition, a downgrade in its ratings to sub-investment grade would result in higher interest rates on senior unsecured debt that the Company may issue in the future as compared to issuing such debt with investment grade ratings.

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


·                  recent transactions;

·                  critical accounting policies and estimates;

·                  results of operations for the year ended December 31, 2018 as compared to the year ended December 31, 2017;

·                  results of operations for the year ended December 31, 2017 as compared to the year ended December 31, 2016; and

·                  liquidity and capital resources.

·

recent transactions;
·
critical accounting policies and estimates;
·
results of operations for the year ended December 31, 2015 as compared to the year ended December 31, 2014;
·
results of operations for the year ended December 31, 2014 as compared to the year ended December 31, 2013; and
·
liquidity and capital resources. 



41


Recent Transactions

Acquisitions

:

On February 6, 2019, the Company completed the acquisition of a 271,988 square foot office property located in Iselin, New Jersey, for a purchase price of $61.5 million, which was funded using funds available with the Company’s qualified intermediary and borrowings under the Company’s unsecured revolving credit facility.

On January 5, 2016,25, 2019, the Company signed an agreement to acquire a 377-unit multi-family rental property located in Jersey City, New Jersey for approximately $264 million, subject to certain conditions.  The acquisition is expected to be completed in the second quarter 2019.

Properties Commencing Initial Operations:

The following properties commenced initial operations during the year ended December 31, 2018 (dollars in thousands):

 

 

 

 

 

 

 

 

# of

 

Total

 

In-Service

 

 

 

 

 

 

 

Apartment Units/

 

Development

 

Date

 

Property

 

Location

 

Type

 

Rooms

 

Costs Incurred

 

03/01/18

 

145 Front at City Square

 

Worcester, MA

 

Multi-Family

 

365

 

$

97,483

(a)

04/01/18

 

Signature Place at Morris Plains

 

Morris Plains, NJ

 

Multi-Family

 

197

 

56,715

(b)

05/01/18

 

Portside 5/6

 

East Boston, MA

 

Multi-Family

 

296

 

114,694

(c)

08/01/18

 

RiverHouse 11 at Port Imperial

 

Weehawken, NJ

 

Multi-Family

 

295

 

130,369

(d)

12/13/18

 

Residence Inn By Marriott (Phase I)

 

Weehawken, NJ

 

Hotel

 

164

 

58,723

(e)

Totals

 

 

 

 

 

 

 

1,317

 

$

457,984

 


(a)         Development costs as of December 31, 2018 included approximately $4.4 in land costs.  As of December 31, 2018, the Company anticipates additional costs of approximately $1.1 million, which will be primarily funded from a construction loan.

(b)         Development costs as of December 31, 2018 included approximately $0.9 in land costs.

(c)          As of December 31, 2018, the Company anticipates additional costs of approximately $0.7 million, which will be funded by the Company.

(d)         As of December 31, 2018, the Company anticipates additional costs of $1.2 million which will be funded by the Company.

(e)          As of December 31, 2018, the Company anticipates additional costs of $20.1 million which will be funded from a construction loan.

Consolidations:

On August 2, 2018, the Company, which held a 5024.27 percent subordinated interest in the property-owning entity, Overlook Ridge Apartment Investorsunconsolidated joint venture Marbella Tower Urban Renewal Associates LLC, acquired its remaining interest in a 371-unit412-unit multi-family operating property located in Malden, Massachusetts for $39.8 million.


On December 23, 2015, the Company acquired a vacant 147,241 square-foot office property located in the Mack-Cali Business Campus in Parsippany,Jersey City, New Jersey, acquired its equity partner’s 50 percent interest for approximately $10.3$65.6 million whichin cash.  The property was subject to a mortgage loan that had a principal balance of $95 million.  The cash portion of the acquisition was funded primarily through borrowings under the Company’s unsecured revolving credit facility.  This property is currentlyConcurrently with the closing, the joint venture repaid the $95 million mortgage loan in redevelopmentfull and obtained a new loan collateralized by the Company.

On November 12, 2015,property in the amount of $131 million, which bears interest at 4.07 percent and matures in August 2026.  The venture distributed $37.4 million of the loan proceeds, of which the Company’s share was $30.4 million.  As a result of the acquisition, the Company acquiredincreased its ownership of the property from a 196,128 square-foot, 95.624.27 percent leased office property adjacentsubordinated interest to an existing Mack-Cali property locateda 74.27 percent controlling interest.  In accordance with ASC 810, Consolidation, the Company evaluated the acquisition and determined that the entity meets the criteria of a VIE.  As such, the Company consolidated the asset upon acquisition and accordingly, remeasured its equity interests, as required by the FASB’s consolidation guidance, at fair value (based upon the income approach using current rates and market cap rates and discount rates).  As a result, the Company recorded a gain on change of control of interests of $14.2 million (a non-cash item) in Edison, New Jersey,the year ended December 31, 2018, when the Company accounted for approximately $53.1 million, which was funded primarily through borrowings underthe transaction as a VIE that is not a business in accordance with ASC 810-10-30-4.  Additional non-cash items included in the acquisition were the Company’s unsecured revolving credit facilitycarrying value of its interest in the joint venture of $14 million and the noncontrolling interest’s fair value of $29.8 million.  See Note 9: Mortgages, Loans Payable and Other Obligations.

Land and leasehold interest

 

$

48,820

 

Buildings and improvements and other assets, net

 

162,958

 

In-place lease values (a)

 

6,947

 

Less: Below market lease values (a)

 

(108

)

 

 

218,617

 

Less: Debt

 

(131,000

)

Net Assets

 

87,617

 

Less: Noncontrolling interest (b)

 

(22,812

)

Net assets recorded upon consolidation

 

$

64,805

 


.(a)         In-place and below market leases are being amortized over a weighted-average term of 9.3 months.

(b)


Dispositions
         Noncontrolling interest balance reflects distribution of $7.0 million of loan proceeds at closing.

Dispositions/Rental Property Held for Sale:

The Company disposed of the following office properties during the year ended December 31, 2015 2018 (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains

 

 

 

 

 

 

 

 

 

Rentable

 

Net

 

Net

 

(losses)/

 

Disposition

 

 

 

 

 

# of

 

Square

 

Sales

 

Carrying

 

Unrealized

 

Date

 

Property/Address

 

Location

 

Bldgs.

 

Feet

 

Proceeds

 

Value

 

Losses, net

 

02/15/18

 

35 Waterview Boulevard (a)

 

Parsippany, New Jersey

 

1

 

172,498

 

$

25,994

 

$

25,739

 

$

255

 

03/05/18

 

Hamilton portfolio (b)

 

Hamilton, New Jersey

 

6

 

239,262

 

17,546

 

17,501

 

45

 

03/07/18

 

Wall portfolio first closing

 

Wall, New Jersey

 

5

 

179,601

 

14,053

 

10,526

 

3,527

 

03/22/18

 

700 Horizon Drive

 

Hamilton, New Jersey

 

1

 

120,000

 

33,020

 

16,053

 

16,967

 

03/23/18

 

Wall portfolio second closing

 

Wall, New Jersey

 

3

 

217,822

 

30,209

 

12,961

 

17,248

 

03/28/18

 

75 Livingston Avenue

 

Roseland, New Jersey

 

1

 

94,221

 

7,983

 

5,609

 

2,374

 

03/28/18

 

20 Waterview Boulevard (c)

 

Parsippany, New Jersey

 

1

 

225,550

 

12,475

 

11,795

 

680

 

03/30/18

 

Westchester Financial Center (d)

 

White Plains, New York

 

2

 

489,000

 

81,769

 

64,679

 

17,090

 

06/27/18

 

65 Jackson Drive

 

Cranford, New Jersey

 

0

 

 

1,510

(e)

 

1,510

 

08/02/18

 

600 Horizon Drive

 

Hamilton, New Jersey

 

1

 

95,000

 

15,127

 

6,191

 

8,936

 

09/05/18

 

1 & 3 Barker Avenue

 

White Plains, New York

 

2

 

133,300

 

15,140

 

13,543

 

1,597

 

11/15/18

 

120 Passaic Street (f)

 

Rochelle Park, New Jersey

 

1

 

52,000

 

2,667

 

2,568

 

99

 

12/31/18

 

Elmsford Distribution Center

 

Elmsford, New York

 

6

 

387,400

 

66,557

 

17,314

 

49,243

 

Sub-total

 

 

 

 

 

30

 

2,405,654

 

324,050

 

204,479

 

119,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses on rental property held for sale

 

 

 

 

 

 

 

 

 

(20,135

)

Totals

 

 

 

 

 

30

 

2,405,654

 

$

324,050

 

$

204,479

 

$

99,436

 



               
    Rentable  Net  Net    
Disposition  # ofSquare  Sales  Book  Realized 
DateProperty/AddressLocationBldgs. Feet  Proceeds  Value  Gain 
01/15/151451 Metropolitan DriveWest Deptford, New Jersey121,600 $1,072 $929 $ 143 
05/27/1510 Independence BlvdWarren, New Jersey1120,528  18,351(a) 15,114   3,237 
06/11/154 Sylvan WayParsippany, New Jersey1105,135  15,961(a) 9,522   6,439 
06/26/1514 Sylvan WayParsippany, New Jersey1203,506  79,977  55,253   24,724 
07/21/15210 Clay AveLyndhurst, New Jersey1121,203  14,766(a) 5,202   9,564 
08/24/155 Becker Farm RdRoseland, New Jersey1118,343  18,129(a) 8,975   9,154 
               
Totals  6 690,315 $ 148,256 $ 94,995 $ 53,261 
               
(a)   The Company transferred the deeds for these properties to the lender in satisfaction of its mortgage loan obligations totaling $59.7 million. The Company recorded an impairment charge of $25.2 million during the year ended December 31, 2013 as it estimated that the carrying value of the properties may not be recoverable over their anticipated holding periods. 

On January 1, 2014, the

(a)   The Company adopted the new discontinued operations accounting standard and as the properties disposedrecorded a valuation allowance of $0.7 million on this property during the year ended December 31, 2015 did not represent2017.

(b)   The Company recorded a strategic shift (asvaluation allowance of $0.6 million on these properties during the year ended December 31, 2017. The disposition additionally included two land properties.

(c)   The Company recorded a valuation allowance of $11 million on this property during the year ended December 31, 2017.  Prior to closing, the Company is not entirely exiting markets or property types), they have not been reflected as partprovided short term financing through a note receivable to an affiliate of discontinued operations.

Impairments on Properties Held and Used
In September 2015,the buyers of $2.8 million.  The note was paid off in the second quarter of 2018.

(d)   Prior to closing, the Company announcedprovided financing through a three-year strategic initiativenote receivable to transform the Company into a more concentrated owner of New Jersey Hudson River waterfront and transit-oriented office properties and a regional owner of luxury multi-family residential properties. In connection with the transformationan affiliate of the Company’s portfolio, management began developing a disposition planbuyers of $4.0 million.  The note was paid off in September 2015, which will be an ongoing assessment process.  Through this plan,October 2018.

(e)   Represents the receipt by the Company in the coming years, expectssecond quarter 2018 of variable contingent sales consideration, net of costs, of $1.5 million subsequent to disposedisposition of primarilythe property sold in January 2017.

(f)    The net sale proceeds were held by a qualified intermediary, which is noncash and recorded in deferred charges, goodwill and other assets as of December 31, 2018.   See Note 5: Deferred Charges, Goodwill and Other Assets, Net).

The Company disposed of the following developable land holding during the year ended December 31, 2018 (dollars in thousands):

 

 

 

 

 

 

Net

 

Net

 

Gain on

 

Disposition

 

 

 

 

 

Sales

 

Carrying

 

Disposition of

 

Date

 

Property Address

 

Location

 

Proceeds

 

Value

 

Developable Land

 

12/31/18

 

One Lake Street

 

Upper Saddle River, New Jersey (a)

 

$

46,036

 

$

15,097

 

$

30,939

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

 

 

 

 

$

46,036

 

$

15,097

 

$

30,939

 


(a)   The net sale proceeds were held by a qualified intermediary, which is noncash and recorded in deferred charges, goodwill and other assets as of December 31, 2018.   See Note 5: Deferred Charges, Goodwill and Other Assets, Net.  The net carrying value includes $3 million of development costs funded at the closing.

The Company identified as held for sale six office properties considered non-coretotaling approximately 845,000 square feet and a 159 unit multi-family rental property as of December 31, 2018.  The properties are located in Fort Lee, Newark, Paramus, Bridgewater, Morris Plains and Rahway, New Jersey.  The total estimated sales proceeds, net of expected selling costs, from the sales are expected to its ongoing operations.  As a result, at September 30, 2015,be approximately $124 million.  The Company determined that the carrying value of four of the properties was not expected to be recovered from estimated net sales proceeds and accordingly recognized an unrealized loss allowance of $20.1 million during the year ended December 31, 2018.  In January 2019, the Company evaluatedcompleted the recoverabilitydisposition of the carrying valuesthree of these non-core properties for sales proceeds of approximately $54.5 million.

Land Impairments:

The Company owns two separate developable land parcels in Conshohocken and determinedBala Cynwyd, Pennsylvania, that duewere being considered for development into multi-family rental properties.  During the fourth quarter 2018, the Company made the decision to pursue selling the land parcels rather than developing them.  Due to the shortening of the expected periods of ownership, the Company determined that it was necessary to reduce the carrying values of 22 rental properties to their estimated fair values.  Accordingly, the Company recorded an impairment charge of $158.6 million at September 30, 2015 reducing the aggregate carrying values of these properties from $554.3 millionland parcels to their estimated fair values (ascertained by broker opinions of $395.7 million.  Atvalue obtained during the marketing process) and recorded total land impairments charges of $24.6 million at December 31, 2015,2018

Unconsolidated Joint Venture Activity:

On January 31, 2019, the Company, which held a 24.27 percent subordinated interest in the unconsolidated joint venture, Marbella Tower Urban Renewal Associates South LLC (“Marbella II”), a 311-unit multi-family operating property located in Jersey City, New Jersey, acquired its equity partner’s 50 percent interest for $77.5 million in cash.  The acquisition was funded primarily using available cash.  Concurrently with the closing, the joint venture repaid in full the property’s $74.7 million mortgage loan and obtained a new loan in the amount of $117 million.

On December 11, 2018, the Company acquired one of its partner’s interest in the Metropolitan and Shops at 40 Park and the Lofts at 40 Park for $1.3 million and as a result, ofincreased its periodic evaluation ofownership from 12.5 percent interest to 25 percent interest in the recoverability ofMetropolitan and Shops at 40 Park and from 25 percent interest to 50 percent interest in the carrying values resulting from its ongoing assessment of non-core properties, the Company recorded an additional impairment charge of $33.7 million.


Four of the Company’s office properties are collateral for a mortgage loan that matured on August 11, 2014, with a principal balance of $63.3 million as of December 31, 2015. The loan was not repaidLofts at maturity and the Company is in discussions with the lender regarding potential options in satisfaction of the obligation (see Note 10: Mortgages, Loans Payable and Other Obligations).   As of September 30, 2015, the Company estimated that the carrying value of three of these properties, aggregating 479,877 square feet and located in Roseland and Parsippany, New Jersey, may not be recoverable over their anticipated holding periods. In order to reduce the carrying values of the properties to their estimated fair values, the Company recorded impairment charges of $5.6 million at September 30, 2015, which resulted from the current decline in leasing activity and market rents of the properties identified.   The Company had previously recorded impairment charges on these properties at September 30, 2013 of $12.5 million.
42


40 Park.

Critical Accounting Policies and Estimates


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”),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 – to the Financial Statements, for the Company’s treatment of unconsolidated joint venture interests.  Intercompany accounts and transactions have been eliminated.


Accounting Standards Codification (“ASC”) 810, Consolidation, 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 VIEs. Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack (i) the ability to make decisions about the entity'sentity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; (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 substantially all of the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest.  The Company consolidates VIEs in which it is considered to be the primary beneficiary.  The primary beneficiary is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the variable interest entity’s performance: and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE.


On January 1, 2016, the Company adopted accounting guidance under ASC 810, Consolidation, modifying the analysis it must perform to determine whether it should consolidate certain types of legal entities.  The guidance does not amend the existing disclosure requirements for variable interest entities or voting interest model entities.  The guidance, however, modified the requirements to qualify under the voting interest model.  Under the revised guidance, the Operating Partnership will be a variable interest entity of the parent company, Mack-Cali Realty Corporation.  As the Operating Partnership is already consolidated in the balance sheets of Mack-Cali Realty Corporation, the identification of this entity as a variable interest entity has no impact on the consolidated financial statements of Mack-Cali Realty Corporation.  There were no other legal entities qualifying under the scope of the revised guidance that were consolidated as a result of the adoption.

The Financial Statements have been prepared in conformity with generally accepted accounting principles (“GAAP”).  The preparation of financial statements in conformity with 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 reported period.  Actual results could differ from these estimates.  Certain reclassifications have been made to prior period amounts in order to conform with current period presentation.  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.  Acquisition-related costs arewere expensed as incurred.incurred through December 31, 2016.  The Company early adopted FASB guidance Accounting Standards Update (“ASU”) 2017-01 on January 1, 2017, which revises the definition of a business and is expected to result in more transactions to be accounted for as asset acquisitions and significantly limit transactions that would be accounted for as business combinations.  Where an acquisition has been determined to be an asset acquisition, acquisition-related costs 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, 2015, 20142018, 2017 and 20132016 was $16.2$27.0 million, $15.5$20.2 million and $12.9$19.3 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 substantial 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 residents, 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, primarily based on a percentage of the relative commercial square footage or multi-family units of each portion, 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


43

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 assumed, 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 fair values. The Company records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed exceeddiffer from the purchase consideration of a business transaction. 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 initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases.  The capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining terms 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.


relationships or leases.

On a periodic basis, management assesses whether there are any indicators that the value of the Company’s rental properties held for use may be impaired.  In addition to identifying any specific circumstances which may affect a property or properties, management considers other criteria for determining which properties may require assessment for potential impairment.  The criteria considered by management include reviewing low leased percentages, significant near-term lease expirations, recently acquired properties, current and historical operating and/or cash flow losses, near-term mortgage debt maturities and/or other factors, including those that might impact the Company’s intent and ability to hold the property.  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 impairment loss shall be measured as the excess of the carrying value 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.  These assumptions are generally based on management’s experience in its local real estate markets and the effects of current market conditions.  The assumptions 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, and actual losses or impairments may be realized in the future.  See Note 3: Recent Transactions – Impairments on Properties Held and Used – to the Financial Statements.


Rental Property Held for Sale:

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. The Company generally considers assets to be held for sale when the transaction has received appropriate corporate authority and there are no significant contingencies relating to the sale.  If, in management’s opinion, the estimated net sales price, net of selling costs, of the assets which have been identified as held for sale is less than the net bookcarrying value of the assets, a valuation allowance (which is recorded as unrealized losses on disposition of rental property) is established.

44


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 value 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:

The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting.  The Company applies the equity method by initially recording these investments at cost, as Investments in Unconsolidated Joint Ventures, subsequently adjusted for equity in earnings and cash contributions and distributions.  The outside basis portion of the Company’s joint ventures is amortized over the anticipated useful lives of the underlying ventures’ tangible and intangible assets acquired and liabilities assumed.  Generally, the Company would discontinue applying the equity method when the investment (and any advances) is reduced to zero and would not provide for additional losses unless the Company has guaranteed obligations of the venture or is otherwise committed to providing further financial support for the investee.    If the venture subsequently generates income, the Company only recognizes its share of such income to the extent it exceeds its share of previously unrecognized losses.


If the venture subsequently makes distributions and the Company does not have an implied or actual commitment to support the operations of the venture, including a general partner interest in the investee, the Company will not record a basis less than zero, rather such amounts will be recorded as equity in earnings of unconsolidated joint ventures.

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 value of the investment over the value of the investment.  The Company’s estimates of value for each investment (particularly in real estate joint ventures) are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and operating costs.  As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the values estimated by management in its impairment analyses may not be realized, and actual losses or impairment may be realized in the future.  See Note 4: Investments in Unconsolidated Joint Ventures to the Financial Statements.


Revenue Recognition:

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


Escalations and recoveries from tenants are received from tenants for certain costs as provided in the lease agreements.  These costs generally include real estate taxes, utilities, insurance, common area maintenance and other recoverable costs.


Construction services revenue includes fees earned and reimbursements received by the Company for providing construction management and general contractor services to clients.  Construction services revenue is recognized on the percentage of completion method.  Using this method, profits are recorded on the basis of our estimates of the overall profit and percentage of completion of individual contracts.  A portion of the estimated profits is accrued based upon estimates of the percentage of completion of the construction contract.  This revenue recognition method involves inherent risks relating to profit and cost estimates.

Real estate services revenue includes property management, development, construction and leasing commission fees and other services, and payroll and related costs reimbursed from clients.  Fee income derived from the Company’s unconsolidated joint ventures (which are capitalized by such ventures) are recognized to the extent attributable to the unaffiliated ownership interests.


Parking income includes income from parking spaces leased to tenants and others.

45


Other income includes income from tenants for additional services arranged for by the Company and income from tenants for early lease terminations.


Allowance for Doubtful Accounts:

Management performs a detailed review of amounts due from tenants to determine if an allowance for doubtful accounts is required based on factors affecting the collectability of the accounts receivable balances. The factors considered by management in determining which individual tenant receivable balances, or aggregate receivable balances, require a collectability allowance include the age of the receivable, the tenant’s payment history, the nature of the charges, any communications regarding the charges and other related information. 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.


Discontinued OperationsRedeemable Noncontrolling Interests:

In April 2014,

The Company evaluates the Financial Accounting Standards Board (“FASB”)terms of the partnership units issued guidance relatedin accordance with the FASB’s Distinguishing Liabilities from Equity guidance.  Units which embody an unconditional obligation requiring the Company to redeem the reporting of discontinued operation and disclosures of disposals of componentsunits for cash after a specified or determinable date (or dates) or upon the occurrence of an entity.  Thisevent that is not solely within the control of the issuer are determined to be contingently redeemable under this guidance defines a discontinued operationand are included as a component or groupRedeemable noncontrolling interests and classified within the mezzanine section between Total liabilities and Stockholders’ equity on the Company’s Consolidated Balance Sheets.  The carrying amount of components disposed or classified as held for sale and represents a strategic shiftthe redeemable noncontrolling interests will be changed by periodic accretions, so that has (orthe carrying amount will have) a major effect on an entity’s operations and final result;equal the guidance states that a strategic shift could include a disposal of a major geographical area of operations, a major line of business, a major equity method investment or other major parts of an entity.  The guidance also provides for additional disclosure requirements in connection with both discontinued operations and other dispositions not qualifying as discontinued operations.  The guidance is effective for all companies for annual and interim periods beginning on or after December 15, 2014. The guidance applies prospectively to new disposals and new classifications of disposal groups as held for sale afterestimated future redemption value at the effectiveredemption date.  All entities could early adopt the guidance for new disposals (or new classifications as held for sale) that had not been reported in financial statements previously issued or available for issuance. The Company elected to early adopt this standard effective with the interim period beginning January 1, 2014. 

Prior to January 1, 2014, properties identified as held for sale and/or disposed of were presented in discontinued operations for all periods presented. See Note 7: Discontinued Operations – to the Financial Statements.



46



Results From Operations

The following comparisons for the year ended December 31, 20152018 (“2015”2018”), as compared to the year ended December 31, 2014 (2014)2017 (“2017”), and for 20142017 as compared to the year ended December 31, 20132016 (“2013”2016”) make reference to the following:  (i) the effect of the “Same-Store Properties,” which represent all in-service properties owned by the Company at December 31, 2013,2016, (for the 20152018 versus 20142017 comparisons), and which represent all in-service properties owned by the Company at December 31, 20122015 (for the 20142017 versus 20132016 comparisons), excluding properties sold, disposed of, removed from service, or being redeveloped or repositioned from January 1, 20142016 through December 31, 2015;2018; (ii) the effect of the “Acquired Properties,” which represent all properties acquired by the Company or commencing initial operation from January 1, 20142017 through December 31, 20152018 (for the 20152018 versus 20142017 comparisons), and which represents all properties acquired by the Company or commencing initial operations from January 1, 20132016 through December 31, 20142017 (for the 20142017 versus 20132016 comparisons), and (iii) the effect of “Properties Sold” which represent properties sold, disposed of, or removed from service (including properties being redeveloped or repositioned) by the Company from January 1, 20142016 through December 31, 2015.2018.  During the 20152018 and 20142017 periods, foursix office properties, aggregating 657,523638,481 square feet, were removed from service as they were being redeveloped by the Company.


Year Ended December 31, 20152018 Compared to Year Ended December 31, 2014



            
            
             Year Ended      
                December 31,  Dollar Percent 
(dollars in thousands) 2015  2014  Change Change 
Revenue from rental operations and other:           
Base rents$ 487,041  $ 516,727  $ (29,686)  (5.7)%
Escalations and recoveries from tenants  62,481    78,554    (16,073)  (20.5) 
Parking income  11,124    9,107    2,017   22.1  
Other income  4,617    3,773    844   22.4  
Total revenues from rental operations  565,263    608,161    (42,898)  (7.1) 
            
Property expenses:           
Real estate taxes  82,688    90,750    (8,062)  (8.9) 
Utilities  55,965    72,822    (16,857)  (23.1) 
Operating services  107,951    112,621    (4,670)  (4.1) 
Total property expenses  246,604    276,193    (29,589)  (10.7) 
            
Non-property revenues:           
Real estate services  29,620    28,638    982   3.4  
Total non-property revenues  29,620    28,638    982   3.4  
            
Non-property expenses:           
Real estate services expenses  25,583    26,136    (553)  (2.1) 
General and administrative  49,147    71,051    (21,904)  (30.8) 
Acquisition-related costs  1,560    2,118    (558)  (26.3) 
Depreciation and amortization  170,402    172,490    (2,088)  (1.2) 
Impairments  197,919   -   197,919  - 
Total non-property expenses  444,611   271,795    172,816  63.6 
Operating income (loss)  (96,332)   88,811    (185,143)  (208.5) 
Other (expense) income:           
Interest expense  (103,051)   (112,878)   9,827   8.7  
Interest and other investment income  794   3,615    (2,821)  (78.0) 
Equity in earnings (loss) of unconsolidated joint ventures  (3,172)   (2,423)   (749)  (30.9) 
Realized gains (losses) on disposition           
   of rental property, net  53,261    54,848    (1,587)  (2.9) 
Gain on sale of investment in unconsolidated joint venture  6,448    -   6,448   - 
Loss from early extinguishment of debt  -   (582)   582   100.0  
Total other (expense) income  (45,720)   (57,420)   11,700  20.4  
Net income (loss)  (142,052)   31,391    (173,443)  (552.5) 
Noncontrolling interest in consolidated joint ventures  1,044   778    266  34.2 
Noncontrolling interest in Operating Partnership  15,256   (3,602)   18,858  523.5 
Net income (loss) available to common shareholders$ (125,752) $ 28,567  $ (154,319)  (540.2)%
47

2017

 

 

Year Ended

 

 

 

 

 

 

 

December 31,

 

Dollar

 

Percent

 

(dollars in thousands)

 

2018

 

2017

 

Change

 

Change

 

Revenue from rental operations and other:

 

 

 

 

 

 

 

 

 

Base rents

 

$

436,222

 

$

501,334

 

$

(65,112

)

(13.0

)%

Escalations and recoveries from tenants

 

44,121

 

58,767

 

(14,646

)

(24.9

)

Parking income

 

22,117

 

20,270

 

1,847

 

9.1

 

Other income

 

11,052

 

12,700

 

(1,648

)

(13.0

)

Total revenues from rental operations

 

513,512

 

593,071

 

(79,559

)

(13.4

)

 

 

 

 

 

 

 

 

 

 

Property expenses:

 

 

 

 

 

 

 

 

 

Real estate taxes

 

64,555

 

81,364

 

(16,809

)

(20.7

)

Utilities

 

39,054

 

42,598

 

(3,544

)

(8.3

)

Operating services

 

102,626

 

107,379

 

(4,753

)

(4.4

)

Total property expenses

 

206,235

 

231,341

 

(25,106

)

(10.9

)

 

 

 

 

 

 

 

 

 

 

Non-property revenues:

 

 

 

 

 

 

 

 

 

Real estate services

 

17,094

 

23,129

 

(6,035

)

(26.1

)

Total non-property revenues

 

17,094

 

23,129

 

(6,035

)

(26.1

)

 

 

 

 

 

 

 

 

 

 

Non-property expenses:

 

 

 

 

 

 

 

 

 

Real estate services expenses

 

17,919

 

23,394

 

(5,475

)

(23.4

)

General and administrative

 

53,988

 

50,949

 

3,039

 

6.0

 

Depreciation and amortization

 

174,847

 

205,169

 

(30,322

)

(14.8

)

Land Impairments

 

24,566

 

 

24,566

 

 

Total non-property expenses

 

271,320

 

279,512

 

(8,192

)

(2.9

)

Other (expense) income:

 

 

 

 

 

 

 

 

 

Interest expense

 

(83,754

)

(93,388

)

9,634

 

10.3

 

Interest and other investment income (loss)

 

3,389

 

2,766

 

623

 

22.5

 

Equity in earnings (loss) of unconsolidated joint ventures

 

(127

)

(6,081

)

5,954

 

97.9

 

Gain on change of control of interests

 

14,217

 

 

14,217

 

 

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

 

99,436

 

2,364

 

97,072

 

4,106.3

 

Gain on disposition of developable land

 

30,939

 

 

30,939

 

 

Gain on sale of investment in unconsolidated joint venture

 

 

23,131

 

(23,131

)

(100.0

)

Loss from extinguishment of debt, net

 

(10,750

)

(421

)

(10,329

)

(2,453.4

)

Total other (expense) income

 

53,350

 

(71,629

)

124,979

 

174.5

 

Net income

 

$

106,401

 

$

33,718

 

$

72,683

 

215.6

%

The following is a summary of the changes in revenue from rental operations and other, and property expenses, in 20152018 as compared to 20142017 divided into Same-Store Properties, Acquired Properties and Properties Sold in 20142017 and 20152018:



                        
        Total           Same-Store         Acquired   Properties 
       Company            Properties          Properties   Sold in 2014 and 2015 
  Dollar Percent  Dollar Percent  Dollar Percent Dollar Percent 
(dollars in thousands)
 Change Change  Change Change  Change Change Change Change 
Revenue from rental                       
  operations and other:                       
Base rents$ (29,686)  (5.7)% $ 6,660   1.3 % $ 1,780   0.3 % $ (38,126)  (7.3)%
Escalations and recoveries                       
  from tenants  (16,073)  (20.5)    (9,166)  (11.7)    128   0.2     (7,035)  (9.0) 
Parking income  2,017   22.1     1,100   12.1     915   10.0     2   - 
Other income  844   22.4     547   14.5     (24)  (0.6)    321   8.5  
Total$ (42,898)  (7.1)% $ (859)  (0.1)% $ 2,799   0.5 % $ (44,838)  (7.5)%
                        
Property expenses:                       
Real estate taxes$ (8,062)  (8.9)% $ (5,314)  (5.9)% $ 2,034   2.2 % $ (4,782)  (5.2)%
Utilities  (16,857)  (23.1)    (10,701)  (14.7)    218   0.3     (6,374)  (8.7) 
Operating services  (4,670)  (4.1)    1,545   1.4     1,268   1.1     (7,483)  (6.6) 
Total$ (29,589)  (10.7)% $ (14,470)  (5.2)% $ 3,520   1.3 % $ (18,639)  (6.8)%
                        
OTHER DATA:                       
Number of Consolidated Properties  223       221       2       26    
Commercial Square feet (in thousands)
  24,212       24,016       196       3,959    
Multi-family portfolio (number of units)
  1,301       1,081       220       -   

 

 

Total
Company

 

Same-Store
Properties

 

Acquired
Properties

 

Properties
Sold in 2017 and 2018

 

 

 

Dollar

 

Percent

 

Dollar

 

Percent

 

Dollar

 

Percent

 

Dollar

 

Percent

 

(dollars in thousands)

 

Change

 

Change

 

Change

 

Change

 

Change

 

Change

 

Change

 

Change

 

Revenue from rental operations and other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Base rents

 

$

(65,112

)

(13.0

)%

$

(20,899

)

(4.2

)%

$

28,011

 

5.6

%

$

(72,224

)

(14.4

)%

Escalations and recoveries from tenants

 

(14,646

)

(24.9

)

(4,392

)

(7.5

)

1,700

 

2.9

 

(11,954

)

(20.3

)

Parking income

 

1,847

 

9.1

 

916

 

4.5

 

2,090

 

10.3

 

(1,159

)

(5.7

)

Other income

 

(1,648

)

(13.0

)

(2,428

)

(19.1

)

1,401

 

11.0

 

(621

)

(4.9

)

Total

 

$

(79,559

)

(13.4

)%

$

(26,803

)

(4.5

)%

$

33,202

 

5.6

%

$

(85,958

)

(14.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

$

(16,809

)

(20.7

)%

$

(6,820

)

(8.4

)%

$

2,933

 

3.6

%

$

(12,922

)

(15.9

)%

Utilities

 

(3,544

)

(8.3

)

1,355

 

3.2

 

2,177

 

5.1

 

(7,076

)

(16.6

)

Operating services

 

(4,753

)

(4.4

)

1,145

 

1.1

 

7,710

 

7.2

 

(13,608

)

(12.7

)

Total

 

$

(25,106

)

(10.9

)%

$

(4,320

)

(1.9

)%

$

12,820

 

5.5

%

$

(33,606

)

(14.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Consolidated Properties

 

120

 

 

 

105

 

 

 

15

 

 

 

97

 

 

 

Commercial Square feet (in thousands)

 

14,857

 

 

 

13,601

 

 

 

1,256

 

 

 

7,669

 

 

 

Multi-family portfolio (number of units)

 

3,988

 

 

 

2,028

 

 

 

1,960

 

 

 

 

 

 

Base rents.  Base rents for the Same-Store Properties increased $6.7decreased $20.9 million, or 1.34.2 percent, for 20152018 as compared to 2014,2017, due primarily to an increase in occupancy in 2015 as compared to 2014, which resulted from a 90650 basis point increasedecrease in the average same store percent leased of the office portfolio from 89.4 percent in 2017 to 85.082.9 percent in 2018, primarily from 84.1 percent and an increasethe Company’s office properties located in average rental rents per square foot to $22.27 from $22.23.


Jersey City, New Jersey.

Escalations and recoveries.  Escalations and recoveries from tenants for the Same-Store Properties decreased $9.2$4.4 million, or 11.77.5 percent, for 20152018 over 20142017, due primarily to lower real estate tax expenses, as well as lower percent leased, in 2018 at its office properties in Jersey City, New Jersey, which resulted in lower recoveries from tenants of higher electric expenses in 2014 which the Company partially recovers from tenants pursuant2018 as compared to the terms of most of its leases with significantly lower expenses to recover in 2015. 


2017.

Parking income.  Parking income for the Same-Store Properties increased $1.1$0.9 million, or 12.14.5 percent for 20152018 as compared to 20142017 due primarily to increased usage.


an overall greater amount of parking usage in 2018.

Other income.  Other income for the Same-Store Properties increased $0.5decreased $2.4 million, or 14.519.1 percent for 2018 as compared to 2017 due primarily to various small income itemsa decrease in 2015.


lease breakage fees recognized in 2018, as compared to 2017.

Real estate taxes.  Real estate taxes on the Same-Store Properties decreased $5.3$6.8 million, or 5.98.4 percent, for 20152018 as compared to 2014. The change in real estate taxes principally results from2017 due primarily to an increase in tax appeal proceeds received in 20152018 as compared to 2014.2017.  Real estate taxes, without the effect of net tax appeal proceeds, decreased $2.5 million, or 2.9 percent, for 2018 as compared to 2017 due primarily to lower tax assessment values for the Company’s office properties in Jersey City, New Jersey in 2018.

Utilities.  Utilities for the Same-Store Properties increased $2.7$1.4 million, or 3.2 percent, for 20152018 as compared to 20142017, due primarily to increased rates.


Utilities.  Utilities for the year decreased $10.7 million, or 14.7 percent, for 2015electricity rates and usage in 2018 as compared to 2014.  Extended winter freeze conditions in early 2014 caused record electricity demand, and combined with reduced natural gas production and distribution disruptions, resulted in significant market price increases for electricity during the 2014 period.

2017.

Operating services.  Operating services for the Same-Store Properties increased $1.5$1.1 million, or 1.41.1 percent, due primarily to an increaseseverance, separation and related costs in snow removal and other service2018 from property management restructurings of $1.4 million, partially offset by a decrease of $0.7 million in property maintenance costs for 2015in 2018 as compared to 2014.


2017.

Real estate services revenue.  Real estate services revenuesrevenue (primarily reimbursement of property personnel costs) increased $1.0decreased $6.0 million, or 3.426.1 percent, for 20152018 as compared to 2014,2017, due primarily to increaseddecreased third party development and property management activity in multi-family services in 20152018 as compared to 2014.


48


2017.

Real estate services expenses.  Real estate services expenses decreased $0.6$5.5 million, or 2.123.4 percent, for 20152018 as compared to 2014.2017 due primarily to decreased salaries and related expenses from lower third party services activities in 2018.

General and administrative.  General and administrative expenses increased $3.0 million, or 6.0 percent, in 2018 as compared to 2017 due primarily to severance, separation and related costs from management restructurings in 2018 of $6.6 million, partially offset by a decrease in overhead salaries and related expenses from a decrease in overall corporate personnel in 2018 as compared to 2017 of $3.9 million.

Depreciation and amortization.  Depreciation and amortization decreased $30.3 million, or 14.8 percent, for 2018 over 2017.  This decreaseincrease was due primarily to decreased compensationlower depreciation of approximately $34.1 million for properties sold or removed from service during 2017 and related costs.


General2018 and administrative.  General and administrative expenses decreased $21.9a decrease of $3.1 million or 30.8 percent, in 2015for 2018 as compared to 2014, which was2017 on the Same-Store Properties primarily due to severance costs in 2014 of $23.8 million related to the departure of the Company’s Chief Executive Officer and certain of the Company’s other executive officers.

Acquisition-related costs.  The Company incurred transaction costs of $1.6 million in 2015 and $2.1 million in 2014 related to the Company’s property and joint venture acquisitions.  See Note 3 to the Financial Statements: Recent Transactions – Acquisitions.

Depreciation and amortization.  Depreciation and amortization decreased $2.1 million, or 1.2 percent, for 2015 over 2014.  This decrease was due primarily to assets of Same-Store Properties becoming fully amortized, and depreciation in 2014 for properties sold in 2014 and early 2015.amortized.  These were partially offset by acceleratedan increase in depreciation in 2015of $6.9 million for properties being removed2018 as compared to 2017 from service.the Acquired Properties.

Land impairments


Impairments..  The Company recorded $197.9land impairment charges of $24.6 million in impairment charges2018 on two developable land parcels in 2015 on certain properties to reduce the carrying values to their estimated fair market values, with no such charges taken in 2014.  See Note 3: Recent Transactions – to the Financial Statements.

Pennsylvania.

Interest expense.  Interest expense decreased $9.8$9.6 million, or 8.710.3 percent, for 20152018 as compared to 2014.2017.  This decrease was primarily the result of lower overall average debt balances in 2015interest rates for 2018 as compared to 2014.


2017, due to the refinancing of the Company’s debt in 2017 and 2018.

Interest and other investment income.  Interest and other investment income decreased $2.8increased $0.6 million, or 78.022.5 percent, for 20152018 as compared to 2014.  This was2017 primarily due to interest income on lowerhigher average notes receivable balances outstanding in 2015.


2018 as compared to 2017.

Equity in earnings (loss) of unconsolidated joint ventures.  Equity in earnings of unconsolidated joint ventures decreased $0.7increased $6.0 million, or 30.997.9 percent, for 20152018 as compared to 2014.2017.  The decreaseincrease was due primarily to a lossan increase of $3.7 million in 2015 from the Capitol Place Mezz venture (which commenced operations in 2015), and a gain of $2.3 million in 2014 from the Stanford SM venture (the venture’s note receivable was repaid in 2014).  These were partially offset by income of $3.8 million in 2015 from distributions received from the Keystone-Penn joint venture due to a loan refinancing of the venture’s property and a decreased loss from the Rosewood Lafayette Holdings joint venture (in which the Company sold its interest in 2015) of $0.8$5.4 million for 20152018 as compared to 2014.2017 from the Urby at Harborside venture, which was placed in service in 2017, and also included in 2018 the Company’s share of $2.6 million from venture’s sale of an economic tax credit to a third party.

Gain on change of control of interests.


 The Company recorded a gain on change of control of interests of $14.2 million in 2018 as a result of its acquisition of its equity partners’ interest in a multi-family property located in Jersey City, New Jersey.  See Note 3: Recent Transactions — Consolidations — to the Financial Statements.

Realized gains (losses) and unrealized losses on disposition of rental property, net.  The Company had realized gains (unrealized losses) on disposition of rental property of $53.3$99.4 million in 20152018 and $54.8$2.4 million in 2014.2017.  See Note 3: Recent Transactions Dispositions to the Financial Statements.

Gain on disposition of developable land.


  The Company recorded a gain of $30.9 million 2018 on the disposal of land in Upper Saddle River, New Jersey.  See Note 3: Recent Transactions — Dispositions — to the Financial Statements.

Gain on sale of investment in unconsolidated joint venture.The  In 2017, the Company realizedrecorded a gain of $6.4$23.1 million in 2015gain on the sale in 2017 of its equity interestinterests in the Rosewood Lafayette Holdings L.L.C.certain joint venture.


ventures.

Loss from early extinguishment of debt.  debt, net.In 2014,2018, the Company recognized a loss from early extinguishment of debt of $582,000$10.8 million in connection with the early prepayment of certain mortgage payables.  In 2017, the Company recognized a loss from extinguishment of debt of $0.4 million due to allocated costs as a result of the early redemptionamendment of $150 million principal amountits revolving credit facility in 2017 and the refinancing of 5.125 percent Notesa mortgage loan in December 2014, which were scheduled2017.  See Note 8 to mature in January 2015.the Financial Statements: Unsecured Revolving Credit Facility and Term Loans and Note 9 to the Financial Statements: Mortgages, Loans Payable and Other Obligations.

Net income. 


Net income (loss).  Net income decreasedincreased to a loss of approximately $142.0$106.4 million in 20152018 from income of $31.4$33.7 million in 2014.2017.  The decreaseincrease of $173.4$72.7 million was due to the factors discussed above.

Net income (loss) available to common shareholders.  Net income available to common shareholders decreased $154.3 million, or 540.2 percent, from income of $28.6 million in 2014 to a loss of approximately $125.7 million in 2015.  The decrease was primarily due to a decrease in net income of $173.4 million for 2015 as compared to 2014 (primarily due to the impairment charges in 2015 of $197.9 million).  This was partially offset by an increase in noncontrolling interest in Operating Partnership of $18.9 million for 2015 as compared to 2014, and an increase in noncontrolling interest in consolidated joint ventures of approximately $0.2 million for 2015 as compared to 2014.



49


Year Ended December 31, 20142017 Compared to Year Ended December 31, 2013

            
            
            Year Ended      
                December 31,  Dollar Percent 
(dollars in thousands) 2014  2013  Change Change 
Revenue from rental operations and other:           
Base rents$ 516,727  $ 540,165  $ (23,438)  (4.3)%
Escalations and recoveries from tenants  78,554    72,758    5,796   8.0  
Parking income  9,107    6,840    2,267   33.1  
Other income  3,773    4,683    (910)  (19.4) 
Total revenues from rental operations  608,161    624,446    (16,285)  (2.6) 
            
Property expenses:           
Real estate taxes  90,750    85,574    5,176   6.0  
Utilities  72,822    63,622    9,200   14.5  
Operating services  112,621    105,278    7,343   7.0  
Total property expenses  276,193    254,474    21,719   8.5  
            
Non-property revenues:           
Construction services  -   15,650    (15,650)  (100.0) 
Real estate services  28,638    26,935    1,703   6.3  
Total non-property revenues  28,638    42,585    (13,947)  (32.8) 
            
Non-property expenses:           
Direct construction costs  -   14,945    (14,945)  (100.0) 
Real estate services expenses  26,136    22,716    3,420   15.1  
General and administrative  71,051    47,040    24,011   51.0  
Acquisition-related costs  2,118    642    1,476   229.9  
Depreciation and amortization  172,490    182,766    (10,276)  (5.6) 
Impairments  -   110,853    (110,853)  (100.0) 
Total non-property expenses  271,795    378,962    (107,167)  (28.3) 
Operating income (loss)  88,811    33,595    55,216   164.4  
Other (expense) income:           
Interest expense  (112,878)   (123,701)   10,823   8.7  
Interest and other investment income  3,615    2,903    712   24.5  
Equity in earnings (loss) of unconsolidated joint ventures  (2,423)   (2,327)   (96)  (4.1) 
Realized gains (losses) on disposition           
   of rental property, net  54,848    -   54,848   - 
Loss from early extinguishment of debt  (582)   (156)   (426)  (273.1) 
Total other (expense) income  (57,420)   (123,281)   65,861   53.4  
Income (loss) from continuing operations  31,391    (89,686)   121,077   135.0  
Discontinued operations:           
Income from discontinued operations  -   11,811    (11,811)  (100.0) 
Loss from early extinguishment of debt  -   (703)   703   100.0  
Realized gains (losses) and unrealized losses on           
   disposition of rental property and impairments, net  -   59,520    (59,520)  (100.0) 
Total discontinued operations, net  -   70,628    (70,628)  (100.0) 
Net income (loss)  31,391    (19,058)   50,449   264.7  
Noncontrolling interest in consolidated joint ventures  778    2,199    (1,421)  (64.6) 
Noncontrolling interest in Operating Partnership  (3,602)   10,459    (14,061)  (134.4) 
Noncontrolling interest in discontinued operations  -   (8,509)   8,509   100.0  
Net income (loss) available to common shareholders$ 28,567  $ (14,909) $ 43,476   291.6 %
50


2016

 

 

Year Ended

 

 

 

 

 

 

 

December 31,

 

Dollar

 

Percent

 

(dollars in thousands)

 

2017

 

2016

 

Change

 

Change

 

Revenue from rental operations and other:

 

 

 

 

 

 

 

 

 

Base rents

 

$

501,334

 

$

506,877

 

$

(5,543

)

(1.1

)%

Escalations and recoveries from tenants

 

58,767

 

60,505

 

(1,738

)

(2.9

)

Parking income

 

20,270

 

13,630

 

6,640

 

48.7

 

Other income

 

12,700

 

5,797

 

6,903

 

119.1

 

Total revenues from rental operations

 

593,071

 

586,809

 

6,262

 

1.1

 

 

 

 

 

 

 

 

 

 

 

Property expenses:

 

 

 

 

 

 

 

 

 

Real estate taxes

 

81,364

 

87,379

 

(6,015

)

(6.9

)

Utilities

 

42,598

 

49,624

 

(7,026

)

(14.2

)

Operating services

 

107,379

 

103,954

 

3,425

 

3.3

 

Total property expenses

 

231,341

 

240,957

 

(9,616

)

(4.0

)

 

 

 

 

 

 

 

 

 

 

Non-property revenues:

 

 

 

 

 

 

 

 

 

Real estate services

 

23,129

 

26,589

 

(3,460

)

(13.0

)

Total non-property revenues

 

23,129

 

26,589

 

(3,460

)

(13.0

)

 

 

 

 

 

 

 

 

 

 

Non-property expenses:

 

 

 

 

 

 

 

 

 

Real estate services expenses

 

23,394

 

26,260

 

(2,866

)

(10.9

)

General and administrative

 

50,949

 

51,979

 

(1,030

)

(2.0

)

Acquisition-related costs

 

 

2,880

 

(2,880

)

(100.0

)

Depreciation and amortization

 

205,169

 

186,684

 

18,485

 

9.9

 

Total non-property expenses

 

279,512

 

267,803

 

11,709

 

4.4

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

Interest expense

 

(93,388

)

(94,889

)

1,501

 

1.6

 

Interest and other investment income

 

2,766

 

1,614

 

1,152

 

71.4

 

Equity in earnings (loss) of unconsolidated joint ventures

 

(6,081

)

18,788

 

(24,869

)

(132.4

)

Gain on change of control of interests

 

 

15,347

 

(15,347

)

(100.0

)

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

 

2,364

 

109,666

 

(107,302

)

(97.8

)

Gain on sale of investment in unconsolidated joint venture

 

23,131

 

5,670

 

17,461

 

308.0

 

Loss from extinguishment of debt, net

 

(421

)

(30,540

)

30,119

 

98.6

 

Total other (expense) income

 

(71,629

)

25,656

 

(97,285

)

(379.2

)

Net income

 

$

33,718

 

$

130,294

 

$

(96,576

)

(74.1

)%

The following is a summary of the changes in revenue from rental operations and other, and property expenses, in 20142017 as compared to 20132016 divided into Same-Store Properties, Acquired Properties and Properties Sold in 2014:


                        
     Total          Same-Store      Acquired           Properties 
       Company           Properties        Properties           Sold in 2014 
  Dollar Percent   Dollar Percent   Dollar Percent   Dollar Percent 
(dollars in thousands)
 Change Change   Change Change   Change Change   Change Change 
Revenue from rental                       
  operations and other:                       
Base rents$ (23,438) (4.3)% $ (13,831) (2.5)% $ 13,073 2.4% $ (22,680)  (4.2)%
Escalations and recoveries                       
  from tenants  5,796 8.0    8,840 12.2    1,042 1.4    (4,086)  (5.6) 
Parking income  2,267 33.1    (210) (3.1)    2,485 36.3    (8)  (0.1) 
Other income  (910) (19.4)    (1,475) (31.5)    644 13.8    (79)  (1.7) 
Total$ (16,285) (2.6)% $ (6,676) (1.0)% $ 17,244 2.7% $ (26,853)  (4.3)%
                        
Property expenses:                       
Real estate taxes$ 5,176 6.0% $ 6,113 7.1% $ 2,483 2.9% $ (3,420)  (4.0)%
Utilities  9,200 14.5    11,025 17.3    862 1.4    (2,687)  (4.2) 
Operating services  7,343 7.0    9,149 8.7    2,732 2.6    (4,538)  (4.3) 
Total$ 21,719 8.5% $ 26,287 10.3% $ 6,077 2.4% $ (10,645)  (4.2)%
                        
OTHER DATA:                       
Number of Consolidated Properties  232      224      8      16   
Commercial Square feet (in thousands)
  25,363      25,137      226      2,611   
Multi-family portfolio (number of units)
  1,301       -      1,301      -   

2016 and 2017:

 

 

Total

 

Same-Store

 

Acquired

 

Properties

 

 

 

Company

 

Properties

 

Properties

 

Sold in 2016 and 2017

 

 

 

Dollar

 

Percent

 

Dollar

 

Percent

 

Dollar

 

Percent

 

Dollar

 

Percent

 

(dollars in thousands)

 

Change

 

Change

 

Change

 

Change

 

Change

 

Change

 

Change

 

Change

 

Revenue from rental operations and other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Base rents

 

$

(5,543

)

(1.1

)%

$

5,653

 

1.1

%

$

72,837

 

14.4

%

$

(84,033

)

(16.6

)%

Escalations and recoveries from tenants

 

(1,738

)

(2.9

)

2,274

 

3.8

 

4,444

 

7.3

 

(8,456

)

(14.0

)

Parking income

 

6,640

 

48.7

 

4,330

 

31.8

 

2,512

 

18.4

 

(202

)

(1.5

)

Other income

 

6,903

 

119.1

 

(767

)

(13.2

)

7,729

 

133.3

 

(59

)

(1.0

)

Total

 

$

6,262

 

1.1

%

$

11,490

 

2.0

%

$

87,522

 

14.9

%

$

(92,750

)

(15.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

$

(6,015

)

(6.9

)%

$

808

 

0.9

%

$

8,975

 

10.3

%

$

(15,798

)

(18.1

)%

Utilities

 

(7,026

)

(14.2

)

(502

)

(1.0

)

4,131

 

8.3

 

(10,655

)

(21.5

)

Operating services

 

3,425

 

3.3

 

4,530

 

4.4

 

14,853

 

14.3

 

(15,958

)

(15.4

)

Total

 

$

(9,616

)

(4.0

)%

$

4,836

 

2.0

%

$

27,959

 

11.6

%

$

(42,411

)

(17.6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Consolidated Properties

 

142

 

 

 

126

 

 

 

16

 

 

 

98

 

 

 

Commercial Square feet (in thousands)

 

17,148

 

 

 

15,130

 

 

 

2,018

 

 

 

9,300

 

 

 

Multi-family portfolio (number of units)

 

2,551

 

 

 

1,081

 

 

 

1,470

 

 

 

 

 

 

Base rents.  Base rents for the Same-Store Properties decreased $13.8increased $5.7 million, or 2.51.1 percent, for 20142017 as compared to 2013,2016, due primarily to a decrease$0.97 increase in occupancy and rental rates in 2014average office annual rents per square foot to $24.78 for 2017 as compared to 2013.


$23.81 for 2016; partially offset by a 230 basis point decrease in the average same store percent leased of the office portfolio from 90.7 percent in 2016 to 88.4 percent in 2017.

Escalations and recoveries.  Escalations and recoveries from tenants for the Same-Store Properties increased $8.8$2.3 million, or 12.23.8 percent, for 20142017 over 20132016 due primarily to recoveries from tenants of higher electricproperty expenses to recover in 2014 which the Company partially recovers from tenants pursuant to the terms of most of its leases.  Related to the Company’s recovery from tenants of the increases in 2014 of real estate taxes and operating services, the portion the Company is recovering of those expenses has generally been reduced in 2014 primarily as a result of lower occupancies, in conjunction with the re-set of base years on new and renewed leases, in 2014.


2017.

Parking income.Parking income for the Same-Store Properties was relatively unchangedincreased $4.3 million, or 31.8 percent for 20142017 as compared to 2013.


2016 due to increased parking fees collected in 2017, as well as recording parking revenues, net of expenses, in 2016 and recording parking revenue, without netting expenses, in 2017, with such change in presentation resulting in minor period changes.

Other income.  Other income for the Same-Store Properties decreased $1.5$0.8 million, or 31.513.2 percent for 2017 as compared to 2016 due primarily to proceeds from a decreaselitigation settlement received in 2016 with no similar income in 2017.  $4.8 million of the increase in other income for the Acquired Properties in 2017 over 2016 was due to lease breakage fees recognized in 2014 as compared to 2013.


2017.

Real estate taxes.Real estate taxes on the Same-Store Properties increased $6.1 million, or 7.1 percent, for 2014 as compared to 2013. The change in real estate taxes principally results from a decrease in tax appeal proceeds received in 2014 as compared to 2013.  Real estate taxes, without the effect of net tax appeal proceeds, increased $0.7$0.8 million, or 0.9 percent, for 20142017 as compared to 20132016 due primarily to increased rates.


rates in 2017.

Utilities.Utilities for the Same-Store Properties increased $11.0decreased $0.5 million, or 17.31.0 percent, for 20142017 as compared to 2013.  Extended winter freeze conditions2016, due primarily to decreased usage in early 2014 caused record electricity demand, and combined with reduced natural gas production and distribution disruptions, resulted in significant market price increases for electricity during the period.


2017 due to milder weather.

Operating services.Operating services for the Same-Store Properties increased $9.1$4.5 million, or 8.74.4 percent, due primarily to an increase in repairsproperty maintenance costs and maintenance, snow removal and insurance costsparking services expenses for 20142017 as compared to 2013.


Construction services revenue.  Construction services2016, including recording parking revenue, decreased $15.7 million to zeronet of expenses, in 2016 and direct construction costs decreased $14.9 million to zerorecording parking revenue, without netting expenses, in 2014 as compared to 2013 due to the Company’s phase out of this business segment.


51


2017, with such change in presentation resulting in minor period changes.

Real estate services revenue.Real estate services revenuesrevenue (primarily reimbursement of property personnel costs) increased by $1.7decreased $3.5 million, or 6.313.0 percent, for 20142017 as compared to 2013,2016, due primarily to increaseddecreased third party development and property management activity in multi-family services in 20142017 as compared to 2013.


2016.

Real estate services expenses.Real estate services expenses increased $3.4decreased $2.9 million, or 15.110.9 percent, for 20142017 as compared to 2013.  This increase was2016 due primarily to increased compensationdecreased salaries and related costs from increased development and management activity in multifamilyexpenses due to lower third party services in 2014 as compared to 2013.


activities.

General and administrative.General and administrative expenses increased $24.0decreased $1.0 million, or 2.0 percent, in 20142017 as compared to 2013, which was2016 due primarily due to severance costsa decrease in overhead salaries and related to the pending departure of the Company’s Chief Executive Officer and the departure of certain of the Company’s other executive officers in 2014.


expenses.

Acquisition-related costs.  The Company incurred transaction costs of $2.1$2.9 million in 2014 and $0.6 million in 20132016 related to the Company’s property and joint venture acquisitions.  See Note 3 toacquisitions, which were expensed for the Financial Statements: Recent Transactions – Acquisitions.


period, with no such costs expensed in 2017.

Depreciation and amortization.Depreciation and amortization decreased by $10.3increased $18.5 million, or 5.69.9 percent, for 20142017 over 2013.2016.  This decreaseincrease was due primarily to a decreasedepreciation of $4.6$41.1 million in 2017 on the Acquired Properties, and an increase of $3.1 million for 2017 as compared to 2016 on the Same-Store Properties due to assets becoming fully amortized, and a decreaseaccelerated depreciation on buildings planning to be removed from service, partially offset by lower depreciation of $8.7$25.7 million for 2014in 2017 as compared to 20132016 for the properties sold in 2014 (which were not classified as discontinued operations).  These were partially offset by an increase of $3.0or removed from service.

Interest expense.  Interest expense decreased $1.5 million, or 1.6 percent, for 20142017 as compared to 2013 for the Acquired Properties.


Impairments.  The Company recorded $110.9 million in impairment charges in 2013, primarily on 18 properties to reduce their carrying values to their estimated fair market values, with no such charges taken in 2014.

Interest expense.  Interest expense decreased by $10.8 million, or 8.7 percent, for 2014 as compared to 2013.2016.  This decrease was primarily the result of lower overallaverage interest rates achieved on refinanced debt in late 2016, partially offset by increased average debt balances in 2014 as compared to 2013.

2017.

Interest and other investment income.Interest and other investment income increased $0.7$1.2 million, or 24.571.4 percent, for 20142017 as compared to 2013.  This was2016 primarily due to interest income onas a result of $1.6 million from higher average notes receivable balances in 2014.


2017, partially offset by a decrease in valuation mark-to-market gains of $0.5 million for an interest swap recorded in 2017 as compared to 2016.

Equity in earnings (loss) of unconsolidated joint ventures.Equity in earnings of unconsolidated joint ventures decreased $0.1$24.9 million, or 4.1132.4 percent, for 20142017 as compared to 2013.2016.  The Company had decreaseddecrease was due primarily to a decrease in equity earnings income of $20.9 million from refinancing proceeds received in 20142016 from the Company’s South Pier at Harborside hotel joint venture in excess of $1.4its carrying value, with no similar activity in 2017, and an equity loss in 2017 of $6.1 million from the Stamford SMCompany’s URL Harborside venture, (due towhich was placed in service in 2017 but was in the venture’s note receivable being repaid in 2014), and an increased losslease-up stage during the year.

Gain on change of $1.2control of interests.  In 2016, the Company recorded a gain on change of control of $15.3 million in 2014 fromconnection with the PruRose Riverwalk G venture.  These were partially offset by increased income of $2.5 million from the Crystal House Apartments Investors venture in 2014 (as a resultacquisitions of the joint venture being entered intoremaining interests of residential properties located in March 2013).


Malden and East Boston, Massachusetts.

Realized gains (losses) and unrealized losses on disposition of rental property, net.The Company had realized gains on disposition of rental property of $54.8$2.4 million in 2014 (which were not classified as discontinued operations).2017 and $109.7 million in 2016.  See Note 3: Recent Transactions Dispositions to the Financial Statements.

Gain on sale of investment in unconsolidated joint venture.


  In 2017, the Company recorded a $23.1 million gain on the sale of its interests in certain joint ventures, which owned properties in New York, New Jersey and Pennsylvania.  In 2016, the Company realized a gain of $5.7 million on the sale of an unconsolidated joint venture property located in Weehawken, New Jersey.

Loss from early extinguishment of debt.  debt, net.In 2014,2017, the Company recognized lossesa loss from early extinguishment of debt of $582,000 as compared to $156,000 in 2013.  The 2014 amount was$0.4 million due to the early redemption of $150 million principal amount of 5.125 percent Notes in December 2014, which were scheduled to mature in January 2015.  The 2013 amount was due to the partial early termination and extension of the Company’s revolving credit facilityallocated costs as a result of decreased participationthe amendment of its revolving credit facility in 2017 and the refinancing of a mortgage loan in 2017.  In 2016, the Company recognized a loss from extinguishment of debt, net, of $30.5 million due primarily to the costs of repayment of certain lenders insenior unsecured notes and a mortgage loan of $42.5 million offset by a gain from a discounted mortgage loan repayment of $12.4 million.  See Note 7 to the facility.Financial Statements: Senior Unsecured Notes, Note 8 to the Financial Statements: Unsecured Revolving Credit Facility and Term Loans and Note 9 to the Financial Statements: Mortgages, Loans Payable and Other Obligations.

Net income. 


Net income (loss).  Income from continuing operations increaseddecreased to $31.4$33.7 million in 20142017 from a loss of $89.7$130.3 million in 2013.2016.  The increasedecrease of $121.1$96.6 million was due to the factors discussed above.

Net income (loss) available to common shareholders.  Net income available to common shareholders increased by $43.5 million, or 291.6 percent, from a loss of $14.9 million in 2013 to income of $28.6 million in 2014.  The increase was primarily due to an increase in income from continuing operations of $121.1 million for 2014 as compared to 2013 (mostly due to the impairment charges in 2013 of $110.9 million), an impairment charge of $23.9 million on discontinued operations in 2013, a decrease in noncontrolling interest in discontinued operations of $8.5 million for 2014 as compared to 2013 and a loss on early extinguishment of debt of $0.7 million in 2013.  These were partially offset by realized gains on disposition of rental property, net of $83.4 million in 2013 (which were classified as discontinued operations), a decrease in noncontrolling interest in Operating Partnership of $14.1 million for 2014 as compared to 2013, a decrease in income from discontinued operations of $11.8 million for 2014 as compared to 2013, and a decrease in noncontrolling interest in consolidated joint ventures of $1.4 million for 2014 as compared to 2013.

52

LIQUIDITY AND CAPITAL RESOURCES

Liquidity


Overview:

Historically, rental revenue has been the Company’s 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 unsecured revolving credit facility, other debt and equity financings, proceeds from the sale of properties and joint venture capital.


The Company expects to meet its short-term liquidity requirements generally through its working capital, which may include proceeds from the sales of office properties, net cash provided by operating activities and draw from its unsecured 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, to the extent available, proceeds from property sales, joint venture capital, long-term and short-term borrowings (including draws on the Company’s unsecured revolving credit facility) and the issuance of additional debt and/or equity securities.


Repositioning of the Company’s Portfolio:

As described earlier relative to its current strategic initiative, the Company’s management has been reviewing its portfolio and identifying opportunities to divest of non-core office properties that no longer meet its long-term strategy, have reached their potential, are less efficient to operate, or when market conditions are favorable to be sold at attractive prices.  The Company anticipates redeployingcontinuing to redeploy the proceeds from non-core rental property sales in the near-term to acquire office or multi-family rental properties, enhance amenities and infrastructure at existing office properties, develop, redevelop and acquire multi-family rental properties, as well as reposition certain office properties into multi-family residential and/or mixed use properties, in its core Northeast sub-markets.


Construction Projects:

On October 6,

In 2015, the Company entered into a 90-percent owned joint venture partnership with XS Port Imperial Hotel, LLC (“XS”) to form XS Hotel Urban Renewal Associates LLC, (“XS Hotel URA”) for the developmentwhich is developing a 372-key hotel (164 keys Residence Inn and ownership of a 364-key dual branded hotel property located208 keys Marriott Envue) in Weehawken, New Jersey (“Port Imperial Hotel”).  Concurrently,Jersey.  The Residence Inn opened in 4Q 2018 and the Company and XS entered into a separate joint venture partnershipMarriott Envue is expected to form XS Hotel Associates, L.L.C. (“XS Hotel”) for the management and operations of the completed hotel development.  The Company holds a 90 percent interest and XS holds the remaining 10 percent interestopen in the consolidated joint ventures, XS Hotel URA and XS Hotel, with the Company having full and complete authority, power, and discretion to manage and control the ventures’ business, affairs, and property.2Q 2019.   The construction of the Port Imperial Hotelproject is estimated to cost a total$159.9 million, with construction costs of $105.9$147.1 million which willincurred by the venture through December 31, 2018.  The project costs are expected to be funded byfrom a $94 million construction loan with the balance to be funded with members’ capital.  Upon closing, Mack-Cali’s initial contribution was $27.3(with $73.4 million which included a capital credit of $23.7 million for its contributed Hotel Condominium Land unit, and XS Hotel’s initial contribution was $3 million.  Asoutstanding as of December 31, 2015, the Company incurred development costs of $1.5 million and estimates it will need to fund an additional $3.3 million for the completion of the project.


2018).

The Company owns developable land to accommodateis developing a multi-phase development313-unit multi-family project of approximately 1,034-unit multi-family rental property locatedknown as Building 8/9 at Port Imperial in Malden, Massachusetts.  The initial phase commencedWeehawken, New Jersey, which began construction of 292 units in the third quarter of 2015 (the “Chase II Project”).2018.  The Chase II Projectconstruction project, which is estimated to cost a total$142.6 million of $74.9which construction costs of $35.4 million (of which the Company hashave been incurred $22.1 million through December 31, 2015) and2018, is expected to be ready for occupancy by secondin fourth quarter 2017.2020.  The Company estimates it will needis expected to fund additional$50.6 million of construction costs, of $4.8 million for the completion of the Chase II Project.  On December 16, 2015,which the Company obtained a construction loan with a maximum borrowing amount of $48has funded $35.4 million (with no outstanding balance as of December 31, 2015), which bears interest at a rate of LIBOR plus 2.25 percent, reducing to LIBOR plus 2.0 percent subject to achieving certain conditions and matures in December 2018.


On April 1, 2015, the Company acquired vacant land to accommodate a two-phase development of the CitySquare Project for a purchase price of $3.1 million with an additional $1.25 million to be paid (which is accrued as of December 31, 2015), subject to certain conditions, in accordance with the terms of the purchase and sale agreement.  The purchase price for the acquisition was funded primarily through borrowing under the Company’s unsecured revolving credit facility.  The first phase with 237 units started construction in the third quarter 2015 with anticipated initial deliveries in the second quarter 2017.  The second phase, with 128 units, is projected to begin construction in 2017.  Total development costs are estimated to be approximately $92.5 million (of which $9.1 million was incurred by the Company through December 31, 2015 and estimates it will need to fund an additional $41.9 million for the completion of the project).  On December 10, 2015, the Company obtained a construction loan with a maximum borrowing amount of $41.5 million (with no outstanding balance as of December 31, 2015), which bears interest at a rate of LIBOR plus 2.5 percent, reducing to LIBOR plus 2.25 percent subject to achieving certain conditions and matures in December 2018.
53


On May 21, 2014, the Company entered into a joint venture agreement with Ironstate Harborside-A LLC (“ISA”) to form Harborside Unit A Urban Renewal, L.L.C. (“URL-Harborside”), a newly-formed joint venture that will develop, own and operate a high-rise tower of approximately 763 multi-family apartment units above a parking pedestal to be located on land contributed by the Company at its Harborside complex in Jersey City, New Jersey (the “URL Project”).  The Company owns an 85 percent interest in URL-Harborside2018, and the remaining interestconstruction costs are expected to be funded primarily from a $92 million construction loan.

The Company is owned by ISA, with shared control over major decisions suchdeveloping a 326-unit multi-family project known as approval of budgets, property financings and leasing guidelines.Chase III at Overlook Ridge, in Malden, Massachusetts, which began construction in third quarter 2018.  The construction of the URL Projectproject, which is estimated to cost a total$99.9 million of approximately $320 million (of which development costs of $210.2$20.2 million have been incurred by URL-Harborside through December 31, 2015).  The URL Project is projected to be ready for occupancy by the fourth quarter of 2016.  The venture has a construction/permanent loan with a maximum borrowing amount of $192 million (with $63.9 million outstanding as of December 31, 2015), which bears interest at a rate of 5.197 percent and matures in August 2029.  The Company does not expect to fund any future development costs of the project, as future development costs will be funded by using the loan financing.


The Company owns a 76.25 percent interest in a consolidated joint venture which is constructing a 108-unit multi-family development rental property located in Eastchester, New York (the “Eastchester Project”).  The project2018, is expected to be ready for occupancy by the secondin fourth quarter 2020.  The Company is expected to fund $37.9 million of 2016.  The Eastchester Project is estimated to cost a total of $50 million (of which developmentconstruction costs, of $29.6which the Company has funded $20.2 million have been incurred through December 31, 2015).  The venture has a $28.8 million construction loan (with $10.9 million outstanding as of December 31, 2015)2018, and the remaining construction costs are expected to be funded primarily from a $62 million construction loan.

In August 2017, the Company acquired an existing mortgage note receivable encumbering a vacant developable land parcel located in Jersey City, New Jersey (the “Land Property”) with a balance of $44.7 million (the “Land Note Receivable”).  The Land Note Receivable matures in July 2019 and earns interest at an annual rate of 5.85 percent which accrues monthly and is payable at maturity.  In March 2018, the Company expectsreceived a partial prepayment of $3 million.  The Land Property is currently an unimproved land parcel which operates as a surface parking facility.  Additionally, the Company entered into an agreement to fund approximately $20.9acquire the Land Property, subject to the Company’s ability to obtain all necessary development rights and entitlements to develop an apartment building on the land, and other related conditions to ensure that the Company can develop the project.  The purchase price is $73 million, subject to adjustment based on the level of development rights obtained for the developmentconstruction of the project (of which, as of December 31, 2015, the Company has incurred $14.7 million of the development costs and estimates it will need to fund an additional $6.2 million for the completion of the project. 


a multifamily apartment building

REIT Restrictions:

To maintain its qualification as a REIT under the IRS Code, the CompanyGeneral Partner 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 CompanyGeneral Partner intends to continue to make regular quarterly distributions to its common stockholders.  Based upon the most recently paid common stock dividend rate of $0.15$0.20 per common share, in the aggregate, such distributions would equal approximately $53.8$72.2 million ($60.181.8 million, including common units in the Operating Partnership held by parties other than the Company)General Partner) on an annualized basis.  However, any such distributions, whether for federal income tax purposes or otherwise, would be paid out of available cash, including borrowings and other sources, after meeting operating requirements, preferred stock dividends and distributions, and scheduled debt service on the Company’s debt.  If and to the extent the Company retains and does not distribute any

net capital gains, the CompanyGeneral Partner will be required to pay federal, state and local taxes on such net capital gains at the rate applicable to capital gains of a corporation.


Property Lock-Ups:

The

Through February 2016, the Company maycould not dispose of or distribute certain of its properties currently comprised of seven properties with an aggregate net carrying value of approximately $57.1 million, which were originally contributed by certain unrelated common unitholders of the Operating Partnership, without the express written consent of such common unitholders, as applicable, except in a manner which doesdid not result in recognition of any built-in-gain (which may result in an income tax liability) or which reimbursesreimbursed the appropriate specific common unitholders for the tax consequences of the recognition of such built-in-gains (collectively, the “Property Lock-Ups”).  The aforementioned restrictions do not apply in the event that the Company sells all of its properties or in connection with a sale transaction which the Company’s Board of Directors determines is reasonably necessary to satisfy a material monetary default on any unsecured debt, judgment or liability of the Company or to cure any material monetary default on any mortgage secured by a property.  The Property Lock-Ups expire in 2016. 


Upon the expiration in February 2016 of the Property Lock-Ups, the Company is generally required to use commercially reasonable efforts to prevent any sale, transfer or other disposition of the subject properties from resulting in the recognition of built-in gain to the specific common unitholders, which include members of the Mack Group (which includes William L. Mack, Chairman of the Company’sGeneral Partner’s Board of Directors; David S. Mack, director; and Earle I. Mack, a former director);, the Robert Martin Group (which includes Robert F. Weinberg, a former director and current member of itsthe General Partner’s Advisory Board), and the Cali Group (which includes John R. Cali, a former director and current member of itsthe General Partner’s Advisory Board).  As of December 31, 2015, 1102018, after the effects of tax-free exchanges on certain of the originally contributed properties, either wholly or partially, over time, 79 of the Company’s properties, primarily a portfolio of flex properties in Westchester County, New York, with an aggregate net bookcarrying value of approximately $1.3$1.4 billion, have lapsed restrictions and are subject to these conditions.
54


Unencumbered Properties:

As of December 31, 2015,2018, the Company had 204104 unencumbered properties with a carrying value of $2.4$2.2 billion representing 91.088.1 percent of the Company’s total consolidated property count.



Cash Flows


Cash and cash equivalents increaseddecreased by $7.5$18.4 million to $37.1$49.6 million at December 31, 2015,2018, compared to $29.6$68.0 million at December 31, 2014.2017.  This increasedecrease is comprised of the following net cash flow items:



(1)

$169.5167.1 million provided by operating activities.

(2) 

$222.5168.2 million used in investing activities, consisting primarily of the following:

(a)

$78            $11.8 million used for investments in unconsolidated joint ventures; plus

(b)

$70.5            $164.8 million used for rental property acquisitions and related intangibles; plus

(c)

$94.1             $168.4 million used for additions to rental property and improvements; plus

(d)

$81.1            $184.8 million used for the development of rental property, other related costs and deposits; plusminus

(e)

$1.1 million used for restricted cash; minus
(f)$81             $338 million from proceeds from the sales of rental property; minus

(g)$8.3

(f)              $12.1 million received from payments of notes receivables; minus

(h)$6.4 million from proceeds from the sale of investment in unconsolidated joint venture; minus
(i)$6.4

(g)             $11.6 million received from distributions in excess of cumulative earnings from unconsolidated joint ventures.

(3)

$60.617.3 million provided byused in financing activities, consisting primarily of the following:

(a)

$334 million from borrowings under the revolving credit facility; plus
(b)$10.8 million from proceeds received from mortgages and loans payable; plus
(c)                
$2.1 million from contributions from noncontrolling interests; minus
(d)$179            $494 million used for repayments of revolving credit facility; minusplus

(e)$60 million used for payments of dividends and distributions; minus
(f)$43.1

(b)            $418.5 million used for repayments of mortgages, loans payable and other obligations; minus

(g)$3

(c)             $94 million used for repaymentpayments of dividends and distributions; plus

(d)            $3.6 million used for payment of finance costs.

cost, minus

(e)             $461 million from borrowings under the revolving credit facility; minus

(f)              $434.3 million from proceeds received from mortgages and loans payable; minus

(g)             $105 million from issuance of redeemable noncontrolling interests; minus

(h)            $7.5 million from contributions to noncontrolling interests.


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, 2015:


         
         
  Balance  Weighted Average  Weighted Average
  ($000’s)% of Total Interest Rate (a)  Maturity in Years
Fixed Rate Unsecured Debt and        
  Other Obligations$ 1,268,844 58.88% 4.88%  4.16
Fixed Rate Secured Debt  593,677 27.55% 7.15%  2.56
Variable Rate Secured Debt  137,399 6.38% 4.09%  1.13
Variable Rate Unsecured Debt (b)  155,000 7.19% 1.66%  1.58
         
Totals/Weighted Average:$ 2,154,920 100.00% 5.22%(b) 3.34
         
(a)The actual weighted average LIBOR rate for the Company’s outstanding variable rate debt was 0.35 percent as of December 31, 2015, plus the applicable spread.
(b)Excludes amortized deferred financing costs pertaining to the Company’s unsecured revolving credit facility which amounted to $3.2 million for the year ended December 31, 2015.


55
2018:

 

 

Balance
($000’s)

 

% of Total

 

Weighted Average
Interest Rate (a)

 

Weighted Average
Maturity in Years

 

 

Fixed Rate Unsecured Debt and Other Obligations

 

$

1,250,000

 

44.53

%

3.70

%

2.04

 

Fixed Rate Secured Debt

 

1,243,219

 

44.28

%

3.83

%

6.70

 

Variable Rate Secured Debt

 

197,177

 

7.02

%

5.59

%

0.68

 

Variable Rate Unsecured Debt (b)

 

117,000

 

4.17

%

3.74

%

2.07

 

 

 

 

 

 

 

 

 

 

 

Totals/Weighted Average:

 

$

2,807,396

 

100.00

%

3.89

%(b)

4.01

 

Adjustment for unamortized debt discount

 

(2,838

)

 

 

 

 

 

 

Unamortized deferred financing costs

 

(11,907

)

 

 

 

 

 

 

Total Debt, Net

 

$

2,792,651

 

 

 

 

 

 

 




(a)         The actual weighted average LIBOR rate for the Company’s outstanding variable rate debt was 2.45 percent as of December 31, 2018, plus the applicable spread.

(b)         Excludes amortized deferred financing costs primarily pertaining to the Company’s unsecured revolving credit facility which amounted to $3.3 million for the year ended December 31, 2018.

Debt Maturities:

Scheduled principal payments and related weighted average annual effective interest rates for the Company’s debt as of December 31, 20152018 are as follows:

Period

 

Scheduled
Amortization
($000’s)

 

Principal
Maturities
($000’s)

 

Total
($000’s)

 

Weighted Avg.
Effective Interest Rate of
Future Repayments (a)

 

 

 

 

 

 

 

 

 

 

 

2019 (b)

 

$

532

 

$

546,711

 

$

547,243

 

4.11

%

2020

 

2,903

 

325,000

 

327,903

 

3.46

%

2021 (c)

 

3,227

 

285,800

 

289,027

 

3.42

%

2022

 

3,284

 

300,000

 

303,284

 

4.60

%

2023

 

3,412

 

333,998

 

337,410

 

3.53

%

Thereafter

 

7,230

 

991,929

 

999,159

 

3.95

%

Sub-total

 

20,588

 

2,783,438

 

2,804,026

 

3.89

%

Adjustment for unamortized debt discount/premium, net as of December 31, 2018

 

(2,838

)

 

(2,838

)

 

 

Unamortized mark to market

 

3,370

 

 

3,370

 

 

 

Unamortized deferred financing costs

 

(11,907

)

 

(11,907

)

 

 

Totals/Weighted Average

 

$

9,213

 

$

2,783,438

 

$

2,792,651

 

3.89

%(d)



             
             
  Scheduled  Principal    Weighted Avg. 
  Amortization  Maturities  Total Effective Interest Rate of 
Period ($000’s)  ($000’s)  ($000’s) Future Repayments (a) 
2016$ 8,125 $ 406,465 $ 414,590  6.67% 
2017 (b)  7,275   557,088   564,363  3.41% 
2018  7,311   231,536   238,847  6.67% 
2019  723   331,567   332,290  7.45% 
2020  569   -   569  4.82% 
Thereafter  5,759   605,206   610,965  4.13% 
Sub-total  29,762   2,131,862   2,161,624    
Adjustment for unamortized debt            
  discount/premium, net, as of            
 December 31, 2015  (6,704)   -   (6,704)    
             
Totals/Weighted Average$ 23,058 $ 2,131,862 $ 2,154,920  5.22%(c)
             
(a)The actual weighted average LIBOR rate for the Company’s outstanding variable rate debt was 0.35 percent as of December 31, 2015, plus the applicable spread.
(b)Includes outstanding borrowings of the Company’s unsecured revolving credit facility of $155 million which matures in 2017 with two six-month extension options with the payment of a fee.
(c)Excludes amortized deferred financing costs pertaining to the Company’s unsecured revolving credit facility which amounted to $3.2 million for the year ended December 31, 2015.  

(a)         The actual weighted average LIBOR rate for the Company’s outstanding variable rate debt was 2.45 percent as of December 31, 2018, plus the applicable spread.

(b)         On January 7, 2019, the Company exercised a one-year extension option on the $350 million term loan scheduled to mature in January 2019, which extended the maturity of the Term Loan to January 2020.

(c)          Includes outstanding borrowings of the Company’s unsecured revolving credit facility of $117 million.

(d)         Excludes amortized deferred financing costs primarily pertaining to the Company’s unsecured revolving credit facility which amounted to $3.3 million for the year ended December 31, 2018.

Senior Unsecured Notes:

The terms of the Company’s senior unsecured notes (which totaled approximately $1.3 billion$570 million as of December 31, 2015)2018) 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 and Term LoanLoans:

On January 7, 2016,25, 2017, the Company obtainedentered into an amended revolving credit facility and new term loan agreement (“2017 Credit Agreement”) with a group of 13 lenders.  Pursuant to the 2017 Credit Agreement, the Company refinanced its existing $600 million unsecured revolving credit facility (“2017 Credit Facility”) and entered into a new $350$325 million unsecured term loan which maturesfacility (“2017 Term Loan”).  Effective March 6, 2018, the Company elected to determine its interest rate under the 2017 Credit Agreement and under the 2017 Term Loan using the defined leverage ratio option, resulting in an interest rate of LIBOR plus 130 basis points and LIBOR plus 155 basis points, respectively.

The terms of the 2017 Credit Facility include: (1) a four-year term ending in January 20192021, with two six-month extension options; (2) revolving credit loans may be made to the Company in an aggregate principal amount of up to $600 million (subject to increase as discussed below), with a sublimit under the 2017 Credit Facility for the issuance of letters of credit in an amount not to exceed $60 million (subject to increase as discussed below); (3) an interest rate based on the Operating Partnership’s unsecured debt ratings from Moody’s or S&P, or, at the Operating Partnership’s option, if it no longer maintains a debt rating from Moody’s or S&P or such debt ratings fall below Baa3 and BBB-, based on a defined leverage ratio; and (4) a facility fee, currently 25 basis points, payable quarterly based on the Operating Partnership’s unsecured debt ratings from Moody’s or S&P, or, at the Operating Partnership’s option, if it no longer maintains a debt rating from Moody’s or S&P or such debt ratings fall below Baa3 and BBB-, based on a defined leverage ratio.

After electing to use the defined leverage ratio to determine the interest rate, the interest rate under the 2017 Credit Facility is currently based on the following total leverage ratio grid:

Total Leverage Ratio

 

Interest Rate -
Applicable Basis
Points above LIBOR

 

Interest Rate -
Applicable Basis Points
Above LIBOR for
Alternate Base Rate
Loans

 

Facility Fee
Basis Points

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

<45%

 

125.0

 

25.0

 

20.0

 

>45% and <50% (current ratio)

 

130.0

 

30.0

 

25.0

 

>50% and <55%

 

135.0

 

35.0

 

30.0

 

>55%

 

160.0

 

60.0

 

35.0

 

Prior to the election to use the defined leverage ratio option, the interest rates on outstanding borrowings, alternate base rate loans and the facility fee on the current borrowing capacity, payable quarterly in arrears, on the 2017 Credit Facility were based upon the Operating Partnership’s unsecured debt ratings, as follows:

Operating Partnership’s
Unsecured Debt Ratings:
Higher of S&P or Moody’s

 

Interest Rate -
Applicable Basis Points
Above LIBOR

 

Interest Rate -
Applicable Basis Points
Above LIBOR for
Alternate Base Rate
Loans

 

Facility Fee
Basis Points

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

No ratings or less than BBB-/Baa3

 

155.0

 

55.0

 

30.0

 

BBB- or Baa3 (interest rate based on Company’s election through March 5, 2018)

 

120.0

 

20.0

 

25.0

 

BBB or Baa2

 

100.0

 

0.0

 

20.0

 

BBB+ or Baa1

 

90.0

 

0.0

 

15.0

 

A- or A3 or higher

 

87.5

 

0.0

 

12.5

 

The terms of the 2017 Term Loan include: (1) a three-year term ending in January 2020, with two one-year extension options. Theoptions; (2) multiple draws of the term loan commitments may be made within 12 months of the effective date of the 2017 Credit Agreement up to an aggregate principal amount of $325 million (subject to increase as discussed below), with no requirement to be drawn in full; provided, that, if the Company does not borrow at least 50 percent of the initial term commitment from the term lenders (i.e. 50 percent of $325 million) on or before July 25, 2017, the amount of unused term loan commitments shall be reduced on such date so that, after giving effect to such reduction, the amount of unused term loan commitments is not greater than the outstanding term loans on such date; (3) an interest rate for the new term loan is currently 140 basis points over LIBOR, subject to adjustment on a sliding scale based on the Company'sOperating Partnership’s unsecured debt ratings from Moody’s or S&P or, at the Company'sOperating Partnership’s option if it no longer maintains a debt rating from Moody’s or S&P or such debt ratings fall below Baa3 and BBB-, based on a defined leverage ratio. Theratio; and (4) a term commitment fee on any unused term loan commitment during the first 12 months after the effective date of the 2017 Credit Agreement at a rate of 0.25 percent per annum on the sum of the average daily unused portion of the aggregate term loan commitments.

On March 29, 2017, the Company entered intoexecuted interest rate swap arrangements to fix LIBOR with an aggregate average rate of 1.6473% for the duration of the term loan. Including costs, the loan provides forswaps and a current all-inaggregate fixed rate of 3.12 percent.3.0473% for borrowings under the 2017 Term Loan.

After electing to use the defined leverage ratio to determine the interest rate, the interest rate under the 2017 Term Loan is currently based on the following total leverage ratio grid:

Total Leverage Ratio

 

Interest Rate -
Applicable Basis
Points above LIBOR

 

Interest Rate -
Applicable Basis Points
Above LIBOR for
Alternate Base Rate
Loans

 

<45%

 

145.0

 

45.0

 

>45% and <50% (current ratio)

 

155.0

 

55.0

 

>50% and <55%

 

165.0

 

65.0

 

>55%

 

195.0

 

95.0

 

Prior to the election to use the defined leverage ratio option, the interest rate on the 2017 Term Loan was based upon the Operating Partnership’s unsecured debt ratings, as follows:

Operating Partnership’s
Unsecured Debt Ratings:
Higher of S&P or Moody’s

 

Interest Rate -
Applicable Basis Points
Above LIBOR

 

Interest Rate -
Applicable Basis Points
Above LIBOR for
Alternate Base Rate
Loans

 

No ratings or less than BBB-/Baa3

 

185.0

 

85.0

 

BBB- or Baa3 (interest rate based on Company’s election through March 5, 2018)

 

140.0

 

40.0

 

BBB or Baa2

 

115.0

 

15.0

 

BBB+ or Baa1

 

100.0

 

0.0

 

A- or A3 or higher

 

90.0

 

0.0

 

On up to four occasions at any time after the effective date of the 2017 Credit Agreement, the Company may elect to request (1) an increase to the existing revolving credit commitments (any such increase, the “New Revolving Credit Commitments”) and/or (2) the establishment of one or more new term loan commitments (the “New Term Commitments”, together with the 2017 Credit Commitments, the “Incremental Commitments”), by up to an aggregate amount not to exceed $350 million for all Incremental Commitments.  The proceeds fromCompany may also request that the loan were used primarilysublimit for letters of credit available under the 2017 Credit Facility be increased to repay$100 million (without arranging any New Revolving Credit Commitments).  No lender or letter of credit issued has any obligation to accept any Incremental Commitment or any increase to the letter of credit subfacility.  There is no premium or penalty associated with full or partial prepayment of borrowings under the 2017 Credit Agreement.

The 2017 Credit Agreement, which applies to both the 2017 Credit Facility and 2017 Term Loan, includes certain restrictions and covenants which limit, among other things 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 2017 Credit Agreement (described below), or (ii) the property dispositions are completed while the Company is under an event of default under the 2017 Credit Agreement, 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 (60 percent), the maximum amount of secured indebtedness (40 percent), the minimum amount of fixed charge coverage (1.5 times), the maximum amount of unsecured indebtedness (60 percent), the minimum amount of unencumbered property interest coverage (2.0 times) and certain investment limitations (generally 15 percent of total capitalization).  If an event of default has occurred and is continuing, the entire outstanding borrowings onbalance under the 2017 Credit Agreement may (or, in the case of any bankruptcy event of default, shall) become immediately due and payable, and the Company will not make any excess distributions except to enable the General Partner to continue to qualify as a REIT under the IRS Code.

Before it amended and restated its unsecured revolving credit facility and to repay the Company's $200 million, 5.8 percent senior unsecured notes that matured onin January 15, 2016.


Unsecured Revolving Credit Facility:
On July 16, 2013,2017, the Company amended and restated itshad a $600 million unsecured revolving credit facility with a group of 17 lenders.  The $600 million facility is expandablelenders that was scheduled to $1 billion and maturesmature in July 2017.  It has two six month extension options each requiring the payment of a 7.5 basis point fee. The interest rate on outstanding borrowings (not electing the Company’s competitive bid feature) and the facility fee on the current borrowing capacity, payable quarterly in arrears, arewas based upon the Operating Partnership’s unsecured debt ratings at the time, as follows:

Operating Partnership’s
Unsecured Debt Ratings:
Higher of S&P or Moody’s

 

Interest Rate -
Applicable Basis Points
Above LIBOR

 

Facility Fee
Basis Points

 

No ratings or less than BBB-/Baa3

 

170.0

 

35.0

 

BBB- or Baa3 (since January 2017 amendment)

 

130.0

 

30.0

 

BBB or Baa2

 

110.0

 

20.0

 

BBB+ or Baa1

 

100.0

 

15.0

 

A- or A3 or higher

 

92.5

 

12.5

 

In January 2016, the Company obtained a $350 million unsecured term loan (“2016 Term Loan”), which matures in January 2019 with two one-year extension options.  On January 7, 2019, the Company exercised the first one-year extension option with the payment of an extension fee of $0.5 million, which extended the maturity of the 2016 Term Loan to January 2020.  The interest rate for the term loan is based on the Operating Partnership’s unsecured debt ratings, or, at the Company’s option, a defined leverage ratio.  Effective March 6, 2018, the Company elected to determine its interest rate under the 2016 Term Loan using the defined leverage ratio option, resulting in an interest rate of LIBOR plus 155 basis points.  The Company entered into interest rate swap arrangements to fix LIBOR for the duration of the term loan. Including costs, the current all-in fixed rate is 3.13 percent.  The proceeds from the loan were used primarily to repay outstanding borrowings on the Company’s then existing unsecured revolving credit facility and to repay $200 million senior unsecured notes that matured on January 15, 2016.

After electing to use the defined leverage ratio to determine the interest rate, the interest rate under the 2016 Term Loan is currently based on the following total leverage ratio grid:

Total Leverage Ratio

Interest Rate -
Applicable Basis
Points above LIBOR

<45%

145.0

>45% and <50% (current ratio)

155.0

>50% and <55%

165.0

>55%

195.0

Prior to the election to use the defined leverage ratio option, the interest rate on the 2016 Term Loan was based upon the Operating Partnership’s unsecured debt ratings, as follows:


     
Operating Partnership's Interest Rate -  
Unsecured Debt Ratings: Applicable Basis Points Facility Fee
Higher of S&P or Moody's Above LIBOR Basis Points
No ratings or less than BBB-/Baa3 170.0 35.0
BBB- or Baa3 (current) 130.0 30.0
BBB or Baa2 110.0 20.0
BBB+ or Baa1 100.0 15.0
A- or A3 or higher 92.5 12.5
56

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 those above.

Operating Partnership’s
Unsecured Debt Ratings:
Higher of S&P or Moody’s

Interest Rate -
Applicable Basis Points
Above LIBOR

No ratings or less than BBB-/Baa3

185.0

BBB- or Baa3 (interest rate based on Company’s election through March 5, 2018)

140.0

BBB or Baa2

115.0

BBB+ or Baa1

100.0

A- or A3 or higher

90.0

The terms of the unsecured facility2016 Term Loan include certain restrictions and covenants which limit, among other things 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 facilityterm loan described below, or (ii) the property dispositions are completed while the Company is under an event of default under the facility,term loan, 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 (60 percent), the maximum amount of secured indebtedness (40 percent), the minimum amount of fixed charge coverage (1.5 times), the maximum amount of unsecured indebtedness (60 percent), the minimum amount of unencumbered property interest coverage (2.0 times) and certain investment limitations (generally 15 percent of total capitalization).  If an event of default has occurred and is continuing, the Company will not make any excess distributions except to enable the CompanyGeneral Partner to continue to qualify as a REIT under the IRS Code.


Through July 15, 2013,

On August 30, 2018, the Company had a $600 millionentered into an amendment to the 2017 Credit Agreement (the “2017 Credit Agreement Amendment”) and an amendment to the 2016 Term Loan (the “2016 Term Loan Agreement Amendment”).

Each of the 2017 Credit Agreement Amendment and the 2016 Term Loan Amendment is effective as of June 30, 2018 and provides for the following material amendments to the terms of both the 2017 Credit Agreement and 2016 Term Loan):

1.              The unsecured revolving credit facility, which haddebt ratio covenant has been modified with respect to the measurement of the unencumbered collateral pool of assets in the calculation of such ratio for the period commencing July 1, 2018 and continuing until December 31, 2019 to allow the Operating Partnership to utilize the “as-is” appraised value of the properties known as ‘Harborside Plaza I’ and ‘Harborside Plaza V’ properties located in Jersey City, NJ in such calculation; and

2.              A new covenant has been added that prohibits the Company from making any optional or voluntary payment, repayment, repurchase or redemption of any unsecured indebtedness of the Company (or any subsidiaries) that matures after January 25, 2022, at any time when any of the Total Leverage Ratio or the unsecured debt ratio covenants exceeds 60 percent (all as defined in the 2017 Credit Agreement and the 2016 Term Loan) or an interest rate on outstanding borrowingsappraisal is being used to determine the value of LIBOR plus 125 basis pointsHarborside Plaza I and a facility feeHarborside Plaza V for the unsecured debt ratio covenant.

All other terms and conditions of 25 basis points.


the 2017 Credit Agreement and the 2016 Term Loan remain unchanged.

Mortgages, Loans Payable and Other Obligations:

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


On January 8, 2018, the Company prepaid mortgage debt of approximately $209 million that encumbered the Company’s property at Harborside Plaza 5, for which it incurred costs of approximately $8.4 million, which is included in loss from extinguishment of debt, net, for the year ended December 31, 2018.

Debt Strategy:

The Company does not intend to reserve funds to retire the Company’s senior unsecured notes, outstanding borrowings under its unsecured revolving credit facility, its unsecured term loan,loans, 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 22, 2016,15, 2019, the Company had outstanding borrowings of $100$167 million under its unsecured revolving credit facility.  The Company is reviewing various financing and refinancing options, including the redemption or purchase of itsthe Operating Partnership’s senior unsecured notes in public tender offers or privately-negotiated transactions, the issuance of additional, or exchange of current, unsecured debt of the Operating Partnership or common and preferred stock of the General Partner, and/or obtaining additional mortgage debt of the Operating Partnership, some or all of which may be completed in 2016.2019.  The Company currently anticipates that its available cash and cash equivalents, cash flows from operating activities and proceeds from the sale of office properties, together with cash available from borrowings and other sources, will be adequate to meet the Company’s capital and liquidity needs in the short term.  However, if these sources of funds are insufficient or unavailable, due to current economic conditions or otherwise, or if capital needs to fund acquisition and development opportunities in the multi-family rental sector arise, the Company’s ability to make the expected distributions discussed in “REIT Restrictions” above may be adversely affected.



Equity Financing and Registration Statements


Common Equity:

The following table presents the changes in the Company’sGeneral Partner’s issued and outstanding shares of common stock and the Operating Partnership’s common units from January 1, 20152018 to December 31, 2015:



    
 Common Common 
 StockUnitsTotal
Outstanding at January 1, 2015 89,076,578 11,083,876 100,160,454
Common units redeemed for common stock 567,032 (567,032) -
Shares issued under Dividend Reinvestment   
  and Stock Purchase Plan 3,641 - 3,641
Restricted shares issued 45,597 - 45,597
Cancellation of restricted shares (108,898) - (108,898)
Outstanding at December 31, 2015 89,583,950 10,516,844 100,100,794


57


2018:

 

 

Common

 

Common

 

 

 

 

 

Stock

 

Units

 

Total

 

Outstanding at January 1, 2018

 

89,914,113

 

10,438,855

 

100,352,968

 

Common units redeemed for common stock

 

264,570

 

(264,570

)

 

Shares issued under Dividend Reinvestment and Stock Purchase Plan

 

3,227

 

 

3,227

 

Restricted shares and common units issued

 

147,108

 

 

147,108

 

Cancellation of restricted shares

 

(8,712

)

 

(8,712

)

 

 

 

 

 

 

 

 

Outstanding at December 31, 2018

 

90,320,306

 

10,174,285

 

100,494,591

 

ShareShare/Unit Repurchase Program:

The CompanyGeneral Partner has a share repurchase program which was renewed and authorized by its Board of Directors in September 2012 to purchase up to $150 million of the Company’sGeneral Partner’s outstanding common stock (“Repurchase Program”), which it may repurchase from time to time in open market transactions at prevailing prices or through privately negotiated transactions.  As of December 31, 2015,2018, the CompanyGeneral Partner has a remaining authorization under the Repurchase Program of $139 million.  There were no common stock repurchases in the years ended December 31, 20142017 and 20152018 and through February 22, 2016.   


15, 2019.

Dividend Reinvestment and Stock Purchase Plan:

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


Shelf Registration Statements:

The CompanyGeneral Partner has an effective shelf registration statement on Form S-3 filed with the SEC for an aggregate amount of $2.0 billion in common stock, preferred stock, depositary shares, and/or warrants of the Company,General Partner, under which no securities have been sold as of February 22, 2016.


15, 2019.

The CompanyGeneral Partner 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 CompanyGeneral Partner and debt securities of the Operating Partnership, under which no securities have been sold as of February 22, 2016.

15, 2019.

Off-Balance Sheet Arrangements


Unconsolidated Joint Venture Debt:

The debt of the Company’s unconsolidated joint ventures generally providesprovide for recourse to the Company for customary matters such as intentional misuse of funds, environmental conditions and material misrepresentations. The Company has agreed to guarantee repayment of a portion of the debt of its unconsolidated joint ventures.  Such debt has a total facility amount of $547.6$316.9 million of which the Company has agreed to guarantee up to $74.7$35.8 million.  As of December 31, 2015,2018, the outstanding balance of such debt totaled $309.9$204.9 million of which $53.1$24.6 million was guaranteed by the Company.  The Company has also posted a $3.6 million letter of credit in support of the Harborside South Pier joint venture, half of which is indemnified by Hyatt Corporation, the Company’s joint venture partner.


The Company’s off-balance sheet arrangements are further discussed in Note 4: 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, ground lease agreements and other obligations, as of December 31, 2015:

                  
     Payments Due by Period
     Less than 1  2 – 3  4 – 5  6 – 10  After 10
(dollars in thousands) Total  Year  Years  Years  Years  Years
Senior unsecured notes$ 1,523,519 $ 253,588 $ 339,325 $ 313,700 $ 616,906   -
Revolving credit facility (a)  159,085   2,580   156,505   -   -   -
Mortgages, loans payable                 
  and other obligations (b)  828,067   250,071   442,012   87,179   14,274 $ 34,531
Payments in lieu of taxes                 
  (PILOT)  28,123   4,407   13,222   8,815   1,679   -
Ground lease payments  16,704   387   734   463   1,172   13,948
Other  1,655   1,655   -   -   -   -
Total$ 2,557,153 $ 512,688 $ 951,798 $ 410,157 $ 634,031 $ 48,479
58
2018:

 

 

 

 

Payments Due by Period

 

 

 

 

 

Less than 1

 

2 – 3

 

4 – 5

 

6 – 10

 

After 10

 

(dollars in thousands)

 

Total

 

Year

 

Years

 

Years

 

Years

 

Years

 

Senior unsecured notes

 

$

661,232

 

$

22,163

 

$

44,325

 

$

594,744

 

$

 

 

Unsecured revolving credit facility and term loans (a)

 

813,363

 

365,837

(c)

447,526

(d)

 

 

 

Mortgages, loans payable and other obligations (b)

 

1,649,949

 

261,862

(e)

264,822

 

148,218

 

846,327

 

$

128,720

 

Payments in lieu of taxes (PILOT)

 

26,579

 

8,656

 

15,367

 

2,556

 

 

 

Ground lease payments

 

222,551

 

2,471

 

4,982

 

4,981

 

12,109

 

198,008

 

Other

 

1,250

 

1,250

 

 

 

 

 

Total

 

$

3,374,924

 

$

662,239

 

$

777,022

 

$

750,499

 

$

858,436

 

$

326,728

 



(a)

(a)Interest payments assume LIBOR rate of 0.35 percent, which is the weighted average rate on this outstanding variable rate debt at December 31, 2015, plus the applicable spread.

(b)Interest payments assume LIBOR rate of 0.33 percent, which is the weighted average rate on its outstanding variable rate mortgage debt at December 31, 2015, plus the applicable spread. 

Departure of Executive Officer2.45 percent, which is the weighted average rate on this outstanding variable rate debt at December 31, 2018, plus the applicable spread.

(b):         Interest payments assume LIBOR rate of 2.46 percent, which is the weighted average rate on its outstanding variable rate mortgage debt at December 31, 2018, plus the applicable spread.

(c)

          Includes $350 million pertaining to the 2016 Term Loan originally maturing in January 2019, with two one-year extension options.  On November 4, 2014,January 7, 2019, the Company announced that Mitchell E. Hersh would step down as president and chief executive officerexercised the first one-year extension option, which extended the maturity of the Company effective May 11, 2015 and would not stand for re-election2016 Term Loan to January 2020.

(d)         Includes $325 million pertaining to the Company’s Board2017 Term Loan currently maturing in January 2020, with two one-year extension options.  Also includes $197 million pertaining to current borrowings on the unsecured revolving credit facility with a four-year term ending in January 2021, with two six-month extension options.

(e)          Includes $172 million pertaining to various mortgages with one-year extension options.

Changes in Executive Officers:

On October 31, 2018, RRT entered into a separation and consulting agreement with Robert Andrew Marshall, the President and Executive Vice President of DirectorsDevelopment of RRT (the “Board of Directors”“Separation and Consulting Agreement”) at the 2015 annual meeting of the Company’s stockholders..  Pursuant to the termsSeparation and Consulting Agreement, Mr. Marshall’s employment with RRT was terminated, effective as of the Separation Agreement,October 31, 2018 (the “Termination Date”), and Mr. Marshall has agreed to provide consulting services to RRT and the Company elected to extendduring the separation date to June 30, 2015period beginning on November 1, 2018 and ending on March 31, 2019 (the “Separation Date”“Consulting Period”).  In connection with Mr. Hersh’s departure from the Company, the Company and Mr. Hersh entered into a Separation and General Release Agreement (the “Separation Agreement”) dated November 4, 2014 (the “Effective Date”).  The Separation Agreement provided that Mr. Hersh’s employment with the Company was being terminated without cause, and further provided, pursuant to the terms of Mr. Hersh’s employment agreement, multi-year performance award agreement, TSR-based performance award agreement and deferred retirement compensation agreement, for (i) a cash payment to Mr. Hersh of $8 million, (ii) payment of the premiums for the continuation of Mr. Hersh’s health, dental and vision insurance for 48 months following the Separation Date, (iii) vesting of 210,000 shares of restricted common stock pursuant to Mr. Hersh’s multi-year performance award agreement, (iv) a cash payment equal to the sum of (X) $504,000, plus (Y) the product of (1) 210,000 multiplied by (2) the aggregate amount of dividends on the Company’s common stock that were declared and paid between the Effective Date and the Separation Date in payment of accrued but unpaid dividend equivalents pursuant to his multi-year performance award agreement, (v) issuance of 41,811 shares of common stock of the Company (the “Deferred Shares”) pursuant to the acceleration of vesting of 675 performance shares pursuant to Mr. Hersh’s TSR-based performance award agreement, and (vi) a cash payment of $2,311,792 pursuant to Mr. Hersh’s deferred retirement compensation award agreement. All such cash amounts and Deferred Shares were paid to Mr. Hersh on January 4, 2016.  

Under the terms of the Separation and Consulting Agreement, Mr. Hersh continuedMarshall was to receive his base salary in accordance with his employment agreement and to be eligible to participate in the Company’s executive incentive compensation and bonus programs.  In addition, upon departure Mr. Hersh was entitled to receive hisfollowing separation payments:

·                  accrued but unpaid base salary through October 31, 2018;

·                  unreimbursed expenses incurred by Mr. Marshall prior to the Termination Date; and

·                  COBRA payments through January 31, 2019, in an aggregate amount equal to approximately $7,533.

·                  In addition, during the Consulting Period, Mr. Marshall will receive a monthly consulting fee of $22,500.

·                  Additionally, the Separation and Consulting Agreement provides that Mr. Marshall will continue to havevest during the Consulting Period in all of the 22,120 Time-Based Long-Term Incentive Plan Awards originally issued in March 2016 (the “Vested 2016 Time-Based LTIP Awards”) and 28,880 of the 35,697 Performance-Based Long-Term Incentive Plan Awards originally issued in March 2016 (the “Vested 2016 Performance-Based LTIP Awards” and, together with the Vested 2016 Time-Based LTIP Awards, the “Vested 2016 LTIP Awards”).  The Vested 2016 LTIP  awards will vest on the earliest to occur of (i) Mr. Marshall’s death, (ii) the termination of Mr. Marshall’s consulting services by the Company for any reason other than for Cause (as defined in the Separation and Consulting Agreement) prior to March 31, 2019 or (iii) March 8, 2019 (such earliest date, the “Vesting Date”), subject to Mr. Marshall’s continuous performance of the consulting services through the applicable Vesting Date. All other equity awards previously issued to Mr. Marshall, including the remaining 6,817 Performance-Based LTIP Awards originally issued in March 2016, 4,449 Time-Based Long-Term Incentive Plan Awards originally issued in April 2017, 13,473 Performance-Based Long-Term Incentive Plan Awards originally issued in April 2017, 11,799 Time-Based Long-Term Incentive Plan Awards originally issued in April 2018, and 22,676 Performance-Based Long-Term Incentive Plan Awards originally issued in April 2018, expired and were forfeited and cancelled, effective as of the Termination Date.

·                  The Separation and Consulting Agreement further provides that on the earliest to occur of (i) March 11, 2019, (ii) five (5) business days after RRT receives written notice of Mr. Marshall’s death, or (iii) the date on which Mr. Marshall’s consulting services are terminated by the Company for any reason other than for Cause, the Company will purchase from Mr. Marshall all of the Vested 2016 LTIP Awards for an aggregate purchase price in cash equal to the product of (x) the total number of Vested 2016 LTIP Awards (which will amount to a total of 51,000) and (y) the average closing price per share of the Company’s common stock, as reported on the New York Stock Exchange for the period of five trading days ending on the applicable Vesting Date.

The Company’s total estimated costs in connection with the departure of Mr. Marshall of approximately $0.1 million (net of a reversal of $0.3 million of amortization of stock compensation expense due to the forfeiture of the unvested securities) during the year ended December 31, 2018 was included in general and administrative expense (approximately $1.0 million was included in accounts payable, accrued expenses and other liabilities as of December 31, 2018).

In June 2018, the General Partner entered into a separation and general release agreement with Mitchell E. Rudin, pursuant to which Mr. Rudin’s employment with the Company as its Vice Chairman was terminated effective as of June 5, 2018.

Under the terms of the Rudin separation agreement, Mr. Rudin is entitled to receive the following separation payments:

·                  Accrued but unpaid base salary through June 5, 2018;

·                  A lump sum cash payment of $2,558,082;

·                  Payment of unreimbursed expenses incurred by Mr. Rudin prior to termination, in the amount of $50,000 in the aggregate; and

·                  COBRA payments for up to 18 months after termination, in an amount equal to approximately $34,047.

·                  The Rudin separation agreement reflects that certain equity awards previously issued to Mr. Rudin, including time-vesting options, restricted stock units and performance share units, vested in full as of June 5, 2018 in accordance with their terms. Pursuant to the Rudin separation agreement, other than the equity awards that were fully vested as of June 5, 2018, as set forth in the Rudin separation agreement, all other equity awards granted to Mr. Rudin, including 32,311 LTIP Units subject to time-based vesting and 175,127 LTIP Units subject to performance-based vesting, expired and were immediately forfeited and canceled, effective as of June 5, 2018.

The Company’s total estimated costs in connection with the departure of Mr. Rudin of approximately $1.2 million (net of a reversal of $1.6 million of amortization of stock compensation expense due to the forfeiture of the unvested securities) during the year ended December 31, 2018 was included in general and administrative expense (approximately $23,000 was included in accounts payable, accrued expenses and other liabilities as of December 31, 2018).

In January 2018, the Company announced the appointment of David J. Smetana as chief financial officer and Nicholas Hilton as executive vice president of leasing of the General Partner. Mr. Smetana began to perform his duties as chief financial officer and Anthony Krug ceased to serve as chief financial officer immediately following the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.  Mr. Krug remained an employee of the General Partner and provided transition services through March 31, 2018.  Mr. Hilton’s employment commenced on February 12, 2018 following the departure of Christopher DeLorenzo.  In connection with these management changes, the General Partner entered into a separation agreement and release with each of Messrs. Krug and DeLorenzo.

Under the terms of the Krug separation agreement, Mr. Krug is entitled to receive the following severance benefits:

·                  Earned but unpaid compensation through the date of termination, including base salary, 2017 bonus (when determined), a pro rata portion of his annual car allowance, and any unused vacation time;

·                  A lump sum cash severance payment of $1,312,500;

·                  A prorated portion of his 2018 target bonus equal to $93,750;

·                  COBRA payments for up to two years after termination, in an amount equal to approximately $42,000; and

·                  Accelerated vesting of all unvested LTIP units in the Operating Partnership, consisting of 13,306 LTIP units subject to time-based vesting and 18,665 LTIP units subject to performance-based vesting, with LTIP units subject to performance-based vesting criteria vesting at target performance.

Under the terms of the DeLorenzo separation agreement, Mr. DeLorenzo is entitled to receive the following severance benefits:

·                  Earned but unpaid compensation through the date of termination, including base salary, 2017 bonus (when determined), a pro rata portion of his annual car allowance, and any unused vacation time;

·                  A lump sum cash severance payment of $500,000;

·                  COBRA payments for up to 18 months after termination, in an amount equal to approximately $42,000; and

·                  Partial accelerated vesting of unvested LTIP units in the Operating Partnership, consisting of 9,111 LTIP units subject to time based vesting and 13,982 LTIP units subject to performance-based vesting, with LTIP units subject to performance based vesting criteria vesting at target performance.

The Company’s total estimated costs in connection with the departure of Messrs. Krug and DeLorenzo of approximately $2.7 million during the year ended December 31, 2018 was included in general and administrative expense (approximately $43,000 was included in accounts payable, accrued expenses reimbursed.


and other liabilities as of December 31, 2018).

For further information regarding management changes in 2018, see Note 3: Recent Transactions — Management Changes — to the Financial Statements.

Funds from Operations

Funds from operations (“FFO”) (available to common stock and unit holders) is defined as net income (loss) before noncontrolling interest of unitholders,in Operating Partnership, computed in accordance with GAAP, excluding salesgains or disposals oflosses from depreciable rental property transactions (including both acquisitions and dispositions), and impairments related to depreciable rental property, plus real estate-related depreciation and amortization.  The Company believes that FFO is helpful to investors as one of several measures of the performance of an equity REIT.  The Company further believes that as FFO excludes the effect of depreciation, gains (or losses) from sales of propertiesproperty transactions and impairments related to depreciable rental property (all of which are based on historical costs which may be of limited relevance in evaluating current performance), FFO can facilitate comparison of operating performance between equity REITs.

FFO should not be considered as an alternative to net income available to common shareholders as an indication of the Company’s performance or to cash flows as a measure of liquidity.  FFO presented herein is not necessarily comparable to FFO presented by other real estate companies due to the fact that not all real estate companies use the same definition.  However, the Company’s FFO is comparable to the FFO of real estate companies that use the current definition of the National Association of Real Estate Investment Trusts (“NAREIT”).

As the Company considers its primary earnings measure, net income available to common shareholders, as defined by GAAP, to be


59


the most comparable earnings measure to FFO, the following table presents a reconciliation of net income available to common shareholders to FFO, as calculated in accordance with NAREIT’s current definition, for the years ended December 31, 2015, 20142018, 2017 and 20132016 (in thousands):

 

 

Year Ended December 31,

 

 

 

2018

 

2017

 

2016

 

Net income available to common shareholders

 

$

84,111

 

$

23,185

 

$

117,224

 

Add (deduct): Noncontrolling interest in Operating Partnership

 

9,527

 

2,711

 

13,721

 

Real estate-related depreciation and amortization on continuing operations (a)

 

190,394

 

223,763

 

204,746

 

Gain on change of control of interests

 

(14,217

)

 

(15,347

)

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

 

(99,436

)

(2,364

)

(109,666

)

Gain on sale of investment in unconsolidated joint venture

 

 

(23,131

)

(5,670

)

Funds from operations (b)

 

$

170,379

 

$

224,164

 

$

205,008

 




          
                      Years Ended December 31, 
  2015  2014  2013 
Net income (loss) available to common shareholders$ (125,752) $ 28,567  $ (14,909) 
Add (deduct):  Noncontrolling interests in Operating Partnership  (15,256)   3,602    (10,459) 
Noncontrolling interests in discontinued operations  -   -   8,509  
Real estate-related depreciation and amortization on         
   continuing operations (a)  190,875   185,339    194,741  
Real estate-related depreciation and amortization         
   on discontinued operations  -   -   8,218  
Impairments  197,919   -   134,704  
Realized (gains) losses and unrealized losses         
  on disposition of rental property, net  (53,261)   (54,848)   (83,371) 
Gain on sale of investment in unconsolidated         
  joint venture  (6,448)   -   - 
Funds from operations$ 188,077  $ 162,660  $ 237,433  

(a)  Includes the Company’s share from unconsolidated joint ventures of $21.6 million, $13.7 million and $13.8 million for the years ended December 31, 2015, 2014 and 2013, respectively.  Excludes non-real estate-related depreciation and amortization of $350,000, $348,000 and $287,000 for the years ended December 31, 2015, 2014 and 2013, respectively and $604,000, $492,000 and zero of depreciation expense allocable to the Company’s noncontrolling interest in consolidated joint ventures for the years ended December 31, 2015, 2014 and 2013, respectively.


(a)         Includes the Company’s share from unconsolidated joint ventures, and adjustments for noncontrolling interest, of $17.7 million, $20.3 million and $19.2 million for the years ended December 31, 2018, 2017 and 2016, respectively.  Excludes non-real estate-related depreciation and amortization of $2,139,000, $1,742,000 and $1,112,000 for the years ended December 31, 2018, 2017 and 2016, respectively.

(b)         Net income available to common shareholders in 2018 included $24.6 million of land impairment charges and $30.9 million from a gain on sale of developable land, which are included in the calculation to arrive at funds from operations as such gains and charges relate to non-depreciable assets.

Inflation


The Company’s leases with the majority of its commercial 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.  The Company believes that inflation did not materially impact the Company’s results of operations and financial condition for the periods presented.


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,” “potential,” “projected,” “should,” “expect,” “anticipate,” “estimate,” “target,” “continue” or comparable terminology.  Forward-looking statements are inherently subject to certain risks, trends 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:


·  risks and uncertainties affecting the general economic climate and conditions, which in turn may have a negative effect on the fundamentals of our business and the financial condition of our tenants and residents;
·  the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis;
·  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 our properties;
·  changes in interest rate levels and volatility in the securities markets;
·  our ability to complete construction and development activities on time and within budget, including without limitation obtaining regulatory permits and the availability and cost of materials, labor and equipment;
·  forward-looking financial and operational information, including information relating to future development projects, potential acquisitions or dispositions, and projected revenue and income;
·  changes in operating costs;
·  our ability to obtain adequate insurance, including coverage for terrorist acts;
·  our credit worthiness and the availability of financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities and refinance existing debt and our future interest expense;
·  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 or residents will not take occupancy or pay rent, or that development or operating costs may be greater than anticipated.
60

·                  risks and uncertainties affecting the general economic climate and conditions, which in turn may have a negative effect on the fundamentals of our business and the financial condition of our tenants and residents;

·                  the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis;

·                  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 our properties;

·                  changes in interest rate levels and volatility in the securities markets;

·                  our ability to complete construction and development activities on time and within budget, including without limitation obtaining regulatory permits and the availability and cost of materials, labor and equipment;

·                  forward-looking financial and operational information, including information relating to future development projects, potential acquisitions or dispositions, leasing activities, capitalization rates, and projected revenue and income;

·                  changes in operating costs;

·                  our ability to obtain adequate insurance, including coverage for terrorist acts;

·                  our credit worthiness and the availability of financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities and refinance existing debt and our future interest expense;

·                  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 or residents will not take occupancy or pay rent, or that development or operating costs may be greater than anticipated.

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



ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, commodity prices and equity prices.  In pursuing its business plan, the primary market risk to which the Company is exposed is interest rate risk.  Changes in the general level of interest rates prevailing in the financial markets may affect the spread between the Company’s yield on invested assets and cost of funds and, in turn, its ability to make distributions or payments to its investors.


Approximately $1.9$2.5 billion of the Company’s long-term debt as of December 31, 20152018 bears interest at fixed rates and therefore the fair value of these instruments is affected by changes in market interest rates.  The following table presents principal cash flows (in thousands) based upon maturity dates of the debt obligations and the related weighted-average interest rates by expected maturity dates for the fixed rate debt.  The interest rates on the Company’s variable rate debt as of December 31, 20152018 ranged from LIBOR plus 130 basis points to LIBOR plus 950450 basis points.  Assuming interest-rate swaps and caps are not in effect, if market rates of interest on the Company’s variable rate debt increased or decreased by 100 basis points, then the increase or decrease in interest costs on the Company’s variable rate debt would be approximately $2.9$3.1 million annually and the increase or decrease in the fair value of the Company’s fixed rate debt as of December 31, 20152018 would be approximately $58$111 million.

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt,
including current portion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair

 

($s in thousands)

 

2019

 

2020

 

2021

 

2022

 

2023

 

Thereafter

 

Sub-total

 

Other (a)

 

Total

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Rate

 

$

350,066

(b)

$

327,903

 

$

172,027

 

$

303,284

 

$

337,410

 

$

999,159

 

$

2,489,849

 

$

(9,359

)

$

2,480,490

 

$

2,399,551

 

Average Interest Rate

 

3.28

%

3.46

%

3.20

%

4.60

%

3.53

%

3.95

%

 

 

 

 

3.76

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable Rate

 

$

197,177

 

 

$

117,000

 

$

(c)

 

 

$

314,177

 

$

(2,016

)

$

312,161

 

$

312,161

 




                              
December 31, 2015                             
Debt,
including current portion
                            Fair
($s in thousands) 2016  2017  2018  2019  2020  Thereafter  Sub-total  Other (a)  Total  Value
                              
Fixed Rate$315,628 $397,493 $237,447 $307,123 $569 $610,965 $1,869,225 $(6,704) $1,862,521 $1,867,635
Average Interest Rate 8.06% 4.12% 6.70% 7.88% 4.82% 4.13%       5.60%  
                              
Variable Rate$98,962 $ 166,870(b)$1,400 $ 25,167 $ -   - $292,399   - $292,399 $292,399
                              
(a)  Adjustment for unamortized debt discount/premium, net, as of December 31, 2015.
(b)  Includes $155 million of outstanding borrowings under the Company’s unsecured revolving credit facility which matures in 2017 with two six-month extension options with the payment of a fee.

(a)Adjustment for unamortized debt discount/premium, net, unamortized deferred financing costs, net, and unamortized mark-to-market, net as of December 31, 2018.

(b)Includes the $350 million 2016 Term Loan originally scheduled to mature in January 2019 for which the Company exercised a one-year extension option on January 7, 2019, which extended the maturity of the 2016   Term Loan to January 2020.

(c)Includes $117 million of outstanding borrowings under the Company’s unsecured revolving credit facility which, in January 2017, was amended and restated and matures in January 2021.

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.


61


ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


The Consolidated Financial Statements of the Company and the Report of PricewaterhouseCoopers LLP, together with the notes to the Consolidated Financial Statements of the Company, as set forth in the index in Item 15: Exhibits and Financial Statements, are filed under this Item 8: Financial Statements and Supplementary Data and are incorporated herein by reference.



ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE

None.



ITEM 9A.CONTROLS AND PROCEDURES


Mack-Cali Realty Corporation

Disclosure Controls and Procedures. The Company’sGeneral Partner’s management, with the participation of the Company’sGeneral Partner’s chief executive officer, president and chief operating officer and chief financial officer, has evaluated the effectiveness of the Company’sGeneral Partner’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’sGeneral Partner’s chief executive officer, president and chief operating officer and chief financial officer have concluded that, as of the end of such period, the Company’sGeneral Partner’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the CompanyGeneral Partner 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’sGeneral Partner’s chief executive officer, president and chief operating officer and chief financial officer, or persons performing similar functions, and effected by the Company’sGeneral Partner’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’sGeneral Partner’s management, with the participation of the Company’sGeneral Partner’s chief executive officer, president and chief operating officer and chief financial officer, has established

and maintained policies and procedures designed to maintain the adequacy of the Company’sGeneral Partner’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 General Partner;

(2)


(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.

         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 General Partner are being made only in accordance with authorizations of management and directors of the General Partner; and

(3)         Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the General Partner’s assets that could have a material effect on the financial statements.

The Company’sGeneral Partner’s management has evaluated the effectiveness of the Company’sGeneral Partner’s internal control over financial reporting as of December 31, 20152018 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) in 2013.  Based on our assessment and those criteria, the Company’sGeneral Partner’s management has concluded that the Company’sGeneral Partner’s internal control over financial reporting was effective as of December 31, 2015.2018.


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


The effectiveness of the Company’sGeneral Partner’s internal control over financial reporting as of December 31, 20152018 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.



62


Changes In Internal Control Over Financial Reporting.  There have not been any changes in the Company’sGeneral Partner’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’sGeneral Partner’s internal control over financial reporting.

Mack-Cali Realty, L.P.



Disclosure Controls and Procedures. The General Partner’s management, with the participation of the General Partner’s chief executive officer and chief financial officer, has evaluated the effectiveness of the Operating Partnership’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report.  Based on such evaluation, the General Partner’s chief executive officer and chief financial officer have concluded that, as of the end of such period, the Operating Partnership’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Operating Partnership 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 General Partner’s chief executive officer and chief financial officer, or persons performing similar functions, and effected by the General Partner’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 General Partner’s management, with the participation of the General Partner’s chief executive officer and chief financial officer, has established and maintained policies and procedures designed to maintain the adequacy of the Operating Partnership’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 Operating Partnership;

(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 Operating Partnership are being made only in accordance with authorizations of management and directors of the General Partner; and

(3)         Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Operating Partnership’s assets that could have a material effect on the financial statements.

The General Partner’s management has evaluated the effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2018 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) in 2013.  Based on our assessment and those criteria, the General Partner’s management has concluded that the Operating Partnership’s internal control over financial reporting was effective as of December 31, 2018.

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

The effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2018 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 Operating Partnership’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 Operating Partnership’s internal control over financial reporting.

ITEM 9B.OTHER INFORMATION


Not Applicable.


63


PART III


ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


The information required by Item 10 will be set forth in the Company’sGeneral Partner’s definitive proxy statement for its annual meeting of shareholders expected to be held on June 1, 2016,12, 2019, and is incorporated herein by reference.



ITEM 11.EXECUTIVE COMPENSATION


The information required by Item 11 will be set forth in the Company’sGeneral Partner’s definitive proxy statement for its annual meeting of shareholders expected to be held on June 1, 2016,12, 2019, and is incorporated herein by reference.



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

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’sGeneral Partner’s definitive proxy statement for its annual meeting of shareholders expected to be held on June 1, 2016,12, 2019, and is incorporated herein by reference.



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

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

The information required by Item 13 will be set forth in the Company’sGeneral Partner’s definitive proxy statement for its annual meeting of shareholders expected to be held on June 1, 2016,12, 2019, and is incorporated herein by reference.



ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES


The information required by Item 14 will be set forth in the Company’sGeneral Partner’s definitive proxy statement for its annual meeting of shareholders expected to be held on June 1, 2016,12, 2019, and is incorporated herein by reference.


64


PART IV



ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES




Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2015 and 2014

Consolidated Statements of Operations for the Years Ended December 31, 2015, 2014 and 2013

Consolidated Statements of Changes in Equity for the Years Ended December 31, 2015, 2014 and 2013

Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014 and 2013

Notes to Consolidated Financial Statements


(a) 2.Financial Statement Schedules


(i)Mack-Cali Realty Corporation and Mack-Cali Realty, L.P.:


Schedule III Real Estate Investments and Accumulated Depreciation as of December 31, 2015


2018 with reconciliations for the years ended December 31, 2018, 2017 and 2016.

Schedule IV — Mortgage Loans on Real Estate as of December 31, 2018 and 2017.

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.

ITEM 16.


65



FORM 10-K SUMMARY

Not Applicable

Report of Independent Registered Public Accounting Firm



To the Board of Directors and Shareholders

of Mack-Cali Realty Corporation:


Corporation

In our opinion,Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated financial statements listed in the index appearing Item 15(a)(1) present fairly, in all material respects, the financial positionbalance sheets of Mack-Cali Realty Corporation and its subsidiaries (collectively, the(the “Company”) atas of December 31, 20152018 and 2014,2017, and the resultsrelated consolidated statements of their operations, comprehensive income, changes in equity and their cash flows for each of the three years in the period ended December 31, 20152018, including the related notes and financial statement schedules listed in the index appearing under Item 15(a)(2)(i) (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 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)(i) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015,2018, based on criteria established in Internal Control - Integrated Framework 2013 (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  COSO.

Basis for Opinions

The Company'sCompany’s management is responsible for these consolidated financial statements, and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management'sManagement’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on thesethe Company’s consolidated financial statements on the financial statement schedule, and on the Company'sCompany’s internal control over financial reporting based on our integrated audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the consolidated financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, andas well as evaluating the overall presentation of the consolidated financial statement presentation.statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.


As discussed in Note 2 to the consolidated financial statements, the Company adopted accounting standards update (“ASU”) No. 2014-08, “Reporting Discontinued Operations

Definition and DisclosuresLimitations of Disposals of Components of an Entity”, which changed the criteria for reporting discontinued operations in 2014.


Internal Control over Financial Reporting

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 24, 2016




66


/s/ PricewaterhouseCoopers LLP

New York, New York

February 20, 2019

We have served as the Company’s auditor since 1994.

Report of Independent Registered Public Accounting Firm

To the Partners

of Mack-Cali Realty, L.P.:

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Mack-Cali Realty, L.P. and its subsidiaries (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of operations, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2018, including the related notes and financial statement schedules listed in the index appearing under Item 15(a)(2)(i)  (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

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 20, 2019

We have served as the Company’s auditor since 1998.

MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS(in (in thousands, except per share amounts)

      
      
                         December 31,
ASSETS 2015  2014
Rental property     
Land and leasehold interests$ 735,696 $ 760,855
Buildings and improvements  3,648,238   3,753,300
Tenant improvements  408,617   431,969
Furniture, fixtures and equipment  15,167   12,055
   4,807,718   4,958,179
Less – accumulated depreciation and amortization  (1,464,482)   (1,414,305)
      
Net investment in rental property  3,343,236   3,543,874
Cash and cash equivalents  37,077   29,549
Investments in unconsolidated joint ventures  303,457   247,468
Unbilled rents receivable, net  120,246   123,885
Deferred charges, goodwill and other assets, net  213,377   204,650
Restricted cash  35,343   34,245
Accounts receivable, net of allowance for doubtful accounts     
of $1,407 and $2,584  10,754   8,576
      
Total assets$ 4,063,490 $ 4,192,247
      
LIABILITIES AND EQUITY     
Senior unsecured notes$ 1,268,844 $ 1,267,744
Revolving credit facility  155,000   -
Mortgages, loans payable and other obligations  731,076   820,910
Dividends and distributions payable  15,582   15,528
Accounts payable, accrued expenses and other liabilities  135,057   126,971
Rents received in advance and security deposits  49,739   52,146
Accrued interest payable  24,484   26,937
Total liabilities  2,379,782   2,310,236
Commitments and contingencies     
      
Equity:     
Mack-Cali Realty Corporation stockholders’ equity:     
Common stock, $0.01 par value, 190,000,000 shares authorized,     
89,583,950 and 89,076,578 shares outstanding  896   891
Additional paid-in capital  2,570,392   2,560,183
Dividends in excess of net earnings  (1,115,612)   (936,293)
Total Mack-Cali Realty Corporation stockholders’ equity  1,455,676   1,624,781
      
Noncontrolling interests in subsidiaries:     
Operating Partnership  170,891   202,173
Consolidated joint ventures  57,141   55,057
Total noncontrolling interests in subsidiaries  228,032   257,230
      
Total equity  1,683,708   1,882,011
      
Total liabilities and equity$ 4,063,490 $ 4,192,247

 

 

December 31,

 

ASSETS

 

2018

 

2017

 

Rental property

 

 

 

 

 

Land and leasehold interests

 

$

807,236

 

$

786,789

 

Buildings and improvements

 

4,109,797

 

3,955,122

 

Tenant improvements

 

335,266

 

330,686

 

Furniture, fixtures and equipment

 

53,718

 

30,247

 

 

 

5,306,017

 

5,102,844

 

Less — accumulated depreciation and amortization

 

(1,097,868

)

(1,087,083

)

 

 

4,208,149

 

4,015,761

 

Rental property held for sale, net

 

108,848

 

171,578

 

Net investment in rental property

 

4,316,997

 

4,187,339

 

Cash and cash equivalents

 

29,633

 

28,180

 

Restricted cash

 

19,921

 

39,792

 

Investments in unconsolidated joint ventures

 

232,750

 

252,626

 

Unbilled rents receivable, net

 

100,737

 

100,842

 

Deferred charges, goodwill and other assets, net

 

355,234

 

342,320

 

Accounts receivable, net of allowance for doubtful accounts of $1,108 and $1,138

 

5,372

 

6,786

 

 

 

 

 

 

 

Total assets

 

$

5,060,644

 

$

4,957,885

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

Senior unsecured notes, net

 

$

570,314

 

$

569,145

 

Unsecured revolving credit facility and term loans

 

790,939

 

822,288

 

Mortgages, loans payable and other obligations, net

 

1,431,398

 

1,418,135

 

Dividends and distributions payable

 

21,877

 

21,158

 

Accounts payable, accrued expenses and other liabilities

 

168,115

 

192,716

 

Rents received in advance and security deposits

 

41,244

 

43,993

 

Accrued interest payable

 

9,117

 

9,519

 

Total liabilities

 

3,033,004

 

3,076,954

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

330,459

 

212,208

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

Mack-Cali Realty Corporation stockholders’ equity:

 

 

 

 

 

Common stock, $0.01 par value, 190,000,000 shares authorized, 90,320,306 and 89,914,113 shares outstanding

 

903

 

899

 

Additional paid-in capital

 

2,561,503

 

2,565,136

 

Dividends in excess of net earnings

 

(1,084,518

)

(1,096,429

)

Accumulated other comprehensive income

 

8,770

 

6,689

 

Total Mack-Cali Realty Corporation stockholders’ equity

 

1,486,658

 

1,476,295

 

 

 

 

 

 

 

Noncontrolling interests in subsidiaries:

 

 

 

 

 

Operating Partnership

 

168,373

 

171,395

 

Consolidated joint ventures

 

42,150

 

21,033

 

Total noncontrolling interests in subsidiaries

 

210,523

 

192,428

 

 

 

 

 

 

 

Total equity

 

1,697,181

 

1,668,723

 

 

 

 

 

 

 

Total liabilities and equity

 

$

5,060,644

 

$

4,957,885

 

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


67


MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS(in (in thousands, except per share amounts)

          
                      Year Ended December 31,
REVENUES  2015  2014  2013
Base rents $ 487,041  $ 516,727  $ 540,165 
Escalations and recoveries from tenants   62,481    78,554    72,758 
Construction services   -   -   15,650 
Real estate services   29,620    28,638    26,935 
Parking income   11,124    9,107    6,840 
Other income   4,617    3,773    4,683 
Total revenues   594,883    636,799    667,031 
          
EXPENSES         
Real estate taxes   82,688    90,750    85,574 
Utilities   55,965    72,822    63,622 
Operating services   107,951    112,621    105,278 
Direct construction costs   -   -   14,945 
Real estate services expenses   25,583    26,136    22,716 
General and administrative   49,147    71,051    47,040 
Acquisition-related costs   1,560    2,118    642 
Depreciation and amortization   170,402    172,490    182,766 
Impairments   197,919   -   110,853 
Total expenses   691,215   547,988    633,436 
Operating income (loss)   (96,332)   88,811    33,595 
          
OTHER (EXPENSE) INCOME         
Interest expense   (103,051)   (112,878)   (123,701)
Interest and other investment income   794   3,615    2,903 
Equity in earnings (loss) of unconsolidated joint ventures   (3,172)   (2,423)   (2,327)
Realized gains (losses) on disposition of rental property, net   53,261    54,848    -
Gain on sale of investment in unconsolidated joint venture   6,448    -   -
Loss from early extinguishment of debt   -   (582)   (156)
Total other (expense) income   (45,720)   (57,420)   (123,281)
Income (loss) from continuing operations   (142,052)   31,391    (89,686)
Discontinued operations:         
Income from discontinued operations   -   -   11,811 
Loss from early extinguishment of debt   -   -   (703)
Realized gains (losses) and unrealized losses on         
  disposition of rental property and impairments, net   -   -   59,520 
Total discontinued operations, net   -   -   70,628 
Net income (loss)   (142,052)   31,391    (19,058)
Noncontrolling interest in consolidated joint ventures   1,044   778    2,199 
Noncontrolling interest in Operating Partnership   15,256   (3,602)   10,459 
Noncontrolling interest in discontinued operations   -   -   (8,509)
Net income (loss) available to common shareholders $ (125,752) $ 28,567  $ (14,909)
          
Basic earnings per common share:         
Income (loss) from continuing operations $ (1.41) $ 0.32  $ (0.88)
Discontinued operations   -   -   0.71 
Net income (loss) available to common shareholders $ (1.41) $ 0.32  $ (0.17)
          
Diluted earnings per common share:         
Income (loss) from continuing operations $ (1.41) $ 0.32  $ (0.88)
Discontinued operations   -   -   0.71 
Net income (loss) available to common shareholders $ (1.41) $ 0.32  $ (0.17)
          
Basic weighted average shares outstanding   89,291    88,727    87,762 
          
Diluted weighted average shares outstanding   100,222    100,041    99,785 

 

 

Year Ended December 31,

 

REVENUES

 

2018

 

2017

 

2016

 

Base rents

 

$

436,222

 

$

501,334

 

$

506,877

 

Escalations and recoveries from tenants

 

44,121

 

58,767

 

60,505

 

Real estate services

 

17,094

 

23,129

 

26,589

 

Parking income

 

22,117

 

20,270

 

13,630

 

Other income

 

11,052

 

12,700

 

5,797

 

Total revenues

 

530,606

 

616,200

 

613,398

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

Real estate taxes

 

64,555

 

81,364

 

87,379

 

Utilities

 

39,054

 

42,598

 

49,624

 

Operating services

 

102,626

 

107,379

 

103,954

 

Real estate services expenses

 

17,919

 

23,394

 

26,260

 

General and administrative

 

53,988

 

50,949

 

51,979

 

Acquisition-related costs

 

 

 

2,880

 

Depreciation and amortization

 

174,847

 

205,169

 

186,684

 

Land impairments

 

24,566

 

 

 

Total expenses

 

477,555

 

510,853

 

508,760

 

 

 

 

 

 

 

 

 

OTHER (EXPENSE) INCOME

 

 

 

 

 

 

 

Interest expense

 

(83,754

)

(93,388

)

(94,889

)

Interest and other investment income (loss)

 

3,389

 

2,766

 

1,614

 

Equity in earnings (loss) of unconsolidated joint ventures

 

(127

)

(6,081

)

18,788

 

Gain on change of control of interests

 

14,217

 

 

15,347

 

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

 

99,436

 

2,364

 

109,666

 

Gain on disposition of developable land

 

30,939

 

 

 

Gain on sale of investment in unconsolidated joint venture

 

 

23,131

 

5,670

 

Loss from extinguishment of debt, net

 

(10,750

)

(421

)

(30,540

)

Total other income (expense)

 

53,350

 

(71,629

)

25,656

 

Net income

 

106,401

 

33,718

 

130,294

 

Noncontrolling interest in consolidated joint ventures

 

1,216

 

1,018

 

651

 

Noncontrolling interest in Operating Partnership

 

(9,527

)

(2,711

)

(13,721

)

Redeemable noncontrolling interest

 

(13,979

)

(8,840

)

 

Net income available to common shareholders

 

$

84,111

 

$

23,185

 

$

117,224

 

 

 

 

 

 

 

 

 

Basic earnings per common share:

 

 

 

 

 

 

 

Net income available to common shareholders

 

$

0.80

 

$

0.06

 

$

1.31

 

 

 

 

 

 

 

 

 

Diluted earnings per common share:

 

 

 

 

 

 

 

Net income available to common shareholders

 

$

0.80

 

$

0.06

 

$

1.30

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

90,388

 

90,005

 

89,746

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

100,724

 

100,703

 

100,498

 

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



68


MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN EQUITYCOMPREHENSIVE INCOME (in thousands)

                  
                  
     Additional  Dividends in  Noncontrolling   
  Common Stock  Paid-In  Excess of Interests  Total
  Shares  Par Value  Capital  Net Earnings  in Subsidiaries  Equity
Balance at January 1, 2013  87,536 $ 875 $ 2,530,621 $ (764,522) $ 301,533 $ 2,068,507
Net income (loss)  -   -   -   (14,909)   (4,149)   (19,058)
Common stock dividends  -   -   -   (118,418)   -   (118,418)
Common unit distributions  -   -   -      (16,193)   (16,193)
Increase in noncontrolling interest                 
  in consolidated joint ventures  -   -   -   -   1,040   1,040
Redemption of common units                 
  for common stock  277   3   5,475   -   (5,478)   -
Shares issued under Dividend                 
  Reinvestment and Stock Purchase Plan  10   -   243   -   -   243
Directors' deferred compensation plan  -   -   529   -   -   529
Stock compensation  425   4   1,801   -   -   1,805
Rebalancing of ownership percentage                 
  between parent and subsidiaries  -   -   657   -   (657)   -
Balance at December 31, 2013  88,248 $ 882 $ 2,539,326 $ (897,849) $ 276,096 $ 1,918,455
Net income (loss)  -   -   -   28,567   2,824   31,391
Common stock dividends  -   -   -   (67,011)   -   (67,011)
Common unit distributions  -   -   -      (8,456)   (8,456)
Increase in noncontrolling interest                 
  in consolidated joint ventures  -   -   -   -   552   552
Redemption of common units                 
  for common stock  781   8   14,354   -   (14,362)   -
Shares issued under Dividend                 
  Reinvestment and Stock Purchase Plan  6   -   118   -   -   118
Directors' deferred compensation plan  -   -   407   -   -   407
Stock compensation  42   1   6,554   -   -   6,555
Rebalancing of ownership percentage                 
  between parent and subsidiaries  -   -   (576)   -   576   -
Balance at December 31, 2014  89,077 $ 891 $ 2,560,183 $ (936,293) $ 257,230 $ 1,882,011
Net income (loss)  -   -   -   (125,752)   (16,300)   (142,052)
Common stock dividends  -   -   -   (53,567)   -   (53,567)
Common unit distributions  -   -   -   -   (6,505)   (6,505)
Increase in noncontrolling interest                 
  in consolidated joint ventures  -   -   -   -   3,128   3,128
Redemption of common units                 
  for common stock  567   6   9,941   -   (9,947)   -
Shares issued under Dividend                 
  Reinvestment and Stock Purchase Plan  3   -   60   -   -   60
Directors' deferred compensation plan  -   -   397   -   -   397
Stock compensation  46   -   2,277   -   -   2,277
Cancellation of restricted shares  (109)   (1)   (2,040)   -   -   (2,041)
Rebalancing of ownership percentage                 
  between parent and subsidiaries  -   -   (426)   -   426   -
Balance at December 31, 2015  89,584 $ 896 $ 2,570,392 $ (1,115,612) $ 228,032 $ 1,683,708

 

 

Year Ended December 31,

 

 

 

2018

 

2017

 

2016

 

Net income

 

$

106,401

 

$

33,718

 

$

130,294

 

Other comprehensive income:

 

 

 

 

 

 

 

Net unrealized gain on derivative instruments for interest rate swaps

 

2,318

 

5,250

 

2,216

 

Comprehensive income

 

$

108,719

 

$

38,968

 

$

132,510

 

Comprehensive (income) loss attributable to noncontrolling interest in consolidated joint ventures

 

1,216

 

1,018

 

651

 

Comprehensive (income) loss attributable to redeemable noncontrolling interest

 

(13,979

)

(8,840

)

 

Comprehensive (income) loss attributable to noncontrolling interest in Operating Partnership

 

(9,764

)

(3,257

)

(13,952

)

Comprehensive income attributable to common shareholders

 

$

86,192

 

$

27,889

 

$

119,209

 

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




69


MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTSSTATEMENT OF CASH FLOWSCHANGES IN EQUITY (in thousands)

          
                    December 31,
CASH FLOWS FROM OPERATING ACTIVITIES  2015  2014  2013
Net income (loss) $ (142,052) $ 31,391  $ (19,058)
Adjustments to reconcile net income to net cash provided by         
Operating activities:         
Depreciation and amortization, including related intangible assets   172,108    173,848    183,303 
Depreciation and amortization on discontinued operations   -   -   8,218 
Amortization of deferred stock units   397    407    529 
Amortization of stock compensation   2,219    11,097    2,387 
Amortization of deferred financing costs   3,790    3,274    3,172 
Write-off of unamortized discount on senior unsecured notes   -   12    156 
Amortization of debt discount and mark-to-market   3,385    6,507   6,781
Equity in (earnings) loss of unconsolidated joint ventures   3,172    2,423    2,327 
Distributions of cumulative earnings from unconsolidated joint ventures   5,644    11,213    8,485 
Realized (gains) loss on disposition of rental property, net   (53,261)   (54,848)   (59,520)
Realized (gains) loss on sale of investment in unconsolidated joint venture   (6,448)   -   -
Impairments   197,919   -   110,853 
Changes in operating assets and liabilities:         
Increase in unbilled rents receivable, net   (1,760)   (4,083)   (10,105)
Increase in deferred charges, goodwill and other assets   (22,854)   (34,402)   (31,404)
(Increase) decrease in accounts receivable, net   (2,178)   355    248 
 Increase (decrease) in accounts payable, accrued expenses and other liabilities   6,960    15,858    (7,090)
Decrease in rents received in advance and security deposits   (2,408)   (1,583)   (2,187)
Increase (decrease) in accrued interest payable   4,822    (2,216)   1,598 
          
Net cash provided by operating activities $ 169,455 $ 159,253  $ 198,693
          
CASH FLOWS FROM INVESTING ACTIVITIES         
Rental property acquisitions and related intangibles $ (70,455) $ (61,938) $ (178,294)
Rental property additions and improvements   (94,073)   (91,813)   (89,869)
Development of rental property and other related costs   (81,073)   (25,140)   (13,772)
Proceeds from the sales of rental property   81,049    274,839    332,102 
Proceeds from the sale of investment in unconsolidated joint venture   6,448    -   
Investments in notes receivable   -   (62,276)   (16,425)
Repayment of notes receivable   8,250   62,526    333 
Investment in unconsolidated joint ventures   (78,027)   (67,325)   (86,504)
Distributions in excess of cumulative earnings from unconsolidated joint ventures   6,445    35,901    23,907 
Increase in restricted cash   (1,098)   (14,451)   (455)
          
Net cash (used in) provided by investing activities $ (222,534) $ 50,323  $ (28,977)
          
CASH FLOW FROM FINANCING ACTIVITIES         
Borrowings from revolving credit facility $ 334,000  $ 277,328  $ 289,000 
Repayment of revolving credit facility   (179,000)   (277,328)   (289,000)
Repayment of senior unsecured notes   -   (350,000)   (100,000)
Proceeds of senior unsecured notes   -   -   268,928 
Proceeds from mortgages and loans payable   10,752    130,135    3,170 
Repayment of mortgages, loans payable and other obligations   (43,133)   (83,808)   (20,715)
Payment of contingent consideration   (1,167)   (5,228)   (2,755)
Payment of financing costs   (2,998)   (3,147)   (5,429)
Contributions from noncontrolling interests   2,140    145    -
Payment of dividends and distributions   (59,987)   (89,830)   (149,454)
          
Net cash provided by (used in) financing activities $ 60,607  $ (401,733) $ (6,255)
          
Net increase (decrease) in cash and cash equivalents $ 7,528 $ (192,157) $ 163,461
Cash and cash equivalents, beginning of period   29,549    221,706    58,245 
          
Cash and cash equivalents, end of period $ 37,077 $ 29,549  $ 221,706

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

Dividends in

 

Other

 

Noncontrolling

 

 

 

 

 

Common Stock

 

Paid-In

 

Excess of

 

Comprehensive

 

Interests

 

Total

 

 

 

Shares

 

Par Value

 

Capital

 

Net Earnings

 

Income (Loss)

 

in Subsidiaries

 

Equity

 

Balance at January 1, 2016

 

89,584

 

$

896

 

$

2,570,392

 

$

(1,115,612

)

$

 

$

228,032

 

$

1,683,708

 

Net income

 

 

 

 

117,224

 

 

13,070

 

130,294

 

Common stock dividends

 

 

 

 

(53,796

)

 

 

(53,796

)

Common unit distributions

 

 

 

 

 

 

(6,619

)

(6,619

)

Decrease in noncontrolling interest in consolidated joint ventures

 

 

 

414

 

 

 

(35,544

)

(35,130

)

Redemption of common units for common stock

 

29

 

 

474

 

 

 

(474

)

 

Shares issued under Dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reinvestment and Stock Purchase Plan

 

3

 

 

71

 

 

 

 

71

 

Directors’ deferred compensation plan

 

 

 

372

 

 

 

 

372

 

Stock compensation

 

85

 

1

 

3,465

 

 

 

2,180

 

5,646

 

Cancellation of restricted shares

 

(4

)

 

(75

)

 

 

 

(75

)

Other comprehensive income

 

 

 

 

 

1,985

 

231

 

2,216

 

Rebalancing of ownership percentage between parent and subsidiaries

 

 

 

1,360

 

 

 

(1,360

)

 

Balance at December 31, 2016

 

89,697

 

$

897

 

$

2,576,473

 

$

(1,052,184

)

$

1,985

 

$

199,516

 

$

1,726,687

 

Net income

 

 

 

 

23,185

 

 

10,533

 

33,718

 

Common stock dividends

 

 

 

 

(67,430

)

 

 

(67,430

)

Common unit distributions

 

 

 

 

 

 

(8,629

)

(8,629

)

Issuance of limited partner common units

 

 

 

 

 

 

2,793

 

2,793

 

Redeemable noncontrolling interest

 

 

 

(17,951

)

 

 

(10,914

)

(28,865

)

Decrease in noncontrolling interest in consolidated joint ventures

 

 

 

(3,756

)

 

 

1,105

 

(2,651

)

Redemption of common units for common stock

 

149

 

1

 

2,530

 

 

 

(2,531

)

 

Shares issued under Dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reinvestment and Stock Purchase Plan

 

2

 

 

67

 

 

 

 

67

 

Directors’ deferred compensation plan

 

 

 

482

 

 

 

 

482

 

Stock compensation

 

70

 

1

 

2,814

 

 

 

4,632

 

7,447

 

Cancellation of restricted shares

 

(4

)

 

(146

)

 

 

 

(146

)

Other comprehensive income

 

 

 

 

 

4,704

 

546

 

5,250

 

Rebalancing of ownership percentage between parent and subsidiaries

 

 

 

4,623

 

 

 

(4,623

)

 

Balance at December 31, 2017

 

89,914

 

$

899

 

$

2,565,136

 

$

(1,096,429

)

$

6,689

 

$

192,428

 

$

1,668,723

 

Net income

 

 

 

 

84,111

 

 

22,290

 

106,401

 

Common stock dividends

 

 

 

 

(72,200

)

 

 

(72,200

)

Common unit distributions

 

 

 

 

 

 

(9,022

)

(9,022

)

Redeemable noncontrolling interest

 

 

 

(11,425

)

 

 

(15,275

)

(26,700

)

Increase in noncontrolling interest in consolidated joint ventures

 

 

 

 

 

 

22,333

 

22,333

 

Redemption of common units for common stock

 

264

 

3

 

4,341

 

 

 

(4,344

)

 

Shares issued under Dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reinvestment and Stock Purchase Plan

 

4

 

 

(37

)

 

 

 

(37

)

Directors’ deferred compensation plan

 

 

 

507

 

 

 

 

507

 

Stock compensation

 

147

 

1

 

1,413

 

 

 

5,480

 

6,894

 

Cancellation of restricted shares

 

(9

)

 

(583

)

 

 

(1,453

)

(2,036

)

Other comprehensive income

 

 

 

 

 

2,081

 

237

 

2,318

 

Rebalancing of ownership percentage between parent and subsidiaries

 

 

 

2,151

 

 

 

(2,151

)

 

Balance at December 31, 2018

 

90,320

 

$

903

 

$

2,561,503

 

$

(1,084,518

)

$

8,770

 

$

210,523

 

$

1,697,181

 

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

70

MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

 

 

December 31,

 

 

 

2018

 

2017

 

2016

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

 

$

106,401

 

$

33,718

 

$

130,294

 

Adjustments to reconcile net income to net cash provided by Operating activities:

 

 

 

 

 

 

 

Depreciation and amortization, including related intangible assets and liabilities

 

170,284

 

198,674

 

186,549

 

Amortization of directors deferred compensation stock units

 

507

 

482

 

372

 

Amortization of stock compensation

 

6,894

 

7,447

 

5,646

 

Amortization of deferred financing costs

 

5,028

 

4,612

 

4,582

 

Amortization of debt discount and mark-to-market

 

(948

)

(287

)

1,686

 

Equity in (earnings) loss of unconsolidated joint ventures

 

127

 

6,081

 

(18,788

)

Distributions of cumulative earnings from unconsolidated joint ventures

 

9,182

 

8,186

 

6,120

 

Gain on change of control of interests

 

(14,217

)

 

(15,347

)

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

 

(99,436

)

(2,364

)

(109,666

)

Gain on disposition of developable land

 

(30,939

)

 

 

Gain on sale of investments in unconsolidated joint ventures

 

 

(23,131

)

(5,670

)

Loss (gain) from extinguishment of debt

 

10,750

 

421

 

(12,420

)

Land impairments

 

24,566

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Increase in unbilled rents receivable, net

 

(7,519

)

(11,286

)

(12,775

)

Increase in deferred charges, goodwill and other assets

 

(29,377

)

(19,710

)

(33,878

)

Decrease in accounts receivable, net

 

1,382

 

2,831

 

596

 

Increase (decrease) in accounts payable, accrued expenses and other liabilities

 

13,915

 

(9,012

)

(14,535

)

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

 

875

 

(1,817

)

(3,297

)

(Decrease) increase in accrued interest payable

 

(402

)

1,296

 

(9,362

)

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

167,073

 

$

196,141

 

$

100,107

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

Rental property acquisitions and related intangibles

 

$

(164,838

)

$

(619,350

)

$

(407,869

)

Rental property additions and improvements

 

(168,398

)

(90,068

)

(121,582

)

Development of rental property and other related costs

 

(184,799

)

(267,845

)

(206,955

)

Proceeds from the sales of rental property

 

338,015

 

312,596

 

604,978

 

Proceeds from the sale of investments in unconsolidated joint ventures

 

 

98,599

 

6,420

 

Investments in notes receivable

 

 

(47,049

)

 

Repayment of notes receivable

 

12,102

 

74,945

 

500

 

Investment in unconsolidated joint ventures

 

(11,789

)

(36,060

)

(35,930

)

Distributions in excess of cumulative earnings from unconsolidated joint ventures

 

11,553

 

5,877

 

22,231

 

Proceeds from investment receivable

 

 

3,625

 

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

$

(168,154

)

$

(564,730

)

$

(138,207

)

 

 

 

 

 

 

 

 

CASH FLOW FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

Borrowings from revolving credit facility

 

$

461,000

 

$

730,000

 

$

1,165,000

 

Repayment of revolving credit facility

 

(494,000

)

(866,000

)

(1,034,000

)

Repayment of senior unsecured notes

 

 

(250,000

)

(448,339

)

Borrowings from unsecured term loan

 

 

325,000

 

350,000

 

Proceeds from mortgages and loans payable

 

434,293

 

518,852

 

474,344

 

Repayment of mortgages, loans payable and other obligations

 

(418,495

)

(156,760

)

(349,426

)

Acquisition of noncontrolling interests

 

 

(2,021

)

(37,946

)

Issuance of redeemable noncontrolling interests, net

 

105,000

 

139,002

 

 

Payment of financing costs

 

(3,576

)

(9,230

)

(9,414

)

Contributions from (to) noncontrolling interests, net

 

(7,542

)

(19)

 

1,065

 

Payment of dividends and distributions

 

(94,017

)

(77,826

)

(60,041

)

 

 

 

 

 

 

 

 

Net cash (used in) provided by financing activities

 

$

(17,337

)

$

350,998

 

$

51,243

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

$

(18,418

)

$

(17,591

)

$

13,143

 

Cash, cash equivalents and restricted cash, beginning of period (1)

 

67,972

 

85,563

 

72,420

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash, end of period (2)

 

$

49,554

 

$

67,972

 

$

85,563

 


(1)         Includes Restricted Cash of $39,792, $53,952 and $35,343 as of December 31, 2017, 2016 and 2015, respectively, pursuant to the adoption of ASU 2016-15.

(2)         Includes Restricted Cash of $19,921, $39,792 and $53,952 as of December 31, 2018, 2017 and 2016, respectively, pursuant to the adoption of ASU 2016-15.

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

MACK-CALI REALTY, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (in thousands, except per unit amounts)

 

 

December 31,

 

 

 

2018

 

2017

 

ASSETS

 

 

 

 

 

Rental property

 

 

 

 

 

Land and leasehold interests

 

$

807,236

 

$

786,789

 

Buildings and improvements

 

4,109,797

 

3,955,122

 

Tenant improvements

 

335,266

 

330,686

 

Furniture, fixtures and equipment

 

53,718

 

30,247

 

 

 

5,306,017

 

5,102,844

 

Less — accumulated depreciation and amortization

 

(1,097,868

)

(1,087,083

)

 

 

4,208,149

 

4,015,761

 

Rental property held for sale, net

 

108,848

 

171,578

 

Net investment in rental property

 

4,316,997

 

4,187,339

 

Cash and cash equivalents

 

29,633

 

28,180

 

Restricted cash

 

19,921

 

39,792

 

Investments in unconsolidated joint ventures

 

232,750

 

252,626

 

Unbilled rents receivable, net

 

100,737

 

100,842

 

Deferred charges, goodwill and other assets, net

 

355,234

 

342,320

 

Accounts receivable, net of allowance for doubtful accounts of $1,108 and $1,138

 

5,372

 

6,786

 

 

 

 

 

 

 

Total assets

 

$

5,060,644

 

$

4,957,885

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

Senior unsecured notes, net

 

$

570,314

 

$

569,145

 

Unsecured revolving credit facility and term loans

 

790,939

 

822,288

 

Mortgages, loans payable and other obligations, net

 

1,431,398

 

1,418,135

 

Distributions payable

 

21,877

 

21,158

 

Accounts payable, accrued expenses and other liabilities

 

168,115

 

192,716

 

Rents received in advance and security deposits

 

41,244

 

43,993

 

Accrued interest payable

 

9,117

 

9,519

 

Total liabilities

 

3,033,004

 

3,076,954

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

330,459

 

212,208

 

 

 

 

 

 

 

Partners’ Capital:

 

 

 

 

 

General Partner, 90,320,306 and 89,914,113 common units outstanding

 

1,413,497

 

1,407,366

 

Limited partners, 10,174,285 and 10,438,855 common units outstanding

 

232,764

 

233,635

 

Accumulated other comprehensive income

 

8,770

 

6,689

 

Total Mack-Cali Realty, L.P. partners’ capital

 

1,655,031

 

1,647,690

 

 

 

 

 

 

 

Noncontrolling interests in consolidated joint ventures

 

42,150

 

21,033

 

 

 

 

 

 

 

Total equity

 

1,697,181

 

1,668,723

 

 

 

 

 

 

 

Total liabilities and equity

 

$

5,060,644

 

$

4,957,885

 

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

MACK-CALI REALTY, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per unit amounts)

 

 

Year Ended December 31,

 

 

 

2018

 

2017

 

2016

 

REVENUES

 

 

 

 

 

 

 

Base rents

 

$

436,222

 

$

501,334

 

$

506,877

 

Escalations and recoveries from tenants

 

44,121

 

58,767

 

60,505

 

Real estate services

 

17,094

 

23,129

 

26,589

 

Parking income

 

22,117

 

20,270

 

13,630

 

Other income

 

11,052

 

12,700

 

5,797

 

Total revenues

 

530,606

 

616,200

 

613,398

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

Real estate taxes

 

64,555

 

81,364

 

87,379

 

Utilities

 

39,054

 

42,598

 

49,624

 

Operating services

 

102,626

 

107,379

 

103,954

 

Real estate services expenses

 

17,919

 

23,394

 

26,260

 

General and administrative

 

53,988

 

50,949

 

51,979

 

Acquisition-related costs

 

 

 

2,880

 

Depreciation and amortization

 

174,847

 

205,169

 

186,684

 

Land Impairments

 

24,566

 

 

 

Total expenses

 

477,555

 

510,853

 

508,760

 

 

 

 

 

 

 

 

 

OTHER (EXPENSE) INCOME

 

 

 

 

 

 

 

Interest expense

 

(83,754

)

(93,388

)

(94,889

)

Interest and other investment income (loss)

 

3,389

 

2,766

 

1,614

 

Equity in earnings (loss) of unconsolidated joint ventures

 

(127

)

(6,081

)

18,788

 

Gain on change of control of interests

 

14,217

 

 

15,347

 

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

 

99,436

 

2,364

 

109,666

 

Gain on disposition of developable land

 

30,939

 

 

 

Gain on sale of investment in unconsolidated joint venture

 

 

23,131

 

5,670

 

Loss from extinguishment of debt, net

 

(10,750

)

(421

)

(30,540

)

Total other income (expense)

 

53,350

 

(71,629

)

25,656

 

Net income

 

106,401

 

33,718

 

130,294

 

Noncontrolling interest in consolidated joint ventures

 

1,216

 

1,018

 

651

 

Redeemable noncontrolling interest

 

(13,979

)

(8,840

)

 

Net income available to common unitholders

 

$

93,638

 

$

25,896

 

$

130,945

 

 

 

 

 

 

 

 

 

Basic earnings per common unit:

 

 

 

 

 

 

 

Net income available to common unitholders

 

$

0.80

 

$

0.06

 

$

1.31

 

 

 

 

 

 

 

 

 

Diluted earnings per common unit:

 

 

 

 

 

 

 

Net income available to common unitholders

 

$

0.80

 

$

0.06

 

$

1.30

 

 

 

 

 

 

 

 

 

Basic weighted average units outstanding

 

100,634

 

100,410

 

100,245

 

 

 

 

 

 

 

 

 

Diluted weighted average units outstanding

 

100,724

 

100,703

 

100,498

 

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

MACK-CALI REALTY, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands)

 

 

Year Ended December 31,

 

 

 

2018

 

2017

 

2016

 

Net income

 

$

106,401

 

$

33,718

 

$

130,294

 

Other comprehensive income:

 

 

 

 

 

 

 

Net unrealized gain on derivative instruments for interest rate swaps

 

2,318

 

5,250

 

2,216

 

Comprehensive income

 

$

108,719

 

$

38,968

 

$

132,510

 

Comprehensive (income) loss attributable to noncontrolling interest in consolidated joint ventures

 

1,216

 

1,018

 

651

 

Comprehensive (income) loss attributable to redeemable noncontrolling interest

 

(13,979

)

(8,840

)

 

Comprehensive income attributable to common unitholders

 

$

95,956

 

$

31,146

 

$

133,161

 

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

MACK-CALI REALTY, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (in thousands)

 

 

 

 

 

 

 

 

 

 

Accumulated

 

Noncontrolling

 

 

 

 

 

 

 

 

 

General Partner

 

Limited Partner

 

Other

 

Interest

 

 

 

 

 

General Partner

 

Limited Partner

 

Common

 

Common

 

Comprehensive

 

in Consolidated

 

 

 

 

 

Common Units

 

Common Units

 

Unitholders

 

Unitholders

 

Income (Loss)

 

Joint Ventures

 

Total Equity

 

Balance at January 1, 2016

 

89,584

 

10,517

 

$

1,399,419

 

$

227,148

 

$

 

$

57,141

 

$

1,683,708

 

Net income

 

 

 

117,224

 

13,721

 

 

(651

)

130,294

 

Distributions

 

 

 

(53,796

)

(6,619

)

 

 

(60,415

)

Decrease in noncontrolling interest

 

 

 

414

 

 

 

(35,544

)

(35,130

)

Redemption of limited partner common units for shares of general partner common units

 

29

 

(29

)

474

 

(474

)

 

 

 

Shares issued under Dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reinvestment and Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase Plan

 

3

 

 

71

 

 

 

 

71

 

Directors’ deferred compensation plan

 

 

 

372

 

 

 

 

372

 

Other comprehensive income

 

 

 

 

231

 

1,985

 

 

2,216

 

Stock compensation

 

85

 

 

3,466

 

2,180

 

 

 

5,646

 

Cancellation of restricted shares

 

(4

)

 

(75

)

 

 

 

(75

)

Balance at December 31, 2016

 

89,697

 

10,488

 

$

1,467,569

 

$

236,187

 

$

1,985

 

$

20,946

 

$

1,726,687

 

Net income

 

 

 

23,185

 

2,711

 

 

7,822

 

33,718

 

Distributions

 

 

 

(67,430

)

(8,629

)

 

 

(76,059

)

Issuance of limited partner common units

 

 

99

 

 

2,793

 

 

 

2,793

 

Redeemable noncontrolling interest

 

 

 

(17,951

)

(2,074

)

 

(8,840

)

(28,865

)

Decrease in noncontrolling interest

 

 

 

(3,756

)

 

 

1,105

 

(2,651

)

Redemption of limited partner common units for shares of general partner common units

 

149

 

(149

)

2,531

 

(2,531

)

 

 

 

Shares issued under Dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reinvestment and Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase Plan

 

2

 

 

67

 

 

 

 

67

 

Directors’ deferred compensation plan

 

 

 

482

 

 

 

 

482

 

Other comprehensive income

 

 

 

 

546

 

4,704

 

 

5,250

 

Stock compensation

 

70

 

 

2,815

 

4,632

 

 

 

7,447

 

Cancellation of restricted shares

 

(4

)

 

(146

)

 

 

 

(146

)

Balance at December 31, 2017

 

89,914

 

10,438

 

$

1,407,366

 

$

233,635

 

$

6,689

 

$

21,033

 

$

1,668,723

 

Net income

 

 

 

84,111

 

9,527

 

 

12,763

 

106,401

 

Distributions

 

 

 

(72,200

)

(9,022

)

 

 

(81,222

)

Redeemable noncontrolling interest

 

 

 

(11,425

)

(1,296

)

 

(13,979

)

(26,700

)

Decrease in noncontrolling interest

 

 

 

 

 

 

22,333

 

22,333

 

Redemption of limited partner common units for shares of general partner common units

 

264

 

(264

)

4,344

 

(4,344

)

 

 

 

Shares issued under Dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reinvestment and Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase Plan

 

4

 

 

(37

)

 

 

 

(37

)

Directors’ deferred compensation plan

 

 

 

507

 

 

 

 

507

 

Other comprehensive income

 

 

 

 

237

 

2,081

 

 

2,318

 

Stock compensation

 

147

 

 

1,414

 

5,480

 

 

 

6,894

 

Cancellation of restricted shares

 

(9

)

 

(583

)

(1,453

)

 

 

(2,036

)

Balance at December 31, 2018

 

90,320

 

10,174

 

$

1,413,497

 

$

232,764

 

$

8,770

 

$

42,150

 

$

1,697,181

 

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

MACK-CALI REALTY, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

 

 

December 31,

 

 

 

2018

 

2017

 

2016

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

 

$

106,401

 

$

33,718

 

$

130,294

 

Adjustments to reconcile net income to net cash provided by Operating activities:

 

 

 

 

 

 

 

Depreciation and amortization, including related intangible assets and liabilities

 

170,284

 

198,674

 

186,549

 

Amortization of directors deferred compensation stock units

 

507

 

482

 

372

 

Amortization of stock compensation

 

6,894

 

7,447

 

5,646

 

Amortization of deferred financing costs

 

5,028

 

4,612

 

4,582

 

Amortization of debt discount and mark-to-market

 

(948

)

(287

)

1,686

 

Equity in (earnings) loss of unconsolidated joint ventures

 

127

 

6,081

 

(18,788

)

Distributions of cumulative earnings from unconsolidated joint ventures

 

9,182

 

8,186

 

6,120

 

Gain on change of control of interests

 

(14,217

)

 

(15,347

)

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

 

(99,436

)

(2,364

)

(109,666

)

Gain on disposition of developable land

 

(30,939

)

 

 

Gain on sale of investments in unconsolidated joint ventures

 

 

(23,131

)

(5,670

)

Loss (gain) from extinguishment of debt

 

10,750

 

421

 

(12,420

)

Land impairments

 

24,566

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Increase in unbilled rents receivable, net

 

(7,519

)

(11,286

)

(12,775

)

Increase in deferred charges, goodwill and other assets

 

(29,377

)

(19,710

)

(33,878

)

Decrease in accounts receivable, net

 

1,382

 

2,831

 

596

 

Increase (decrease) in accounts payable, accrued expenses and other liabilities

 

13,915

 

(9,012

)

(14,535

)

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

 

875

 

(1,817

)

(3,297

)

(Decrease) increase in accrued interest payable

 

(402

)

1,296

 

(9,362

)

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

167,073

 

$

196,141

 

$

100,107

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

Rental property acquisitions and related intangibles

 

$

(164,838

)

$

(619,350

)

$

(407,869

)

Rental property additions and improvements

 

(168,398

)

(90,068

)

(121,582

)

Development of rental property and other related costs

 

(184,799

)

(267,845

)

(206,955

)

Proceeds from the sales of rental property

 

338,015

 

312,596

 

604,978

 

Proceeds from the sale of investments in unconsolidated joint ventures

 

 

98,599

 

6,420

 

Investments in notes receivable

 

 

(47,049

)

 

Repayment of notes receivable

 

12,102

 

74,945

 

500

 

Investment in unconsolidated joint ventures

 

(11,789

)

(36,060

)

(35,930

)

Distributions in excess of cumulative earnings from unconsolidated joint ventures

 

11,553

 

5,877

 

22,231

 

Proceeds from investment receivable

 

 

3,625

 

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

$

(168,154

)

$

(564,730

)

$

(138,207

)

 

 

 

 

 

 

 

 

CASH FLOW FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

Borrowings from revolving credit facility

 

$

461,000

 

$

730,000

 

$

1,165,000

 

Repayment of revolving credit facility

 

(494,000

)

(866,000

)

(1,034,000

)

Repayment of senior unsecured notes

 

 

(250,000

)

(448,339

)

Borrowings from unsecured term loan

 

 

325,000

 

350,000

 

Proceeds from mortgages and loans payable

 

434,293

 

518,852

 

474,344

 

Repayment of mortgages, loans payable and other obligations

 

(418,495

)

(156,760

)

(349,426

)

Acquisition of noncontrolling interests

 

 

(2,021

)

(37,946

)

Issuance of redeemable noncontrolling interests, net

 

105,000

 

139,002

 

 

Payment of financing costs

 

(3,576

)

(9,230

)

(9,414

)

Contributions from (to) noncontrolling interests, net

 

(7,542

)

(19)

 

1,065

 

Payment of distributions

 

(94,017

)

(77,826

)

(60,041

)

 

 

 

 

 

 

 

 

Net cash (used in) provided by financing activities

 

$

(17,337

)

$

350,998

 

$

51,243

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

$

(18,418

)

$

(17,591

)

$

13,143

 

Cash, cash equivalents and restricted cash, beginning of period (1)

 

67,972

 

85,563

 

72,420

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash, end of period (2)

 

$

49,554

 

$

67,972

 

$

85,563

 


(1)         Includes Restricted Cash of $39,792, $53,952 and $35,343 as of December 31, 2017, 2016 and 2015, respectively, pursuant to the adoption of ASU 2016-15.

(2)         Includes Restricted Cash of $19,921, $39,792 and $53,952 as of December 31, 2018, 2017 and 2016, respectively, pursuant to the adoption of ASU 2016-15.

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

MACK-CALI REALTY CORPORATION, MACK-CALI REALTY, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(square (square footage, and apartment unit, room, and building counts unaudited)


1.ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION


ORGANIZATION

Mack-Cali Realty Corporation, a Maryland corporation, together with its subsidiaries (collectively, the “Company”“General Partner”), is a fully-integrated, self-administered, self-managed real estate investment trust (“REIT”).  The General Partner controls Mack-Cali Realty, L.P., a Delaware limited partnership, together with its subsidiaries (collectively, the “Operating Partnership”), as its sole general partner and owned an 89.8 percent and 89.6 percent common unit interest in the Operating Partnership as of December 31, 2018 and December 31, 2017, respectively.  The General Partner’s business is the ownership of interests in and operation of the Operating Partnership and all of the General Partner’s expenses are incurred for the benefit of the Operating Partnership.  The General Partner is reimbursed by the Operating Partnership for all expenses it incurs relating to the ownership and operation of the Operating Partnership.

The Operating Partnership conducts the business of providing leasing, management, acquisition, development, construction and tenant-related services for its propertiesGeneral Partner.  The Operating Partnership, through its operating divisions and third parties.  subsidiaries, including the Mack-Cali property-owning partnerships and limited liability companies, is the entity through which all of the General Partner’s operations are conducted.  Unless stated otherwise or the context requires, the “Company” refers to the General Partner and its subsidiaries, including the Operating Partnership and its subsidiaries.

As of December 31, 2015,2018, the Company owned or had interests in 275135 properties, consisting of 14756 office and 10955 flex properties, totaling approximately 29.915.4 million square feet, leased to approximately 1,900700 commercial tenants, and 1924 multi-family rental properties containing 5,644 residential6,910 apartment units, plus developable land (collectively, the “Properties”).  The Properties are comprised of 14756 office buildings totaling approximately 24.612.6 million square feet (which include 36four buildings aggregating approximately 5.60.5 million square feet owned by unconsolidated joint ventures in which the Company has investment interests), 9447 office/flex buildings totaling approximately 4.82.7 million square feet, six industrial/warehouse buildings totaling approximately 387,400 square feet, 1924 multi-family properties totaling 5,644 apartments6,910 apartment units (which include 13eight properties aggregating 4,343 apartments2,922 apartment units owned by unconsolidated joint ventures in which the Company has investment interests), fivesix parking/retail properties totaling approximately 121,700137,100 square feet (which include two buildings aggregating 81,700 square feet owned by unconsolidated joint ventures in which the Company has investment interests), onea hotel (which is owned by an unconsolidated joint venture in which the Company has an investment interest) and three parcelsa parcel of land leased to others.  The Properties are located in sevensix 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”),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, for the Company’s treatment of unconsolidated joint venture interests.  Intercompany accounts and transactions have been eliminated.


Accounting Standards Codification (“ASC”) 810, Consolidation, 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 VIEs.  Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack (i) the ability to make decisions about the entity'sentity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; (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 substantially all of the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest.  The Company consolidates VIEs in which it is considered to be the primary beneficiary.  The primary beneficiary is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the variable interest entity’s performance: and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE.


On January 1, 2016, the Company adopted accounting guidance under ASC 810, Consolidation, modifying the analysis it must perform to determine whether it should consolidate certain types of legal entities.  The guidance does not amend the existing disclosure requirements for variable interest entities or voting interest model entities.  The guidance, however, modified the requirements to qualify under the voting interest model.  Under the revised guidance, the Operating Partnership will be a variable interest entity of the parent company, Mack-Cali Realty Corporation.  As the Operating Partnership is already consolidated in the balance sheets of Mack-Cali Realty Corporation, the identification of this entity as a variable interest entity has no impact on the consolidated financial statements of Mack-Cali Realty Corporation.  There were no other legal entities qualifying under the scope of the revised guidance that were consolidated as a result of the adoption.

As of December 31, 20152018 and 2014,2017, the Company’s investments in consolidated real estate joint ventures, which are variable interest entities in which the Company is deemed to be the primary beneficiary, other than Roseland Residential, L.P. (See Note 3: Rockpoint Transaction), have total real estate assets of $273.4$480.4 million and $242.9$215.5 million, respectively, mortgages of $89.5$241.5 million and $94.3$81.2 million, respectively, and other liabilities of $17.5$23 million and $15.7$19.3 million, respectively.


The financial statements have been prepared in conformity with GAAP.  The preparation of financial statements in conformity with 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.  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.


Actual results could differ from those estimates.  Certain reclassifications have been made to prior period amounts in order to conform with current period presentation.

71


2.    SIGNIFICANT ACCOUNTING POLICIES


Rental

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. Acquisition–Acquisition—related costs arewere expensed as incurred.incurred for all real estate acquisitions classified as business combinations, which were substantially all of our operating property acquisitions, through December 31, 2016. The Company early adopted FASB guidance Accounting Standards Update (“ASU”) 2017-01 on January 1, 2017, which revises the definition of a business and is expected to result in more transactions to be accounted for as asset acquisitions and significantly limit transactions that would be accounted for as business combinations. Where an acquisition has been determined to be an asset acquisition, acquisition-related costs 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. Capitalized development and construction salaries and related costs approximated $4.2$2.3 million, $3.1$2.2 million and $4.4$2.6 million for the years ended December 31, 2015, 20142018, 2017 and 2013, respectively.  Included in total rental property is construction, tenant improvement and development in-progress of $88.7 million and $62.8 million as of December 31, 2015 and 2014,2016, 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.

Included in net investment in rental property as of December 31, 2018 and December 31, 2017 is real estate and building and tenant improvements not in service; as follows (dollars in thousands):

 

 

 

December 31,

 

December 31,

 

 

 

 

2018

 

2017

 

 

Land held for development (including pre-development costs) (a)

 

$

465,930

 

$

483,432

 

 

Development and construction in progress, including land (b)

 

327,039

 

535,971

 

 

Total

 

$

792,969

 

$

1,019,403

 



The Company considers a construction project as substantially completed and held available for occupancy upon the substantial 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, primarily based on a percentage of the relative square footage of each portion, 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:

(a)         Includes predevelopment and infrastructure costs included in buildings and improvements of $204.9 million and $188.1 million as of December 31, 2018 and December 31, 2017, respectively.

(b)         Includes land of $49.6 million and $77.0 million as of December 31, 2018 and December 31, 2017, respectively.

The Company considers a construction project as substantially completed and held available for occupancy upon the substantial completion of 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 residents, 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, primarily based on a percentage of the relative commercial square footage or multi-family units of each portion, 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 assumed, 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 fair values.  The Company records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed exceed the purchase consideration of a transaction.  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 initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases. The capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining terms 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.
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On a periodic basis, management assesses whether there are any indicators that the value of the Company’s rental properties held for use may be impaired.  In addition to identifying any specific circumstances which may affect a property or properties, management considers other criteria for determining which properties may require assessment for potential impairment.  The criteria considered by management include reviewing low leased percentages, significant near-term lease expirations, recently acquired properties, current and historical operating and/or cash flow losses, near-term mortgage debt maturities or other factors that might impact the Company’s intent and ability to hold the property.  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 value 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.  These assumptions are generally based on management’s experience in its local real estate markets and the effects of current market conditions.  The assumptions 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, and actual losses or impairments may be realized in the future.  See Note 3: Recent Transactions – Impairments on Properties Held and Used.

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 assumed, 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.  The Company records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed differ from the purchase consideration of a business transaction.

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

On a periodic basis, management assesses whether there are any indicators that the value of the Company’s rental properties held for use may be impaired.  In addition to identifying any specific circumstances which may affect a property or properties, management considers other criteria for determining which properties may require assessment for potential impairment.  The criteria considered by management include reviewing low leased percentages, significant near-term lease expirations, current and historical operating and/or cash flow losses, near-term mortgage debt maturities and/or other factors, including those that might impact the Company’s intent and ability to hold the property.  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 impairment loss shall be measured as the excess of the carrying value 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.  These assumptions are generally based on management’s experience in its local real estate markets and the effects of

current market conditions. The assumptions 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, and actual losses or impairments may be realized in the future.

Rental Property

Held for Sale

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. The Company generally considers assets to be held for sale when the transaction has received appropriate corporate authority, and there are no significant contingencies relating to the sale. If, in management’s opinion, the estimated net sales price, net of selling costs, of the assets which have been identified as held for sale is less than the carrying value of the assets, a valuation allowance (which is recorded as unrealized losses on disposition of rental property) is established.

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 estimated 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.
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 value 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

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 value 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

The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting. The Company applies the equity method by initially recording these investments at cost, as Investments in Unconsolidated Joint Ventures, subsequently adjusted for equity in earnings and cash contributions and distributions.  The outside basis portion of the Company’s joint ventures is amortized over the anticipated useful lives of the underlying ventures’ tangible and intangible assets acquired and liabilities assumed. Generally, the Company would discontinue applying the equity method when the investment (and any advances) is reduced to zero and would not provide for additional losses unless the Company has guaranteed obligations of the venture or is otherwise committed to providing further financial support for the investee.    If the venture subsequently generates income, the Company only recognizes its share of such income to the extent it exceeds its share of previously unrecognized losses.

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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 value of the investment over the value of the investment.  The Company’s estimates of value for each investment (particularly in real estate joint ventures) are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and operating costs.  As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the values estimated by management in its impairment analyses may not be realized, and actual losses or impairment may be realized in the future.  See Note 4: Investments in Unconsolidated Joint Ventures. 

If the venture subsequently makes distributions and the Company does not have an implied or actual commitment to support the operations of the venture, including a general partner interest in the investee, the Company will not record a basis less than zero, rather such amounts will be recorded as equity in earnings of unconsolidated joint ventures.

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 value of the investment over the value of the investment. The Company’s estimates of value for each investment (particularly in real estate joint ventures) are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and operating costs. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the values estimated by management in its impairment analyses may not be realized, and actual losses or impairment may be realized in the future. See Note 4: Investments in Unconsolidated Joint Ventures.

Cash and Cash Equivalents

Equivalents

All highly liquid investments with aan original maturity of three months or less when purchased are considered to be cash equivalents.


Deferred

Deferred Financing Costs

Costs incurred in obtaining financing are capitalized and amortized over the term of the related indebtedness. AmortizationDeferred financing costs are presented in the balance sheet as a direct deduction from the carrying value of the debt liability to which they relate, except deferred financing costs related to the revolving credit facility, which are presented in deferred charges, goodwill and other assets. In all cases, amortization of such costs is included in interest expense and was $3,790,000, $3,274,000$5,028,000, $4,612,000 and $3,172,000$4,582,000 for the years ended December 31, 2015, 20142018, 2017 and 2013,2016, respectively. If a financing obligation is extinguished early, any unamortized deferred financing costs are written off and included in gains (losses) from early extinguishment of debt. Included in Lossloss from early extinguishment of debt, net of $582,000gains, of $10.8 million, $0.4 million and $156,000$30.5 million for the years ended December 31, 20142018, 2017 and 20132016 were unamortized deferred financing costs which were written off (as non-cash transactions) amounting to $12,000$0.6 million, $0.4 million and $156,000,$0.7 million, respectively.


Deferred

Deferred Leasing Costs

Costs incurred in connection with successfully executed commercial and residential 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 related to commercial leases, which is capitalized and amortized, approximated $3,521,000, $3,840,000 and $4,223,000included in deferred charges, goodwill and other assets, net was approximately $3,463,000, $3,146,000 and $3,270,000 for the years ended December 31, 2015, 20142018, 2017 and 2013,2016, respectively. Upon the adoption of ASC842 on January1, 2019, the Company will no longer capitalize such costs.


Goodwill

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net tangible and intangible assets acquired in a business combination. Goodwill is allocated to various reporting units, as applicable. Each of the Company’s segments consists of a reporting unit. Goodwill is not amortized. Management performs an annual impairment test for goodwill during the fourth quarter and between annual tests, management evaluates the recoverability of goodwill whenever events or changes in circumstances indicate that the carrying value of goodwill may not be fully recoverable. In its impairment tests of goodwill, management first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, based on this assessment, management determines that the fair value of the reporting unit is not less than its carrying value, then performing the additional two-step impairment test is unnecessary. If the carrying value of goodwill exceeds its fair value, an impairment charge is recognized. The Company determined that its goodwill, with a balance of $2.9 million, was not impaired at December 31, 20152018 after management performed its impairment tests.


Derivative
Instruments

Derivative Instruments

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



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Revenue
Recognition

Revenue Recognition

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


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

Escalations and recoveries from tenants are received from tenants for certain costs as provided in the lease agreements.  These costs generally include real estate taxes, utilities, insurance, common area maintenance and other recoverable costs.  See Note 14: Tenant Leases.

Construction services revenue includes fees earned and reimbursements received by the Company for providing construction management and general contractor services to clients.  Construction services revenue is recognized on the percentage of completion method.  Using this method, profits are recorded on the basis of our estimates of the overall profit and percentage of completion of individual contracts.  A portion of the estimated profits is accrued based upon estimates of the percentage of completion of the construction contract.  This revenue recognition method involves inherent risks relating to profit and cost estimates.

Real estate services revenue includes property management, development, construction and leasing commission fees and other services, and payroll and related costs reimbursed from clients.  Fee income derived from the Company’s unconsolidated joint ventures (which are capitalized by such ventures) are recognized to the extent attributable to the unaffiliated ownership interests.

Parking income includes income from parking spaces leased to tenants and others.

Other income includes income from tenants for additional services arranged for by the Company and income from tenants for early lease terminations.

Allowance for

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 13: Tenant Leases.

Real estate services revenue includes property management, development, construction and leasing commission fees and other services, and payroll and related costs reimbursed from clients. Fee income derived from the Company’s unconsolidated joint ventures (which are capitalized by such ventures) are recognized to the extent attributable to the unaffiliated ownership interests.

Parking income includes income from parking spaces leased to tenants and others.

Other income includes income from tenants for additional services arranged for by the Company and income from tenants for early lease terminations.

Allowance for Doubtful Accounts

Management performs a detailed review of amounts due from tenants to determine if an allowance for doubtful accounts is required based on factors affecting the collectability of the accounts receivable balances. The factors considered by management in determining which individual tenant receivable balances, or aggregate receivable balances, require a collectability allowance include the age of the receivable, the tenant’s payment history, the nature of the charges, any communications regarding the charges and other related information. 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

Income and Other Taxes

The CompanyGeneral Partner has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”“IRS Code”). As a REIT, the CompanyGeneral Partner 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 CompanyGeneral Partner satisfies certain organizational and operational requirements including the requirement to distribute at least 90 percent of its REIT taxable income (determined by excluding any net capital gains) to its shareholders. If and to the extent the CompanyGeneral Partner retains and does not distribute any net capital gains, the CompanyGeneral Partner will be required to pay federal, state and local taxes, as applicable, on such net capital gains at the rate applicable to capital gains of a corporation.

The CompanyOperating Partnership is a partnership, and, as a result, all income and losses of the partnership are allocated to the partners for inclusion in their respective tax returns. Accordingly, no provision or benefit for income taxes has been made in the accompanying financial statements.

As of December 31, 2018, the estimated net basis of the rental property for federal income tax purposes was lower than the net assets as reported in the Operating Partnership’s financial statements by approximately $410,573,000. The Operating Partnership’s taxable income for the year ended December 31, 2018 was estimated to be approximately $82,106,000 and for the years ended December 31, 2017 and 2016 was approximately $97,037,000 and $30,208,000, respectively. The differences between book income and taxable income primarily result from differences in depreciation expenses, the recording of rental income, differences in the deductibility of interest expense and certain other expenses for tax purposes, differences in revenue recognition and the rules for tax purposes of a property exchange.

The General Partner has elected to treat certain of its corporate subsidiaries as taxable REIT subsidiaries (each a “TRS”). In general, a TRS of the CompanyGeneral Partner may perform additional services for tenants of the Company and generally may engage in any real estate or non-real estate related business (except for the operation or management of health care facilities or lodging facilities or the providing to any person, under a franchise, license or otherwise, rights to any brand name under which any lodging facility or health care facility is operated). A TRS is subject to corporate federal income tax. The CompanyGeneral Partner has conducted business through its TRS entities for certain property management, development, construction and other related services, as well as to hold a joint venture interest in a hotel and other matters.

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As of December 31, 2015, the Company had a deferred tax asset related to its TRS activity with a balance of approximately $22.4 million which has been fully reserved for through a valuation allowance.  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.

Pursuant to the amended provisions related to uncertain tax provisions of ASC 740, Income Taxes, the Company recognized no material adjustments regarding its tax accounting treatment.  The Company expects to recognize interest and penalties related to uncertain tax positions, if any, as income tax expense, which is included in general and administrative expense.

In the normal course of business, the Company or one of its subsidiaries is subject to examination by federal, state and local jurisdictions in which it operates, where applicable.  As of December 31, 2015, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations are generally from the year 2011 forward.

The deferred tax asset balance at December 31, 2018 amounted to $10.1 million which has been fully reserved through a valuation allowance. New tax reform legislation enacted in late 2017 reduced the corporate tax rate to 21 percent, effective January 1, 2018.  Consequently, the Company’s deferred tax assets were re-measured to reflect the reduction in the future U.S. corporate income tax rate as of the enactment date.  As a result, the Company recorded a decrease related to its deferred tax assets of $5.3 million and a decrease to the associated valuation allowance of $5.3 million at December 31, 2017. If the General Partner fails to qualify as a REIT in any taxable year, the Company will be subject to federal income tax on its taxable income at regular corporate tax rates. The Company is subject to certain state and local taxes.

Earnings

Pursuant to the amended provisions related to uncertain tax provisions of ASC 740, Income Taxes, the Company recognized no material adjustments regarding its tax accounting treatment. The Company expects to recognize interest and penalties related to uncertain tax positions, if any, as income tax expense, which is included in general and administrative expense.

In the normal course of business, the Company or one of its subsidiaries is subject to examination by federal, state and local jurisdictions in which it operates, where applicable. As of December 31, 2018, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations are generally from the year 2014 forward.

Earnings Per Share or Unit

The Company presents both basic and diluted earnings per share or unit (“EPS”EPS or EPU”). Basic EPS or EPU excludes dilution and is computed by dividing net income available to common shareholders or unitholders by the weighted average number of shares or units outstanding for the period. Diluted EPS or EPU 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 or EPU from continuing operations amount. Shares or Units whose issuance is contingent upon the satisfaction of certain conditions shall be considered outstanding and included in the computation of diluted EPS or EPU as follows (i) if all necessary conditions have been satisfied by the end of the period (the events have occurred), those shares or units shall be included as of the beginning of the period in which the conditions were satisfied (or as of the date of the grant, if later) or (ii) if all necessary conditions have not been satisfied by the end of the period, the number of contingently issuable shares or units included in diluted EPS or EPU shall be based on the number of shares or units, if any, that would be issuable if the end of the reporting period were the end of the contingency period (for example, the number of shares or units that would be issuable based on current period earnings or period-end market price) and if the result would be dilutive. Those contingently issuable shares or units shall be included in the denominator of diluted EPS or EPU as of the beginning of the period (or as of the date of the grant, if later).


Dividends and Distributions Payable

Distributions
Payable

The dividends and distributions payable at December 31, 20152018 represents dividends payable to common shareholders (89,584,008(90,320,408 shares) and distributions payable to noncontrolling interest common unitholders of the Operating Partnership (10,516,844(10,174,285 common units and 1,762,170 LTIP units) for all such holders of record as of January 6, 20163, 2019 with respect to the fourth quarter 2015.2018. The fourth quarter 20152018 common stock dividends and common unit distributions of $0.15$0.20 per common share, common unit and LTIP unit were approved by the General Partner’s Board of Directors on December 8, 201511, 2018 and paid on January 15, 2016.11, 2019.

The dividends and distributions payable at December 31, 2017 represents dividends payable to common shareholders (89,914,658 shares) and distributions payable to noncontrolling interest unitholders of the Operating Partnership (10,438,855 common units and 1,230,877 LTIP units) for all such holders of record as of January 3, 2018 with respect to the fourth quarter 2017. The fourth quarter 2017 common stock dividends and unit distributions of $0.20 per common share, common unit and LTIP unit were approved by the General Partner’s Board of Directors on December 12, 2017 and paid on January 12, 2018.

The Company has determined that the $0.80 dividend per common share paid during the year ended December 31, 2018 represented approximately 47 percent ordinary income and approximately 53 percent capital gain; the $0.70 dividend per common share paid during the year ended December 31, 2017 represented 100 percent ordinary income and the $0.60 dividend per common share paid during the year ended December 31, 2016 represented 100 percent return of capital.


The dividends and distributions payable at December 31, 2014 represents dividends payable to common shareholders (88,866,652 shares) and distributions payable to noncontrolling interest common unitholders of the Operating Partnership (11,083,876 common units) for all such holders of record as of January 6, 2015 with respect to the fourth quarter 2014.  The fourth quarter 2014 common stock dividends and common unit distributions of $0.15 per common share and unit were approved by the Board of Directors on December 9, 2014 and paid on January 14, 2015.

The Company has determined that the $0.60 dividend per common share paid during the year ended December 31, 2015 represented approximately 90 percent ordinary income and approximately 10 percent capital gain to its stockholders; the $0.90 dividend per common share paid during the year ended December 31, 2014 represented approximately 77 percent ordinary income and approximately 23 percent return of capital; and the $1.50 dividend per common share paid during the year ended December 31, 2013 represented approximately 53 percent ordinary income, approximately 33 percent return of capital and approximately 14 percent capital gain to its stockholders.
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Costs Incurred

Costs Incurred For Stock Issuances

Issuances

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


Stock
Compensation

Stock Compensation

The Company accounts for stock compensation in accordance with the provisions of ASC 718, Compensation-Stock Compensation. These provisions require that the estimated fair value of restricted stock (“Restricted Stock Awards”), restricted stock units (“RSUs”), performance share units, (“PSUs”), total stockholder return based performance shares (“TSR”)long term incentive plan awards and stock options at the grant date be amortized ratably into expense over the appropriate vesting period. The Company recorded stock compensation expense of $2,219,000, $8,139,000$6,894,000, $7,447,000 and $2,387,000$5,646,000 for the years ended December 31, 2015, 20142018, 2017 and 2013,2016, respectively.  The amount for 2014 included $5,824,000 related to the departure of certain executive officers.


Other

Other Comprehensive Income (Loss)

Income

Other comprehensive income (loss), if any, includes items that are recorded in equity, such as effective portions of derivatives designated as cash flow hedges or unrealized holding gains or losses on marketable securities available for sale.  There was no difference

Redeemable Noncontrolling Interests

The Company evaluates the terms of the partnership units issued in other comprehensive incomeaccordance with the FASB’s Distinguishing Liabilities from Equity guidance. Units which embody an unconditional obligation requiring the Company to net incomeredeem the units for cash after a specified or determinable date (or dates) or upon the years ended December 31, 2015, 2014occurrence of an event that is not solely within the control of the issuer are determined to be contingently redeemable under this guidance and 2013,are included as Redeemable noncontrolling interests and no accumulated other comprehensive income asclassified within the mezzanine section between Total liabilities and Stockholders’ equity on the Company’s Consolidated Balance Sheets. The carrying amount of December 31, 2015 and 2014.the redeemable noncontrolling interests will be changed by periodic accretions, so that the carrying amount will equal the estimated future redemption value at the redemption date.


Fair Value Hierarchy

Hierarchy

The standard Fair Value Measurements specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). The following summarizes the fair value hierarchy:


·  

·Level 1: Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

·  

·Level 2: Quoted prices for identical assets and liabilities in markets that are inactive, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly, such as interest rates and yield curves that are observable at commonly quoted intervals and

·  

·Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.


In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety.  The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.


Discontinued
Operations
In April 2014, the Financial Accounting Standards Board (“FASB”) issued guidance related to the reportingfair value measurement in its entirety. The Company’s assessment of discontinued operation and disclosures of disposals of components of an entity.  This guidance defines a discontinued operation as a component or group of components disposed or classified as held for sale and represents a strategic shift that has (or will have) a major effect on an entity’s operations and final result; the guidance states that a strategic shift could include a disposalsignificance of a major geographical areaparticular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Impact Of Recently-Issued Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), modifying the principles for the recognition, measurement, presentation and disclosure of operations,leases for both parties to a major line of business, a major equity method investment or other major parts of an entity.  The guidance alsocontract (i.e. lessees and lessors).  ASU 2016-02 provides new guidelines that change the accounting for additional disclosure requirements in connection with both discontinued operationsleasing arrangements for lessees, whereby their rights and other dispositions not qualifying as discontinued operations.  The guidance is effective forobligations under substantially all companies for annual and interim periods beginning on or after December 15, 2014.  The guidance applies prospectively to new disposalsleases, existing and new, classificationswould be capitalized and

recorded on the balance sheet. For lessors, however, the accounting remains largely equivalent to the current model, with the distinction between operating, sales-type, and direct financing leases retained, but updated to align with certain changes to the lessee model and the new revenue recognition standard.

ASU 2016-02 provides two transition methods. The first transition method allows for application of disposal groups as held for sale after the effective date.  All entities could earlynew model at the beginning of the earliest comparative period presented. Under the second transition method, comparative periods would not be restated, with any cumulative effect adjustments recognized in the opening balance of retained earnings in the period of adoption. In addition, a practical expedient was recently issued by the FASB that allows lessors to combine non-lease components with related lease components if certain conditions are met. The Company will adopt thethis guidance for new disposals (or new classifications as held for sale) that had not been reported in financial statements previously issued or available for issuance. The Company elected to early adopt this standard effective with theits interim periodand annual periods beginning January 1, 2014.  Prior2019 and expects to January 1, 2014, properties identified as helduse the second transition method.

Under ASU 2016-02, lessors will only capitalize incremental direct leasing costs and will expense internal leasing costs that were previously capitalized prior to the adoption of ASU 2016-02. For leases where the Company is a lessee, primarily its ground leases, the Company expects to recognize a right-of-use asset and a corresponding lease liability. The Company is continuing to assess the potential impact of this standard but expects to recognize right-of-use assets and lease liabilities for sale and/or disposed of were presented in discontinued operations for all periods presented.  See Note 7: Discontinued Operations.such ground leases.

77


Impact Of
Recently-Issued
Accounting
Standards

In May 2014,June 2016, the FASB issued Accounting Standards UpdateASU 2016-13, Financial Instruments — Credit Losses (“ASU”) 2014-09 Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"2016-13”). The guidance introduces a new model for estimating credit losses for certain types of financial instruments, including trade and lease receivables, loans receivable, held-to-maturity debt securities, and net investments in direct financing leases, amongst other financial instruments. ASU 2014-09 is a comprehensive new revenue recognition2016-13 also modifies the impairment model requiring a company to recognize revenue to depictfor available-for-sale debt securities and expands the transfer of goods or services to a customer atdisclosure requirements regarding an amount reflectingentity’s assumptions, models, and methods for estimating the consideration it expects to receive in exchangeallowance for those goods or services. In adoptinglosses. ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. Additionally, this guidance requires improved disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.  ASU 2014-092016-13 is effective for the first interim period within annual reporting periods beginning after December 15, 2017, and2019, including interim periods within those fiscal years, with early adoption is permitted for periods beginning after December 15, 2016.permitted. The Company is currently in the process of evaluating the impact the adoption of ASU 2014-092016-13 will have on the Company’s consolidated financial position or resultsstatements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). The purpose of operations. ASU 2017-12 is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for annual reporting periods beginning after December 15, 2018. ASU 2017-12 requires a modified retrospective transition method which requires a cumulative effect of the change on the opening balance of each affected component of equity in the Company’s consolidated financial statements as of the date of adoption. The Company does not expect the adoption of ASU 2017-12 to have a material impact on the Company’s consolidated financial statements.


3.    RECENT TRANSACTIONS

Management Changes

In June 2014,March 2018, the FASB issued ASU 2014-12 Compensation—Stock Compensation (Topic 718) - Accounting for Share-Based Payments WhenCompany announced the Termsappointment of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”). The amendments in ASU 2014-12 apply to all reporting entities that grant their employees share-based payments in which the termsMichael J. DeMarco, Chief Executive Officer of the award provideGeneral Partner, to its Board of Directors effective March 14, 2018.  Mr. DeMarco’s addition to the Board expanded the total number of members from nine to ten.  In February 2019, the Company announced that the Board of Directors increased its size from ten to eleven members, effective immediately, and nominated a performance target that affects vesting could be achieved afterslate of eleven candidates consisting of Lisa Myers, Laura Pomerantz and all of the requisite service period. Thatcurrent directors of the Company (other than Kenneth M. Duberstein, who decided not to stand for re-election and will retire from the Board of Directors at the Company’s 2019 annual meeting of shareholders) for election to the Board of Directors at the Company’s 2019 annual meeting of shareholders, which is the employee would be eligible to vest in the award regardless of whether the employee is rendering service on the date the performance target is achieved. Current GAAP does not contain explicit guidance on how to account for those share-based payments. ASU 2014-12 is intended to resolve the accounting treatment of such awards. The amendments in ASU 2014-12 are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015 with early adoption permitted.  The adoption of ASU 2014-12 is not expected to impactbe held on June 12, 2019.

In January 2018, the Company announced the appointment of David J. Smetana as chief financial officer and Nicholas Hilton as executive vice president of leasing of the General Partner.  Mr. Smetana began to perform his duties as chief financial officer and Anthony Krug ceased to serve as chief financial officer immediately following the filing of the Company’s consolidated financial statements. 


In August 2014, the FASB issued ASU 2014-15, which requires management to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern, and to provide certain disclosures when it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. ASU 2014-15 is effectiveAnnual Report on Form 10-K for the annual periodyear ended December 31, 20162017.  Mr. Krug remained an employee of the Company and provided transition services through March 31, 2018.  Mr. Hilton’s employment commenced on February 12, 2018 following the departure of Christopher DeLorenzo.

In June 2018, the Company announced that the employment of Mitchell E. Rudin as Vice Chairman of the General Partner was terminated effective as of June 5, 2018.  In November 2018, the Company announced that the employment of Robert Andrew Marshall

as President and Executive Vice President of Development of RRT was terminated effective as of October 31, 2018.  In addition, the Company also restructured certain other corporate and property management personnel during the year ended December 31, 2018.

As a result of the executive management changes as well as other personnel changes during the period, the Company incurred total net severance and related expenses in the year ended December 31, 2018 of $7.9 million, $6.5 million of which was included in general and administrative expense (including $1.0 million of stock compensation expense due to accelerated vesting and a net reversal of $2.0 million of amortization of stock compensation expense due to the forfeiture of unvested securities) and $1.4 million of which was included in operating services expense for annual periodsthe period.

Acquisitions

On February 6, 2019, the Company completed the acquisition of a 271,988 square foot office property located in Iselin, New Jersey, for a purchase price of $61.5 million, which was funded using funds available with the Company’s qualified intermediary and interim periods thereafter with early adoption permitted.borrowings under the Company’s unsecured revolving credit facility.

On January 25, 2019, the Company signed an agreement to acquire a 377-unit multi-family rental property located in Jersey City, New Jersey for approximately $264 million, subject to certain conditions.  The adoption of ASU 2014-15acquisition is not expected to materially impactbe completed in the second quarter 2019.

2017

The Company acquired the following office properties (which were determined to be asset acquisitions in accordance with ASU 2017-01) during the year ended December 31, 2017 (dollars in thousands):

Acquisition

 

 

 

 

 

# of

 

Rentable

 

Acquisition

 

Date

 

Property Address

 

Location

 

Bldgs.

 

Square Feet

 

Cost

 

01/11/17

 

Red Bank portfolio (a)

 

Red Bank, New Jersey

 

3

 

279,472

 

$

27,228

 

03/06/17

 

Short Hills/Madison portfolio (b)

 

Short Hills & Madison, New Jersey

 

6

 

1,113,028

 

367,361

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Acquisitions

 

 

 

 

 

9

 

1,392,500

 

$

394,589

 


(a)   This acquisition was funded through borrowings under the Company’s consolidated financial statements.


In February 2015,unsecured revolving credit facility.

(b)   This acquisition was funded through borrowings under the FASB issued ASU 2015-02, Consolidation–Amendments to the Consolidation Analysis (Topic 810) (“ASU 2015-02”).  ASU 2015-02 updates guidance related to accounting for consolidation of certain limited partnerships. ASU 2015-02 does not add or remove any of the five characteristics that determine if an entity isCompany’s unsecured revolving credit facility and a VIE; however, it changes the manner in which a reporting entity assesses its ability to make decisions about the entity's activities. Additionally, ASU 2015-02 removesnew $124.5 million loan secured by three of the six criteria that must be metproperties.

The purchase prices were allocated to the net assets acquired, as follows (in thousands):

 

 

Red Bank

 

Short Hills/Madison

 

 

 

 

 

Portfolio

 

Portfolio

 

Total

 

Land and leasehold interest

 

$

7,914

 

$

30,336

 

$

38,250

 

Buildings and improvements and other assets

 

16,047

 

295,299

 

311,346

 

Above market leases (a)

 

118

 

6,367

 

6,485

 

In-place lease values (a)

 

3,171

 

45,604

 

48,775

 

 

 

27,250

 

377,606

 

404,856

 

Less: Below market lease values (a)

 

(22

)

(10,245

)

(10,267

)

Net assets recorded upon acquisition

 

$

27,228

 

$

367,361

 

$

394,589

 


(a)         Above market, in-place and below market leases are being amortized over a weighted-average term of 5.4 years.

The Company acquired three separate developable land parcels located in Jersey City, Morris Township and Red Bank, New Jersey, for a fee arrangement to not be a VIEapproximately $80 million during the year ended December 31, 2017.  The acquisitions were funded using available cash and modifies how an entity assesses interests held through related parties. ASU 2015-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2015, with early adoption permitted.  The adoption of ASU 2015-02 is not expected to impactborrowings under the Company’s consolidated financial statements.


unsecured revolving credit facility.

In April 2015,Properties Commencing Initial Operations

The following properties commenced initial operations during the FASB issued ASU 2015-03, Interest–Imputation of Interest-Simplifying the Presentation of Debt Issuance Costs (Subtopic 835-30) (“ASU 2015-03”).  ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presentedyear ended December 31, 2018 (dollars in the balance sheet as a direct deduction from the carrying value of that debt liability, consistent with debt discounts.  The recognition and measurement guidance for debt issuance costs are not affected by this update.  Debt issuance costs related to revolving lines of credit are not within the scope of this new guidance. Additionally, in August 2015 the FASB issued guidance expanding the April 2015 update (ASU 2015-15).  It states that, given the absence of authoritative guidance within the update, the SEC staff would not object to an entity deferring and presenting debt issuancethousands):

 

 

 

 

 

 

 

 

# of

 

Total

 

In-Service

 

 

 

 

 

 

 

Apartment Units/

 

Development

 

Date

 

Property

 

Location

 

Type

 

Rooms

 

Costs Incurred

 

03/01/18

 

145 Front at City Square

 

Worcester, MA

 

Multi-Family

 

365

 

$

97,483

(a)

04/01/18

 

Signature Place at Morris Plains

 

Morris Plains, NJ

 

Multi-Family

 

197

 

56,715

(b)

05/01/18

 

Portside 5/6

 

East Boston, MA

 

Multi-Family

 

296

 

114,694

(c)

08/01/18

 

RiverHouse 11 at Port Imperial

 

Weehawken, NJ

 

Multi-Family

 

295

 

130,369

(d)

12/13/18

 

Residence Inn By Marriott (Phase I)

 

Weehawken, NJ

 

Hotel

 

164

 

58,723

(e)

Totals

 

 

 

 

 

 

 

1,317

 

$

457,984

 


(a)   Development costs as an asset for revolving lines of credit and subsequently amortizingDecember 31, 2018 included approximately $4.4 in land costs.  As of December 31, 2018, the deferred debt issuanceCompany anticipates additional costs ratably overof approximately $1.1 million, which will be primarily funded from a construction loan.

(b)   Development costs as of December 31, 2018 included approximately $0.9 in land costs.

(c)   As of December 31, 2018, the termCompany anticipates additional costs of approximately $0.7 million, which will be funded by the arrangement, regardlessCompany.

(d)   As of whether there are any outstanding borrowings onDecember 31, 2018, the lineCompany anticipates additional costs of credit.  This guidance is effective for financial statements issued for fiscal years beginning after$1.2 million which will be funded by the Company.

(e)   As of December 15, 2015, and interim periods within those fiscal years, with early adoption permitted for financial statements that have not been previously issued.  Full retrospective application is required.  The adoption31, 2018, the Company anticipates additional costs of ASU 2015-03$20.1 million which will result in debt issuance costs, currently included in Deferred charges, goodwill and other assets, being presented in the balance sheet asbe funded from a direct deduction from the carrying value of the related debt liabilitiesconstruction loan.

.Consolidations

2018


78


3.    RECENT TRANSACTIONS

Acquisitions

On January 5, 2016,August 2, 2018, the Company, which held a 5024.27 percent subordinated interest in the property-owning entity, Overlook Ridge Apartment Investorsunconsolidated joint venture Marbella Tower Urban Renewal Associates LLC, acquired its remaining interest in a 371-unit412-unit multi-family operating property located in Malden, Massachusetts for $39.8 million.


2015
On December 23, 2015, the Company acquired a vacant 147,241 square-foot office property located in the Mack-Cali Business Campus in Parsippany,Jersey City, New Jersey, acquired its equity partner’s 50 percent interest for approximately $10.3$65.6 million whichin cash.  The property was subject to a mortgage loan that had a principal balance of $95 million.  The cash portion of the acquisition was funded primarily through borrowings under the Company’s unsecured revolving credit facility.  This property is currentlyConcurrently with the closing, the joint venture repaid the $95 million mortgage loan in redevelopmentfull and obtained a new loan from a different lender, collateralized by the Company.

On November 12, 2015,property in the amount of $131 million, which bears interest at 4.07 percent and matures in August 2026.  The venture distributed $37.4 million of the loan proceeds, of which the Company’s share was $30.4 million.  As a result of the acquisition, the Company acquiredincreased its ownership of the property from a 196,128 square-foot, 95.624.27 percent leased office property adjacentsubordinated interest to an existing Mack-Cali property locateda 74.27 percent controlling interest.  In accordance with ASC 810, Consolidation, the Company evaluated the acquisition and determined that the entity meets the criteria of a VIE.  As such, the Company consolidated the asset upon acquisition and accordingly, remeasured its equity interests, as required by the FASB’s consolidation guidance, at fair value (based upon the income approach using current rates and market cap rates and discount rates).  As a result, the Company recorded a gain on change of control of interests of $14.2 million (a non-cash item) in Edison, New Jersey, for approximately $53.1 million, which was funded primarily through borrowings under the Company’s unsecured revolving credit facility.

The purchase prices were allocated to the net assets acquired during the year ended December 31, 2015, as follows (in thousands):

      
  Parsippany Edison 
Land$ 5,590$ 5,542 
Buildings and improvements  4,710  40,762 
Above market leases (1)  -  2,097 
In-place lease values (1)  -  4,699 
      
Net cash paid at acquisition$ 10,300$ 53,100 

(1)      In-place lease values will be amortized over four years or less, and above market leases will be amortized over 10 years or less.

2014
On December 2, 2014,2018, when the Company acquired developable landaccounted for the transaction as a VIE that is not a business in Conshohocken, Pennsylvania, for approximately $15.3 million, which was funded using available cash.

On August 15, 2014,accordance with ASC 810-10-30-4.  Additional non-cash items included in the Company acquired the equity interests of its joint venture partner in Overlook Ridge, L.L.C, Overlook Ridge JV, L.L.C. and Overlook Ridge JV 2C/3B, L.L.C. for $16.6 million, which was funded primarily through borrowing underacquisition were the Company’s unsecured revolving credit facility.  As a result, the Company increased its ownership to 100 percent of the developable land and now consolidates these entities, which were previously accounted for through unconsolidated joint ventures, (collectively, the “Consolidated Land”); and acquired an additional 25 percent, for a total of 50 percentcarrying value of its subordinated, unconsolidated interests in two operating multi-family properties owned by those entities.  See Note 4: Investments in Unconsolidated Joint Ventures.  In conjunction with the Company’s acquisition of the Consolidated Land, the Company assumed loans with a total principal balance of $23.0 million, which bore interest in the rangejoint venture of LIBOR plus 2.50 to 3.50 percent.$14 million and the noncontrolling interest’s fair value of $29.8 million (non-cash allocation).  See Note 10:9: Mortgages, Loans Payable and Other Obligations.

On April 10, 2014, the Company acquired Andover Place, a 220-unit multi-family rental property located in Andover, Massachusetts, for approximately $37.7 million, which was funded primarily through borrowing under the Company’s unsecured revolving credit facility.


79


The purchase price was allocated to the netNet assets acquired,recorded upon consolidation were as follows during the year ended December 31, 2014 (in thousands):

Land and leasehold interest

 

$

48,820

 

Buildings and improvements and other assets, net

 

162,958

 

In-place lease values (a)

 

6,947

 

Less: Below market lease values (a)

 

(108

)

 

 

218,617

 

Less: Debt

 

(131,000

)

Net Assets

 

87,617

 

Less: Noncontrolling interest (b)

 

(22,812

)

Net assets recorded upon consolidation

 

$

64,805

 


Andover
Place
Land$ 8,535
Buildings and improvements 27,609
Furniture, fixtures and equipment 459

(a)   In-place lease values (1)

 1,118
 37,721
Less: Below market lease values (1) (25)
Net cash paid at acquisition$ 37,696

(1)      In-place lease values and below market lease values will beleases are being amortized over one year or less.

Excluded from the cash flow statement for the year ended December 31, 2014 was $44.4a weighted-average term of 9.3 months.

(b)   Noncontrolling interest balance reflects distribution of $7.0 million of acquisition and other investment fundings (of which $40.1 million relatedloan proceeds at closing.

2017

On February 3, 2017, the Operating Partnership issued 42,800 shares of a new class of 3.5 percent Series A Preferred Limited Partnership Units of the Operating Partnership (the “Series A Units”) valued at $42.8 million.  The Series A Units were issued to the acquisitionCompany’s partners in the Plaza VIII & IX Associates L.L.C. joint venture that owns a development site adjacent to the Company’s Harborside property in Jersey City, New Jersey as non-cash consideration for their approximate 37.5 percent interest in the joint venture.  Concurrent with the issuance of 50the Series A Units, the Company purchased from other partners in the Plaza VIII & IX Associates L.L.C. joint venture their approximate 12.5 percent tenantsinterest for approximately $14.3 million in commoncash.  The results of these transactions increased the Company’s interests in the Curtis Center property.  See Unconsolidated Joint Venture Transactionsjoint venture from 50 percent to 100 percent.  Upon these acquisitions, the Company consolidated Plaza VIII & IX Associates L.L.C., a voting interest entity, substantially all of which is comprised of land for development.  As an acquisition of the additional 50 percent of the land, the Company accounted for the transaction as an asset acquisition under a cost accumulation model, resulting in Note 4: Investmentstotal consolidated assets of $60.6 million, substantially all of which is classified as land on the Balance Sheet.

On February 28, 2017, the Operating Partnership authorized the issuance of 9,213 shares of a new class of 3.5 percent Series A-1 Preferred Limited Partnership Units of the Operating Partnership (the “Series A-1 Units”).  9,122 Series A-1 Units were issued on February 28, 2017, valued at $9.1 million, to the Company’s partner in Unconsolidated Joint Ventures)a joint venture with the Operating Partnership, which owns Monaco Towers in Jersey City, New Jersey that includes 523 apartment homes in two fifty-story towers with 558 parking spaces and 12,300 square feet of ground floor retail space.  The Series A-1 Units were issued as non-cash consideration for the partner’s approximate 13.8 percent ownership interest in the joint venture to increase the Company’s unconsolidated investment to 29 percent.  In April 2017, an additional 91 Series A-1 Units were issued by the Operating Partnership to purchase from other partners in the same joint venture

their approximate 71.2 percent ownership interest for approximately $130.9 million in cash and $171.2 million in assumed debt in transactions which closed in April 2017. The results of these transactions increased the Company’s interests in the joint venture to 100 percent.  Upon these acquisitions, the Company consolidated RoseGarden Monaco Holdings, L.L.C., a voting interest entity.

As an acquisition of the remaining interests in the venture which were handled throughowns the Monaco Towers, the Company accounted for the transaction as an asset acquisition under a qualified intermediary using proceeds from prior sales structuredcost accumulation model, resulting in total consolidated net assets of $139.9 million which is allocated, as follows (in thousands):

 

 

Monaco

 

Monaco

 

 

 

 

 

North

 

South

 

Total

 

Land and leasehold interest

 

$

27,300

 

$

31,461

 

$

58,761

 

Buildings and improvements and other assets

 

112,841

 

129,895

 

242,736

 

Above market leases (a)

 

350

 

 

350

 

In-place lease values (a)

 

4,585

 

4,913

 

9,498

 

Less: Below market lease values (a)

 

(141

)

(118

)

(259

)

 

 

144,935

 

166,151

 

311,086

 

Less: Debt assumed at fair value

 

(79,544

)

(91,656

)

(171,200

)

Net assets recorded upon consolidation

 

$

65,391

 

$

74,495

 

$

139,886

 


(a)         Above market, in-place and below market leases are being amortized over a weighted-average term of 8 months.

Dispositions/Rental Property Held for tax purposes as Section 1031 transactions.


Dispositions
2015
Sale

2018

The Company disposed of the following office properties during the year ended December 31, 2015 2018 (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains

 

 

 

 

 

 

 

 

 

Rentable

 

Net

 

Net

 

(losses)/

 

Disposition

 

 

 

 

 

# of

 

Square

 

Sales

 

Carrying

 

Unrealized

 

Date

 

Property/Address

 

Location

 

Bldgs.

 

Feet

 

Proceeds

 

Value

 

Losses, net

 

02/15/18

 

35 Waterview Boulevard (a)

 

Parsippany, New Jersey

 

1

 

172,498

 

$

25,994

 

$

25,739

 

$

255

 

03/05/18

 

Hamilton portfolio (b)

 

Hamilton, New Jersey

 

6

 

239,262

 

17,546

 

17,501

 

45

 

03/07/18

 

Wall portfolio first closing

 

Wall, New Jersey

 

5

 

179,601

 

14,053

 

10,526

 

3,527

 

03/22/18

 

700 Horizon Drive

 

Hamilton, New Jersey

 

1

 

120,000

 

33,020

 

16,053

 

16,967

 

03/23/18

 

Wall portfolio second closing

 

Wall, New Jersey

 

3

 

217,822

 

30,209

 

12,961

 

17,248

 

03/28/18

 

75 Livingston Avenue

 

Roseland, New Jersey

 

1

 

94,221

 

7,983

 

5,609

 

2,374

 

03/28/18

 

20 Waterview Boulevard (c)

 

Parsippany, New Jersey

 

1

 

225,550

 

12,475

 

11,795

 

680

 

03/30/18

 

Westchester Financial Center (d)

 

White Plains, New York

 

2

 

489,000

 

81,769

 

64,679

 

17,090

 

06/27/18

 

65 Jackson Drive

 

Cranford, New Jersey

 

0

 

 

1,510

(e)

 

1,510

 

08/02/18

 

600 Horizon Drive

 

Hamilton, New Jersey

 

1

 

95,000

 

15,127

 

6,191

 

8,936

 

09/05/18

 

1 & 3 Barker Avenue 

 

White Plains, New York

 

2

 

133,300

 

15,140

 

13,543

 

1,597

 

11/15/18

 

120 Passaic Street (f)

 

Rochelle Park, New Jersey

 

1

 

52,000

 

2,667

 

2,568

 

99

 

12/31/18

 

Elmsford Distribution Center

 

Elmsford, New York

 

6

 

387,400

 

66,557

 

17,314

 

49,243

 

Sub-total

 

 

 

 

 

30

 

2,405,654

 

324,050

 

204,479

 

119,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses on rental property held for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,135

)

Totals

 

 

 

 

 

30

 

2,405,654

 

$

324,050

 

$

204,479

 

$

99,436

 



               
    Rentable  Net  Net    
Disposition  # ofSquare  Sales  Book  Realized 
DateProperty/AddressLocationBldgs. Feet  Proceeds  Value  Gain 
01/15/151451 Metropolitan DriveWest Deptford, New Jersey121,600 $1,072 $929 $ 143 
05/27/1510 Independence BlvdWarren, New Jersey1120,528  18,351(a) 15,114   3,237 
06/11/154 Sylvan WayParsippany, New Jersey1105,135  15,961(a) 9,522   6,439 
06/26/1514 Sylvan WayParsippany, New Jersey1203,506  79,977  55,253   24,724 
07/21/15210 Clay AveLyndhurst, New Jersey1121,203  14,766(a) 5,202   9,564 
08/24/155 Becker Farm RdRoseland, New Jersey1118,343  18,129(a) 8,975   9,154 
               
Totals  6 690,315 $ 148,256 $ 94,995 $ 53,261 
               
(a)     The Company transferred the deeds for these properties to the lender in satisfaction of its mortgage loan obligations totaling $59.7 million. The Company recorded an impairment   charge of $25.2 million during the year ended December 31, 2013 as it estimated that the carrying value of the properties may not be recoverable over their anticipated holding periods. 

2014

(a)   The Company recorded a valuation allowance of $0.7 million on this property during the year ended December 31, 2017. 

(b)         The Company recorded a valuation allowance of $0.6 million on these properties during the year ended December 31, 2017. The disposition additionally included two land properties.

(c)          The Company recorded a valuation allowance of $11 million on this property during the year ended December 31, 2017.  Prior to closing, the Company provided short term financing through a note receivable to an affiliate of the buyers of $2.8 million.  The note was paid off in the second quarter of 2018.

(d)         Prior to closing, the Company provided financing through a note receivable to an affiliate of the buyers of $4.0 million.  The note was paid off in  October 2018.

(e)          Represents the receipt by the Company in the second quarter 2018 of variable contingent sales consideration, net of costs, of $1.5 million subsequent to disposition of the property sold in January 2017.

(f)           The net sale proceeds were held by a qualified intermediary, which is noncash and recorded in deferred charges, goodwill and other assets as of December 31, 2018.   See Note 5: Deferred Charges, Goodwill and Other Assets, Net).

The Company solddisposed of the following developable land holding during the year ended December 31, 2018 (dollars in thousands):

 

 

 

 

 

 

Net

 

Net

 

Gain on

 

Disposition

 

 

 

 

 

Sales

 

Carrying

 

Disposition of

 

Date

 

Property Address

 

Location

 

Proceeds

 

Value

 

Developable Land

 

12/31/18

 

One Lake Street

 

Upper Saddle River, New Jersey (a)

 

$

46,036

 

$

15,097

 

$

30,939

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

 

 

 

 

$

46,036

 

$

15,097

 

$

30,939

 


(a)         The net sale proceeds were held by a qualified intermediary, which is noncash and recorded in deferred charges, goodwill and other assets as of December 31, 2018.   See Note 5: Deferred Charges, Goodwill and Other Assets, Net.  The net carrying value includes $3 million of development costs funded at the closing.

The Company identified as held for sale six office properties, totaling approximately 845,000 square feet, and a 159 unit multi-family rental property as of December 31, 2018.  The properties are located in Fort Lee, Newark, Paramus, Bridgewater, Morris Plains and Rahway, New Jersey.  The total estimated sales proceeds, net of expected selling costs, from the sales are expected to be approximately $124 million.  The Company determined that the carrying value of four of the properties was not expected to be recovered from estimated net sales proceeds and accordingly recognized an unrealized loss allowance of $20.1 million for the year ended December 31, 2018.  In January 2019, the Company completed the disposition of three of these properties for sales proceeds of approximately $54.5 million.

The following table summarizes the rental property held for sale, net, as of December 31, 2018 (dollars in thousands):

 

 

December 31,

 

 

 

2018

 

Land

 

$

24,376

 

Buildings and improvements

 

159,857

 

Less: Accumulated depreciation

 

(55,250

)

Less: Unrealized losses on properties held for sale

 

(20,135

)

Rental property held for sale, net

 

$

108,848

 

Other assets and liabilities related to the rental properties held for sale, as of December 31, 2018, include $2.9 million in Deferred charges and other assets, $1.7 million in Unbilled rents receivable and $2.3 million in Accounts payable, accrued expenses and other liabilities.  Approximately $3.9 million of these assets and $1.7 million of these liabilities are expected to be removed with the completion of the sales.

2017

The Company disposed of the following office properties during the year ended December 31, 2014 2017 (dollars in thousands):

               
    Rentable  Net  Net    
Sale  # ofSquare  Sales  Book  Realized 
DateProperty/AddressLocationBldgs. Feet  Proceeds  Value  Gain 
04/23/1422 Sylvan WayParsippany, New Jersey 1 249,409 $ 94,897 $ 60,244 $ 34,653 
06/23/1430 Knightsbridge Road (a)Piscataway, New Jersey 4 680,350   54,641   52,361   2,280 
06/23/14470 Chestnut Ridge Road (a) (b)Woodcliff Lake, New Jersey 1 52,500   7,195   7,109   86 
06/23/14530 Chestnut Ridge Road (a) (b)Woodcliff Lake, New Jersey 1 57,204   6,299   6,235   64 
06/27/14400 Rella BoulevardSuffern, New York 1 180,000   27,539   10,938   16,601 
06/30/14412 Mount Kemble Avenue (a)Morris Township, New Jersey 1 475,100   44,751   43,851   900 
07/29/1417-17 Route 208 North (a) (b)Fair Lawn, New Jersey 1 143,000   11,835   11,731   104 
08/20/14555, 565, 570 Taxter Road (a)Elmsford, New York 3 416,108   41,057   41,057   - 
08/20/14200, 220 White Plains Road (a)Tarrytown, New York 2 178,000   12,619   12,619   - 
08/20/141266 East Main Street (a) (b)Stamford, Connecticut 1 179,260   18,406   18,246   160 
              
Totals  16 2,610,931 $ 319,239 $ 264,391 $ 54,848 

(a)The Company completed the sale of these properties for approximately $221 million, comprised of: $192.5 million in cash from a combination of affiliates of Keystone Property Group’s (“Keystone Entities”) senior and pari-passu equity and mortgage financing; Company subordinated equity interests in each of the properties sold with capital accounts aggregating $21.2 million; and Company pari-passu equity interests in five of the properties sold aggregating $7.3 million.  Net sale proceeds from the sale aggregated $196.8 million which was comprised of the $221 million gross sales price less the subordinated equity interests of $21.2 million and $3 million in closing costs.  The purchasers of these properties are unconsolidated joint ventures formed between the Company and the Keystone Entities.  The senior and pari-passu equity will receive a 15 percent internal rate of return (“IRR”) after which the subordinated equity will receive a 10 percent IRR and then all distributable cash flow will be split equally between the Keystone Entities and the Company.  See Note 4: Investments in Unconsolidated Joint Ventures.  In connection with certain of these partial sale transactions, because the buyer received a preferential return on certain of the ventures for which the Company received subordinated equity interests, the Company only recognized profit to the extent that they received net proceeds in excess of their entire carrying value of the properties, effectively reflecting their retained subordinated equity interest at zero.
(b)The Company recorded an impairment charge of $20.8 million on these properties at December 31, 2013 as it estimated that the carrying value of the properties may not be recoverable over their anticipated holding periods.
80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Realized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gains

 

 

 

 

 

 

 

 

 

Rentable

 

Net

 

 

Net

 

(losses)/

 

Disposition

 

 

 

 

 

# of

 

Square

 

Sales

 

 

Carrying

 

Unrealized

 

Date

 

Property/Address

 

Location

 

Bldgs.

 

Feet

 

Proceeds

 

 

Value

 

Losses, net

 

01/30/17

 

Cranford portfolio

 

Cranford, New Jersey

 

6

 

435,976

 

$

26,598

 

 

$

22,736

 

$

3,862

 

01/31/17

 

440 Route 22 East (a)

 

Bridgewater, New Jersey

 

1

 

198,376

 

10,074

 

 

10,069

 

5

 

02/07/17

 

3 Independence Way

 

Princeton, New Jersey

 

1

 

111,300

 

11,549

 

 

9,910

 

1,639

 

05/15/17

 

103 Carnegie Center

 

Princeton, New Jersey

 

1

 

96,000

 

15,063

 

 

8,271

 

6,792

 

08/29/17

 

400 Chestnut Ridge Road

 

Woodcliff Lake, New Jersey

 

1

 

89,200

 

6,891

 

 

7,498

 

(607

)

08/30/17

 

140 E. Ridgewood Avenue

 

Paramus, New Jersey

 

1

 

239,680

 

30,201

 

 

30,737

 

(536

)

08/30/17

 

Bergen portfolio

 

Woodcliff Lake, Paramus and Rochelle Park, New Jersey

 

5

 

1,061,544

 

86,973

(c)

 

135,121

 

(48,148

)

09/11/17

 

377 Summerhill Road

 

East Brunswick, New Jersey

 

1

 

40,000

 

3,221

 

 

2,172

 

1,049

 

09/13/17

 

700 Executive Boulevard

 

Elmsford, New York

 

 

(b)

5,717

 

 

970

 

4,747

 

09/20/17

 

Totowa Portfolio

 

Totowa, New Jersey

 

13

 

499,243

 

63,624

 

 

27,630

 

35,994

 

09/27/17

 

890 Mountain Avenue (d)

 

New Providence, New Jersey

 

1

 

80,000

 

4,852

 

 

6,139

 

(1,287

)

09/28/17

 

135 Chestnut Ridge Road

 

Montvale, New Jersey

 

1

 

66,150

 

5,844

(e)

 

2,929

 

2,915

 

09/29/17

 

Moorestown portfolio

 

Moorestown and Burlington, New Jersey

 

26

 

1,260,398

 

73,393

(f)

 

56,186

 

17,207

 

10/19/17

 

1 Enterprise Boulevard

 

Yonkers, New York

 

 

(b)

3,230

 

 

1,380

 

1,850

 

11/15/17

 

61 South Paramus Road

 

Paramus, New Jersey

 

1

 

269,191

 

23,255

 

 

37,184

 

(13,929

)

12/06/17

 

300 Tice Boulevard

 

Woodcliff Lake, New Jersey

 

1

 

230,000

 

28,847

 

 

25,705

 

3,142

 

Sub-total

 

 

 

 

 

60

 

4,677,058

 

399,332

 

 

384,637

 

14,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses on rental property held for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,331

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

 

 

 

 

60

 

4,677,058

 

$

399,332

 

 

$

384,637

 

$

2,364

 



On January 1, 2014, the

(a)   The Company early adopted the new discontinued operations accounting standard and as the properties disposedrecorded a valuation allowance of $7.7 million on this property during the year ended December 31, 2015 and 2014 did not represent2016.

(b)   This disposition is of a strategic shift (asground leased land property.

(c)   At closing, the Company provided short term seller financing aggregating $65 million through mortgage notes receivable to the buyers.  These notes were paid off in November and December 2017.

(d)   The Company recorded an impairment charge of $7.0 million on this property during the year ended December 31, 2015.

(e)   The Company recorded an impairment charge of $4.2 million on this property during the year ended December 31, 2015.  $5.9 million of the sales proceeds from this sale were held by a qualified intermediary, which is noncash and recorded in deferred charges, goodwill and other assets as of December 31, 2017.  The Company received these proceeds in March 2018.  See Note 5: Deferred Charges, Goodwill and Other Assets, Net.

(f)    $15.3 million of the sales proceeds from this sale were held by a qualified intermediary, which is noncash and recorded in deferred charges, goodwill and other assets as of December 31, 2017.  The Company received these proceeds in March 2018.  See Note 5: Deferred Charges, Goodwill and Other Assets, Net.

The Company identified as held for sale 21 office properties totaling approximately 2 million square feet as of December 31, 2017.  The properties are located in Parsippany, Paramus, Rochelle Park, Hamilton and Wall, New Jersey and White Plains, New York.  The total estimated sales proceeds from the sales were expected to be approximately $223 million.  The Company determined that the carrying value of seven of the office properties was not entirely exiting markets or property types), they have not been reflected as partexpected to be recovered from estimated net sales proceeds and accordingly recognized an unrealized loss allowance of discontinued operations.


$12.3 million during the year ended December 31, 2017.

The following table summarizes income (loss) from the properties disposedrental property held for sale, net, as of during the years ended December 31, 2015 and 2014, for the years ended December 31, 2015, 2014 and 2013: 2017 (dollars in thousands):


          
          
                Years Ended December 31,
   2015  2014  2013
Total revenues $ 9,137 $ 53,975 $ 79,379
Operating and other expenses   (5,532)   (24,311)   (34,835)
Depreciation and amortization   (11,700)   (9,955)   (20,927)
Interest expense   (7,008)   (10,369)   (9,784)
          
Income (loss) from properties disposed of $ (15,103) $ 9,340 $ 13,833
          
Impairments   -   -   (79,378)
Realized gains on dispositions   53,261   54,848   -
          
Total income (loss)  from properties disposed of $ 38,158 $ 64,188 $ (65,545)
2015

Impairments on Properties Held

 

 

December 31,

 

 

 

2017

 

Land

 

$

37,024

 

Buildings and improvements

 

273,388

 

Less: Accumulated depreciation

 

(126,503

)

Less: Unrealized losses on properties held for sale

 

(12,331

)

Rental property held for sale,net

 

$

171,578

 

Other assets and Used

In September 2015,liabilities related to the rental properties held for sale, as of December 31, 2017, included $9.8 million in deferred charges, and other assets, $4.7 million in Unbilled rents receivable and $4.6 million in Accounts payable, accrued expenses and other liabilities.  Approximately $13.4 million of these assets and $0.3 million of these liabilities were expected to be written off with the completion of the sales.

Land Impairments

The Company owns two separate developable land parcels in Conshohocken and Bala Cynwyd, Pennsylvania, that were being considered for development into multi-family rental properties.  During the fourth quarter 2018, the Company announced a three-year strategic initiativemade the decision to transformpursue selling the Company into a more concentrated owner of New Jersey Hudson River waterfront and transit-oriented office properties and a regional owner of luxury multi-family residential properties.  In connection with the transformation of the Company’s portfolio, management began developing a disposition plan in September 2015, which will be an ongoing assessment process.  Through this plan, the Company, in the coming years, expectsland parcels as opposed to dispose of primarily office properties considered non-core to its ongoing operations.  As a result, at September 30, 2015, the Company evaluated the recoverability of the carrying values of these non-core properties, and determined that duedevelopment.  Due to the shortening of the expected periods of ownership, the Company determined that it was necessary to reduce the carrying values of 22 rental properties to their estimated fair values.  Accordingly, the Company recorded an impairment charge of $158.6 million at September 30, 2015 reducing the aggregate carrying values of these properties from $554.3 millionland parcels to their estimated fair values (ascertained by broker opinions of $395.7 million.  Atvalue obtained during the marketing process) and recorded total land impairments charges of $24.6 million at December 31, 2015,2018.

Rockpoint Transaction

On February 27, 2017, the Company, RRT, the Company’s wholly-owned subsidiary through which the Company conducts its multi-family residential real estate operations, Roseland Residential, L.P. (“RRLP”), the operating partnership through which RRT conducts all of its operations, and certain other affiliates of the Company entered into an equity investment agreement (the “Investment Agreement”) with Rockpoint Group, L.L.C. and certain of its affiliates (collectively, “Rockpoint”).  The Investment Agreement provides for multiple equity investments by Rockpoint in RRLP from time to time for up to an aggregate of $300 million of equity units of limited partnership interests of RRLP (the “Rockpoint Units”).  The initial closing under the Investment Agreement occurred on March 10, 2017 for $150 million of Rockpoint Units.  Additional closings of Rockpoint Units to be issued and sold to Rockpoint pursuant to the Investment Agreement may occur from time to time in increments of not less than $10 million per closing, with the balance of the full $300 million by March 1, 2019.  See Note 14: Redeemable Noncontrolling Interests.

RRLP has been identified as a variable interest entity in which the Company is deemed to be the primary beneficiary.  As of December 31, 2018 and December 31, 2017, the Company’s consolidated RRLP entity had total assets of $2.3 billion and $1.9 billion, respectively, total mortgages and loan payable of $1.1 billion and $769.7 million, respectively, and other liabilities of $57 million and $95.9 million, respectively.

Unconsolidated Joint Venture Activity

On January 31, 2019, the Company, which held a 24.27 percent subordinated interest in the unconsolidated joint venture Marbella Tower Urban Renewal Associates South LLC, a 311-unit multi-family operating property located in Jersey City, New Jersey, acquired its equity partner’s 50 percent interest for $77.5 million in cash.  The acquisition was funded primarily using available cash.  Concurrently with the closing, the joint venture repaid in full the property’s $74.7 million mortgage loan and obtained a new loan in the amount of $117 million.

On December 11, 2018, the Company acquired one of its partner’s interest in the Metropolitan and Shops at 40 Park and the Lofts at 40 Park for $1.3 million and as a result, ofincreased its periodic evaluation ofownership from 12.5 percent interest to 25 percent interest in the recoverability ofMetropolitan and Shops at 40 Park and from 25 percent interest to 50 percent interest in the carrying values resulting from its ongoing assessment of non-core properties,Lofts at 40 Park.

On September 29, 2017, the Company recordedsold its interests in the KPG-MCG Curtis joint venture that owns an additional impairment chargeoperating property located in Philadelphia, Pennsylvania for a sales price of $33.7 million.


Four$102.5 million, which included the retirement of the Company’s office properties are collateral forshare in a mortgage loan that maturedpayable of $75 million, and realized a gain on August 11, 2014, withthe sale of the unconsolidated joint venture of $12 million.  $5.6 million of the net sales proceeds from this sale were held by a principal balance of $63.3 million as of December 31, 2015.  The loanqualified intermediary, which is considered non cash and recorded in deferred charges, goodwill and other assets.  See Note 5: Deferred Charges, Goodwill and Other Assets, Net.

On September 21, 2017, the RoseGarden Monaco, L.L.C. joint venture agreement was not repaid at maturity andterminated.  Accordingly, the Company is in discussions with the lender regarding potential options in satisfaction of the obligation (see Note 10: Mortgages, Loans Payable and Other Obligations).   As of September 30, 2015, the Company estimated thatwrote off the carrying value of threeits investment in the joint venture and recorded a loss of these$1.4 million on the disposition of its joint venture interest.

On February 15, 2017, the Company sold its 7.5 percent interest in the Elmajo Urban Renewal Associates, LLC and Estuary Urban Renewal Unit B, LLC joint ventures that own operating multi-family properties aggregating 479,877 square feet and located in Roseland and Parsippany,Weehawken, New Jersey may not be recoverable over their anticipated holding periods.  In order to reducefor a sales price of $5.1 million and realized a gain on the carrying valuessale of the properties to their estimated fair values,unconsolidated joint venture of $5.1 million.

On January 31, 2017, the Company recorded impairment chargessold its interest in the KPG-P 100 IMW JV, LLC, Keystone-Penn and Keystone-Tristate joint ventures that own operating properties, located in Philadelphia, Pennsylvania for an aggregate sales price of $5.6$9.7 million at September 30, 2015, which resulted fromand realized a gain on the current decline in leasing activity and market rentssale of the properties identified.   The Company had previously recorded impairment charges on these properties at September 30, 2013unconsolidated joint venture of $12.5$7.4 million.


Appointment of executive officers
On June 3, 2015, the Company announced the appointments of Mitchell E. Rudin as chief executive officer and Michael J. DeMarco as president and chief operating officer of the Company, effective immediately.  The Company entered into employment agreements dated June 3, 2015 with each of Messrs. Rudin and DeMarco (together, the “Executive Employment Agreements”) that each provide as follows:
81


·  A term that ends on December 31, 2018 (the “Employment Term”) unless earlier terminated;
·  An annual base salary for each of Messrs. Rudin and DeMarco of $700,000, subject to potential merit increases (but not decreases) each year;
·  A target annual bonus opportunity of one hundred percent (100%) of base salary, or $700,000, for each of Messrs. Rudin and DeMarco, with a threshold bonus of fifty percent (50%) of base salary, or $350,000, and a maximum bonus of two hundred percent (200%) of base salary, or $1,400,000, a pro rata bonus opportunity for 2015 based on the assessment of the Executive Compensation and Option Committee of the Board of Directors (“Committee”) of each executive’s development of a strategic plan for the Company and bonuses for 2016 and subsequent years to be based on objective performance goals to be established annually by the Committee;
·  2015 long-term incentive (“LTI”) awards under the Company’s 2013 Incentive Stock Plan (the “2015 LTI Awards”), consisting of the granting to each of Messrs. Rudin and DeMarco on June 5, 2015 of 18,775.27 restricted stock units subject to time-based vesting over three years, and of 56,325.82 performance share units (“PSUs”) which will vest from 0 to 150 percent of the number of PSUs granted based on the Company’s total shareholder return relative to a peer group of equity office REITs over a three-year performance period; and
·  The grant on June 5, 2015 (the “Grant Date”) to each of Messrs. Rudin and DeMarco of options to purchase 400,000 shares of the Company’s common stock, exercisable for a period of ten years with an exercise price equal to the closing price of the Company’s common stock on the NYSE on the Grant Date (which price was $17.31 per share), with 200,000 of such options vesting in three equal annual installments commencing on the first anniversary of the Grant Date, and 200,000 of such options vesting if the Company’s common stock trades at or above $25.00 per share for 30 consecutive trading days while Mr. Rudin and Mr. DeMarco is employed, as applicable, or on or before June 30, 2019 if Mr. Rudin and Mr. DeMarco is employed for the entire Employment Term (except if the executive’s employment has been terminated by the Company for cause following expiration of the Employment Term). 



82


4.    INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES


As of December 31, 2015,2018, the Company had an aggregate investment of approximately $303.5$232.8 million in its equity method joint ventures.  The Company formed these ventures with unaffiliated third parties, or acquired interests in them, to develop or manage primarily office and multi-family rental properties, or to acquire land in anticipation of possible development of office and multi-family rental properties.  As of December 31, 2015,2018, the unconsolidated joint ventures owned: 36four office properties aggregating approximately 5.60.5 million square feet, 13eight multi-family properties totaling 4,343 apartments,2,922 apartment units, two retail properties aggregating approximately 81,700 square feet, a 350-room hotel, a development projectsproject for up to approximately 1,074 apartments;360 apartment units; and interests and/or rights to developable land parcels able to accommodate up to 2,910 apartments and 1.4 million square feet of office space.3,738 apartment units.  The Company’s unconsolidated interests range from 7.520 percent to 85 percent subject to specified priority allocations in certain of the joint ventures.


The amounts reflected in the following tables (except for the Company’s share of equity in earnings) are based on the historical financial information of the individual joint ventures.  The Company does not record losses of the joint ventures in excess of its investment balances unless the Company is liable for the obligations of the joint venture or is otherwise committed to provide financial support to the joint venture.  The outside basis portion of the Company’s investments in joint ventures is amortized over the anticipated useful lives of the underlying ventures’ tangible and intangible assets acquired and liabilities assumed.  Unless otherwise noted below, the debt of the Company’s unconsolidated joint ventures generally is non-recourse to the Company, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions, and material misrepresentations.


The Company has agreed to guarantee repayment of a portion of the debt of its unconsolidated joint ventures.  As of December 31, 2015,2018, such debt had a total facility amount of $547.6$316.9 million of which the Company agreed to guarantee up to $74.7$35.8 million.  As of December 31, 2015,2018, the outstanding balance of such debt totaled $309.9$204.9 million of which $53.1$24.6 million was guaranteed by the Company.  The Company also posted a $3.6 million letter of credit in support of the South Pier at Harborside joint venture, half of which is indemnified by Hyatt Corporation, the Company’s joint venture partner.  The Company performed management, leasing, development and other services for the properties owned by the unconsolidated joint ventures and recognized $5.5$2.4 million and $6.2$2.8 million for such services in the years ended December 31, 20152018 and 2014,2017, respectively.  The Company had $0.8$0.2 million and $1.0$0.8 million in accounts receivable due from its unconsolidated joint ventures as of December 31, 20152018 and 2014.


2017.

Included in the Company’s investments in unconsolidated joint ventures as of December 31, 20152018 are fivefour unconsolidated development joint ventures, which are VIEs for which the Company is not the primary beneficiary.  These joint ventures are primarily established to develop real estate property for long-term investment and were deemed VIEs primarily based on the fact that the equity investment at risk was not sufficient to permit the entities to finance their activities without additional financial support.  The initial equity contributed to these entities was not sufficient to fully finance the real estate construction as development costs are funded by the partners throughout the construction period.  The Company determined that it was not the primary beneficiary of these VIEs based on the fact that the Company has shared control of these entities along with the entity’s partners and therefore does not have controlling financial interests in these VIEs.  The Company’s aggregate investment in these VIEs was approximately $173.4$129.5 million as of December 31, 2015.2018.  The Company’s maximum exposure to loss as a result of its involvement with these VIEs is estimated to be approximately $207.1$165.4 million, which includes the Company’s current investment and estimated future funding commitments/guarantees of approximately $33.7$35.8 million.  The Company has not provided financial support to these VIEs that it was not previously contractually required to provide.  In general, future costs of development not financed through third parties will be funded with capital contributions from the Company and its outside partners in accordance with their respective ownership percentages.





83




The following is a summary of the Company'sCompany’s unconsolidated joint ventures as of December 31, 20152018 and 2014:  2017 (dollars in thousands):

                  
             Property Debt 
 Number ofCompany's  Carrying Value  As of December 31, 2015 
 Apartment UnitsEffective  December 31,  December 31,   MaturityInterest 
Entity / Property Nameor Square Feet (sf)Ownership % (a)  2015  2014  BalanceDateRate 
Multi-family                 
Marbella RoseGarden, L.L.C./ Marbella  (b) 412units 24.27% $ 15,569 $ 15,779 $ 95,00005/01/18 4.99% 
RoseGarden Monaco Holdings, L.L.C./ Monaco   (b) 523units 15.00%   937   2,161   165,00002/01/21 4.19% 
Rosewood Lafayette Holdings, L.L.C./ Highlands at Morristown Station (c) 217units 25.00%   -   62   - --  
PruRose Port Imperial South 15, LLC /RiversEdge at Port Imperial (b) 236units 50.00%   -   -   57,50009/01/20 4.32% 
Rosewood Morristown, L.L.C. / Metropolitan at 40 Park  (d) (e) 130units 12.50%   5,723   6,029   45,982(f)(f)  
Overlook Ridge JV 2C/3B, L.L.C./The Chase at Overlook Ridge  (b) 371units 50.00%   2,039   2,524   52,66201/26/16L+2.50%(g)
PruRose Riverwalk G, L.L.C./ RiverTrace at Port Imperial   (b) 316units 25.00%   -   955   79,39307/15/21 6.00%(h)
Elmajo Urban Renewal Associates, LLC / Lincoln Harbor (Bldg A&C)  (b) 355units 7.50%   -   -   128,10003/01/30 4.00%(i)
Crystal House Apartments Investors LLC / Crystal House  (j) 798units 25.00%   28,114   27,051   165,00004/01/20 3.17% 
Portside Master Company, L.L.C./ Portside at Pier One - Bldg 7  (b) 176units 38.25%   -   1,747   42,50012/04/17L+2.50%(k)
PruRose Port Imperial South 13, LLC / RiverParc at Port Imperial  (b) 280units 20.00%   -   1,087   70,38606/27/16L+2.15%(l)
Roseland/Port Imperial Partners, L.P./ Riverwalk C  (b) (m) 363units 20.00%   1,678   1,800   ---  
RoseGarden Marbella South, L.L.C./ Marbella II 311units 24.27%   16,728   11,282   68,04603/30/17L+2.25%(n)
Estuary Urban Renewal Unit B, LLC / Lincoln Harbor (Bldg B)  (b) 227units 7.50%   -   -   81,90003/01/30 4.00%(o)
Riverpark at Harrison I, L.L.C./ Riverpark at Harrison  (c) 141units 45.00%   2,544   4,744   30,00008/01/25 3.70%(p)
Capitol Place Mezz LLC / Station Townhouses 378units 50.00%   46,267   49,327   100,70007/01/33 4.82%(q)
Harborside Unit A Urban Renewal, L.L.C. / URL Harborside 763units 85.00%   96,799   34,954   63,87108/01/29 5.197%(r)
RoseGarden Monaco, L.L.C./ San Remo Land 250potential units 41.67%   1,339   1,283   ---  
Grand Jersey Waterfront URA, L.L.C./ Liberty Landing 850potential units 50.00%   337   337   ---  
                  
Office                 
Red Bank Corporate Plaza, L.L.C./ Red Bank 92,878sf 50.00%   4,140   3,963   15,12405/17/16L+3.00%(s)
12 Vreeland Associates, L.L.C./ 12 Vreeland Road 139,750sf 50.00%   5,890   5,620   12,54307/01/23 2.87% 
BNES Associates III / Offices at Crystal Lake 106,345sf 31.25%   2,295   1,993   6,13311/01/23 4.76% 
Hillsborough 206 Holdings, L.L.C./ Hillsborough 206 160,000sf 50.00%   1,962   1,962   ---  
KPG-P 100 IMW JV, LLC / 100 Independence Mall West 339,615sf 33.33%   -   -   61,50009/09/16L+7.00%(t)
Keystone-Penn (c) 1,842,820sf(u)    -   -   227,111(v)(v)  
Keystone-TriState 1,266,384sf(w)    3,958   6,140   208,476(x)(x)  
KPG-MCG Curtis JV, L.L.C./ Curtis Center  (y) 885,000sf 50.00%   59,858   59,911  (z)(z)(z)  
                  
Other                 
Plaza VIII & IX Associates, L.L.C./ Vacant land (parking operations) 1,225,000sf 50.00%   4,055   4,022   ---  
Roseland/North Retail, L.L.C./ Riverwalk at Port Imperial  (b) 30,745sf 20.00%   1,758   1,828   ---  
South Pier at Harborside / Hyatt Regency Jersey City on the Hudson 350rooms 50.00%  (aa)  (aa)   63,741(ab)(ab)  
Stamford SM LLC / Senior Mezzanine Loan  (ac)n/an/a 80.00%   -   -   ---  
Other (ad)       1,467   907   ---  
Totals:     $ 303,457 $ 247,468 $ 1,840,668    


(a)      Company's effective ownership % represents the Company's entitlement to residual distributions after payments of priority returns, where applicable.
(b)      The Company's ownership interests in this venture are subordinate to its partner's preferred capital balance and the Company is not expected to meaningfully participate in the venture's cash flows in the near term.
(c)      See discussion in Recent Transactions following in this footnote.
(d)      Through the joint venture, the Company also owns a 12.5 percent interest in a 50,973 square feet retail building ("Shops at 40 Park") and a 25 percent interest in a to-be-built 59-unit, five story multi-family rental development property ("Lofts at 40 Park").
(e)      The Company's ownership interests in this venture are subordinate to its partner's preferred capital balance and the payment of the outstanding balance remaining on a note ($975 as of December 31, 2015), and is not expected to meaningfully participate in the venture's cash flows in the near term.
(f)      Property debt balance consists of: (i) a loan, collateralized by the Metropolitan at 40 Park, with a balance of $38,410, bears interest at 3.25 percent, matures in September 2020; (ii) an amortizable loan, collateralized by the Shops at 40 Park, with a balance of $6,455, bears interest at 3.63 percent, matures in August 2018; and (iii) a loan, collateralized by the Lofts at 40 Park, with a balance of $1,117, bears interest at LIBOR plus 250 basis points and matures in September 2016.  The Shops at 40 Park mortgage loan also provides for additional borrowing proceeds of $1 million based on certain preferred thresholds being achieved.
(g)      The construction loan has a maximum borrowing amount of $55,500 and provides, subject to certain conditions, two one-year extension options with a fee of 25 basis points each.  The joint venture has a swap agreement that fixes the all-in rate to 3.0875 percent per annum on an initial notional amount of $1,840, increasing to $52,000, for the period from September 3, 2013 to November 2, 2015.
(h)       The permanent loan has a maximum borrowing amount of $80,249.
(i)       The construction loan with a maximum borrowing amount of $91,000 converted to a permanent loan on February 27, 2015.
(j)      The Company also owns a 50 percent interest in a vacant land to accommodate the development of approximately 295 additional units of which 252 are currently approved.
(k)       The construction loan has a maximum borrowing amount of $42,500 and provides, subject to certain conditions, two two-year extension options with a fee of 12.5 basis points for the first two-year extension and 25 basis points for the second two-year extension.
(l)     The construction loan has a maximum borrowing amount of $73,350 and provides, subject to certain conditions, one-year extension option followed by a six-month extension option with a fee of 25 basis points each. The joint venture has a swap agreement that fixes the all-in rate to 2.79 percent per annum on an initial notional amount of $1,620, increasing to $69,500 for the period from July 1, 2013 to January 1, 2016.
(m)      The Company also owns a 20 percent residual interest in undeveloped land parcels: parcels 6, I, and J ("Port Imperial North Land") that can accommodate the development of 836 apartment units.
(n)      The construction loan has a maximum borrowing amount of $77,400 and provides, subject to certain conditions, two one-year extension options with a fee of 25 basis points for each year.
(o)      The construction loan with a maximum borrowing amount of $57,000 converted to a permanent loan on February 27, 2015.
(p)      The construction loan with a maximum borrowing amount of $23,400 converted to a permanent loan on July 14, 2015.  See discussion in Recent Transactions following in this footnote.
(q)       The construction/permanent loan has a maximum borrowing amount of $100,700 with amortization starting in August 2017.
(r)    The construction/permanent loan has a maximum borrowing amount of $192,000.
(s)      The joint venture has a swap agreement that fixes the all-in rate to 3.99375 percent per annum on an initial notional amount of $13,650 and then adjusting in accordance with an amortization schedule, which is effective from October 17, 2011 through loan maturity.
(t)       The mortgage loan has two one-year extension options, subject to certain conditions.
(u)      The Company’s equity interests in the joint ventures will be subordinated to Keystone Entities receiving a 15 percent internal rate of return (“IRR”) after which the Company will receive a 10 percent IRR on its subordinate equity and then all profit will be split equally.  See discussion in Recent Transactions following in this footnote.
(v)      Principal balance of $127,600 bears interest at 5.114 percent and matures on August 27, 2023; principal balance of $45,500 bears interest at 5.01 percent and matures on September 6, 2025; principal balance of $32,336 bears interest at rates ranging from LIBOR+5.0 percent to LIBOR+5.75 percent and matures on August 27, 2016; principal balance of $11,250 bears interest at LIBOR+5.5 percent and matures on January 9, 2019; principal balance of $10,425 bears interest at LIBOR+6.0 percent matures on August 31, 2016.
(w)     Includes the Company’s pari-passu interests of $4.0 million in five properties and Company’s subordinated equity interests to Keystone Entities receiving a 15 percent internal rate of return (“IRR”) after which the Company will receive a 10 percent IRR on its subordinate equity and then all profit will be split equally.
(x)      Principal balance of $42,107 bears interest at 4.95 percent and matures on July 1, 2017; principal balance of $73,670 bears interest at rates ranging from 5.65 percent to 6.75 percent and matures on September 9, 2017; principal balance of $14,250 bears interest at 4.88 percent and matures on July 6, 2024; principal balance of $63,400 bears interest at 4.93 percent and matures on July 6, 2044; principal balance of $15,050 bears interest at 4.71 percent and matures on August 6, 2044.
(y)Includes undivided interests in the same manner as investments in noncontrolling partnership, pursuant to ASC 970-323-25-12.
(z)See Note 10: Mortgages, Loans Payable and Other Obligations for debt secured by interests in these assets.
(aa)The negative carrying value for this venture of $3,317 and $1,854 as of December 31, 2015 and 2014, respectively, were included in accounts payable, accrued expenses and other liabilities.
(ab)      Balance includes: (i) mortgage loan, collateralized by the hotel property, with a balance of $60,147, bears interest at 6.15 percent and matures in November 2016, and (ii) loan with a balance of $3,594, bears interest at fixed rates ranging from 6.09 percent to 6.62 percent and matures in August 1, 2020.  The Company posted a $3.6 million letter of credit in support of this loan, half of which is indemnified by the partner.
(ac)      The joint venture collected net proceeds of $47.2 million at maturity, of which the Company received its share of $37.8 million on August 6, 2014.
(ad)The Company owns other interests in various unconsolidated joint ventures, including interests in assets previously owned and interest in ventures whose businesses are related to its core operations. These ventures are not expected to significantly impact the Company's operations in the near term. 
84

 

 

 

 

 

 

 

 

 

 

 

 

Property Debt

 

 

 

Number of

 

Company’s

 

Carrying Value

 

As of December 31, 2018

 

 

 

Apartment Units

 

Effective

 

December 31,

 

December 31,

 

 

 

Maturity

 

Interest

 

Entity / Property Name

 

or Rentable Square Feet (sf)

 

Ownership % (a)

 

2018

 

2017

 

Balance

 

Date

 

Rate

 

Multi-family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marbella (b)

 

412

 

units

 

24.27

%

$

 

$

14,544

 

$

 

 

%

Metropolitan at 40 Park (c) (d) 

 

130

 

units

 

25.00

%

7,679

 

6,834

 

55,227

 

(e)

 

(e)

 

RiverTrace at Port Imperial

 

316

 

units

 

22.50

%

8,112

 

8,864

 

82,000

 

11/10/26

 

3.21

%

Crystal House (f)

 

825

 

units

 

25.00

%

29,570

 

30,570

 

162,838

 

04/01/20

 

3.17

%

PI North - Riverwalk C

 

360

 

units

 

40.00

%

27,175

 

16,844

 

 

12/06/21

 

L+2.75

%(g)

Marbella II (i)

 

311

 

units

 

24.27

%

15,414

 

16,471

 

74,690

 

03/30/19

 

L+2.25

%(h)

Riverpark at Harrison

 

141

 

units

 

45.00

%

1,272

 

1,604

 

29,819

 

08/01/25

 

3.70

%

Station House

 

378

 

units

 

50.00

%

37,675

 

40,124

 

98,504

 

07/01/33

 

4.82

%

Urby at Harborside

 

762

 

units

 

85.00

%

85,317

 

94,429

 

191,732

 

08/01/29

 

5.197

%(j)

PI North -Land (k)

 

836

 

potential units

 

20.00

%

1,678

 

1,678

 

 

 

 

Liberty Landing

 

850

 

potential units

 

50.00

%

337

 

337

 

 

 

 

Hillsborough 206

 

160,000

 

sf

 

50.00

%

1,962

 

1,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Red Bank

 

92,878

 

sf

 

50.00

%

3,127

 

4,602

 

14,000

 

08/01/23

 

L+2.25

%(l)

12 Vreeland Road

 

139,750

 

sf

 

50.00

%

7,019

 

6,734

 

7,904

 

07/01/23

 

2.87

%

Offices at Crystal Lake

 

106,345

 

sf

 

31.25

%

3,442

 

3,369

 

4,076

 

11/01/23

 

4.76

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Riverwalk Retail

 

30,745

 

sf

 

20.00

%

1,539

 

1,625

 

 

 

 

Hyatt Regency Jersey City

 

351

 

rooms

 

50.00

%

112

 

440

 

100,000

 

10/01/26

 

3.668

%

Other (m)

 

 

 

 

 

 

 

1,320

 

1,595

 

 

 

 

Totals:

 

 

 

 

 

 

 

$

232,750

 

$

252,626

 

$

820,790

 

 

 

 

 



(a)Company’s effective ownership % represents the Company’s entitlement to residual distributions after payments of priority returns, where applicable.

(b)On August 2, 2018, the Company acquired its equity partner’s 50 percent controlling interest in the venture and, as a result, increased its ownership from a 24.27 percent subordinated interest to 74.27 percent controlling interest.  See Note 3: Recent Transactions - Consolidation.

(c)The Company’s ownership interests in this venture are subordinate to its partner’s preferred capital balance and the Company is not expected to meaningfully participate in the venture’s cash flows in the near term.

(d)Through the joint venture, the Company also owns a 12.5 percent interest in a 50,973 square feet retail building (“Shops at 40 Park”) and a 25 percent interest in a 59-unit, five story multi-family rental development property (“Lofts at 40 Park”).  On December 11, 2018, the Company acquired one of its partner’s interest and as a result, increased its ownership from 12.5 percent interest to 25 percent interest in the Metropolitan and Shops at 40 Park and from 25 percent interest to 50 percent interest in the Lofts at 40 Park.

(e)Property debt balance consists of: (i) an amortizable loan, collateralized by the Metropolitan at 40 Park, with a balance of $36.0 million bears interest at 3.25 percent, matures in September 2020; (ii) an interest only loan, collateralized by the Shops at 40 Park, with a balance of $6.1 million, bears interest at LIBOR+2.25 percent, matures in September 2019; (iii) a loan with a maximum borrowing amount of $13,950 for the Lofts at 40 Park with a balance of $13.1 million, which bears interest at LIBOR plus 250 basis points and matures in February 2020. 

(f)Included in this is the Company’s unconsolidated 50 percent interest in a vacant land to accommodate the development of approximately 295 additional units of which 252 are currently approved.

(g)The venture has a construction loan with a maximum borrowing amount of $112,000.

(h)The construction loan which had a maximum borrowing amount of $75,000 was amended on 3/30/18 and, subject to certain conditions, provided for four 3-month extension options with a fee of 6.25 basis points for each extension. 

(i)On January 31, 2019, the Company, which held a 24.27 percent subordinated interest in the unconsolidated joint venture, Marbella Tower Urban Renewal Associates South LLC, a 311-unit multi-family operating property located in Jersey City, New Jersey, acquired the majority equity partner’s 50 percent interest in the venture for $77.5 million in cash.  The acquisition was funded primarily using available cash.  Concurrently with the closing, the joint venture repaid in full the property’s $74.7 million mortgage loan and obtained a new loan in the amount of $117 million.

(j)The construction/permanent loan has a maximum borrowing amount of $192 million.  The Company owns an 85 percent interest with shared control over major decisions such as, approval of budgets, property financings and leasing guidelines.

(k)The Company also owns a 20 percent residual interest in undeveloped land parcels: parcels 6, I, and J that can accommodate the development of 836 apartment units.

(l)On August 1, 2018, the venture refinanced its mortgage loan with a maximum borrowing amount of $16,500, bears interest at LIBOR +2.25%, matures on August 1, 2023 and subject to certain conditions, provided for two extension options.

(m)The Company owns other interests in various unconsolidated joint ventures, including interests in assets previously owned and interest in ventures whose businesses are related to its core operations. These ventures are not expected to significantly impact the Company’s operations in the near term. 

The following is a summary of the Company’s equity in earnings (loss) of unconsolidated joint ventures for the years ended December 31, 20152018, 2017 and 2014:2016 (dollars in thousands):

         
                       Year Ended December 31,
Entity / Property Name 2015  2014  2013
Multi-family        
Marbella RoseGarden, L.L.C./ Marbella$ 231 $ (19) $ (540)
RoseGarden Monaco Holdings, L.L.C./ Monaco  (1,224)   (1,040)   (1,560)
Rosewood Lafayette Holdings, L.L.C./ Highlands at Morristown Station  (62)   (853)   (1,131)
PruRose Port Imperial South 15, LLC /RiversEdge at Port Imperial  -   -   (606)
Rosewood Morristown, L.L.C. / Metropolitan at 40 Park  (364)   (345)   (509)
Overlook Ridge JV 2C/3B, L.L.C./The Chase at Overlook Ridge  (371)   (384)   293
PruRose Riverwalk G, L.L.C./ RiverTrace at Port Imperial  (955)   (2,139)   (985)
Elmajo Urban Renewal Associates, LLC / Lincoln Harbor (Bldg A&C)  -   (203)   (345)
Crystal House Apartments Investors LLC / Crystal House  (123)   (139)   (2,639)
Portside Master Company, L.L.C./ Portside at Pier One - Bldg 7  (1,736)   (1,163)   (421)
PruRose Port Imperial South 13, LLC / RiverParc at Port Imperial  (988)   (863)   (664)
Roseland/Port Imperial Partners, L.P./ Riverwalk C  (474)   (646)   (740)
RoseGarden Marbella South, L.L.C./ Marbella II  -   -   (57)
Estuary Urban Renewal Unit B, LLC / Lincoln Harbor (Bldg B)  1   (15)   (157)
Riverpark at Harrison I, L.L.C./ Riverpark at Harrison  (363)   (150)   -
Capitol Place Mezz LLC / Station Townhouses  (3,687)   (75)   -
Harborside Unit A Urban Renewal, L.L.C. / URL Harborside  -   (218)   -
RoseGarden Monaco, L.L.C./ San Remo Land  -   -   -
Grand Jersey Waterfront URA, L.L.C./ Liberty Landing  (32)   (54)   (77)
Office        
Red Bank Corporate Plaza, L.L.C./ Red Bank  392   380   372
12 Vreeland Associates, L.L.C./ 12 Vreeland Road  270   106   74
BNES Associates III / Offices at Crystal Lake  115   240   (14)
Hillsborough 206 Holdings, L.L.C./ Hillsborough 206  (5)   (10)   (35)
KPG-P 100 IMW JV, LLC / 100 Independence Mall West  (800)   (1,887)   (913)
Keystone-Penn  3,812   -   -
Keystone-TriState  (2,182)   (318)   -
KPG-MCG Curtis JV, L.L.C./ Curtis Center  475   624   -
Other        
Plaza VIII & IX Associates, L.L.C./ Vacant land (parking operations)  344   320   99
Roseland/North Retail, L.L.C./ Riverwalk at Port Imperial  (70)   (102)   (230)
South Pier at Harborside / Hyatt Regency Jersey City on the Hudson  3,036   2,602   2,519
Stamford SM LLC / Senior Mezzanine Loan  -   2,337   3,719
Other  1,588   1,591   2,220
Company's equity in earnings (loss) of unconsolidated joint ventures$ (3,172) $ (2,423) $ (2,327)

85

 

 

Year Ended December 31,

 

Entity / Property Name

 

2018

 

2017

 

2016

 

Multi-family

 

 

 

 

 

 

 

Marbella (b)

 

$

205

 

$

334

 

$

231

 

Metropolitan at 40 Park

 

(455

)

(311

)

(317

)

RiverTrace at Port Imperial

 

154

 

196

 

(1,146

)

Crystal House

 

(874

)

(923

)

(870

)

PI North - Pier Land

 

(126

)

(219

)

(62

)

PI North - Riverwalk C

 

 

(653

)

(58

)

Marbella II

 

35

 

93

 

(202

)

Riverpark at Harrison

 

(232

)

(252

)

(190

)

Station House

 

(2,096

)

(1,793

)

(2,440

)

Urby at Harborside

 

(975

)(c)

(6,356

)

(219

)

Liberty Landing

 

(5

)

(15

)

(80

)

Hillsborough 206

 

16

 

(25

)

(53

)

Office

 

 

 

 

 

 

 

Red Bank

 

(215

)

238

 

448

 

12 Vreeland Road

 

285

 

496

 

347

 

Offices at Crystal Lake

 

73

 

89

 

(15

)

Other

 

 

 

 

 

 

 

Roseland/North Retail, L.L.C./ Riverwalk at Port Imperial

 

(86

)

(81

)

(52

)

South Pier at Harborside / Hyatt Regency Jersey City on the Hudson

 

3,672

 

3,277

 

24,180

 

Other

 

497

 

(176

)

(714

)

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

 

$

(127

)

$

(6,081

)

$

18,788

 



(a)         Amounts are net of amortization of basis differences of $903, $792 and $436 for the years ended December 31, 2018, 2017 and 2016, respectively.

(b)         On August 2, 2018, the Company acquired one of its equity partner’s 50 percent interest and as a result, increased its ownership from 24.27 percent subordinated interest to 74.27 percent controlling interest, and ceased applying the equity method of accounting at such time.

(c)          Includes $2.6 million of the Company’s share of the venture’s income from its first annual sale of an economic tax credit certificate from the State of New Jersey to a third party.  The venture has an agreement with a third party to sell it the tax credits over the next nine years for $3 million per year for a total of $27 million.  The sales are subject to the venture obtaining the tax credits from the State of New Jersey and transferring the credit certificates each year.

The following is a summary of the combined financial position of the unconsolidated joint ventures in which the Company had investment interests as of December 31, 20152018 and 2014:2017 (dollars in thousands)thousands and unaudited):

       
   December 31,  December 31,
   2015  2014
Assets:      
   Rental property, net $ 1,781,621 $ 1,534,812 
   Other assets   307,000   398,222
   Total assets $ 2,088,621 $ 1,933,034
Liabilities and partners'/      
members' capital:      
   Mortgages and loans payable $ 1,298,293 $ 1,060,020 
   Other liabilities   215,951   211,340 
   Partners'/members' capital   574,377   661,674
   Total liabilities and      
   partners'/members' capital $ 2,088,621 $ 1,933,034

 

 

December 31,

 

December 31,

 

 

 

2018

 

2017

 

Assets:

 

 

 

 

 

Rental property, net

 

$

903,253

 

$

931,419

 

Other assets

 

212,205

 

207,903

 

Total assets

 

$

1,115,458

 

$

1,139,322

 

Liabilities and partners’/ members’ capital:

 

 

 

 

 

Mortgages and loans payable

 

$

686,797

 

$

689,412

 

Other liabilities

 

67,072

 

80,746

 

Partners’/members’ capital

 

361,589

 

369,164

 

Total liabilities and partners’/members’ capital

 

$

1,115,458

 

$

1,139,322

 

The following is a summary of the combined results from operations of the unconsolidated joint ventures for the period in which the Company had investment interests during the years ended December 31, 2015, 20142018, 2017 and 2013: 2016 (dollars in thousands)

         
                      Year Ended December 31,
  2015  2014  2013
Total revenues$ 318,980  $ 305,034  $ 255,510 
Operating and other expenses  (220,982)   (233,320)   (217,739)
Depreciation and amortization  (71,711)   (42,985)   (32,889)
Interest expense  (52,972)   (32,862)   (16,709)
Net loss$ (26,685) $ (4,133) $ (11,827)

Recent Transactions

KEYSTONE-PENN
On August 28, 2015, Rosetree KPG III, L.L.C., which owns a 236,417 square-foot two-building office property located in Media, Pennsylvania refinanced its $31.8 million loanthousands and obtained a new $45.5 million mortgage loan. The Company received a distribution of $3.7 million as its share of the loan proceeds recognized as equity in earnings during the year ended December 31, 2015 (as a result of having no carrying value of its investment in the unconsolidated joint venture).

RIVERPARK AT HARRISON I, L.L.C./RIVERPARK AT HARRISON
On July 14, 2015, Riverpark at Harrison I, L.L.C. (“Riverpark”), which owns a 141-unit multi-family rental property located in Harrison, New Jersey, refinanced the $23.4 million construction loan, and obtained a $30 million mortgage loan. The Company received a distribution of $1.7 million from the loan proceeds. Concurrent with the loan refinancing, the Company, which holds a 36 percent interest in Riverpark, and its venture partners that hold ownership interests aggregating 44 percent acquired the 20 percent interest of the remaining partner group for $2.1 million.  As a result of the 20 percent redemption, the Company’s ownership interest increased to 45 percent with the remaining venture partners owning 55 percent.  The Company has determined that the joint venture is not a VIE since the equity investment at risk is sufficient to permit Riverpark to finance its activities without additional financial support.  As control is shared with the partners in accordance with the operating agreement, the Company will continue to have an unconsolidated joint venture interest in Riverpark under the provisions of ASC 810, Consolidation.

ROSEWOOD LAFAYETTE HOLDINGS, L.L.C./HIGHLANDS AT MORRISTOWN STATION
On June 1, 2015, the Company sold its 25 percent equity interest in Rosewood Lafayette Holdings L.L.C., a joint venture which owns the Highlands at Morristown Station, a 217-unit multi-family property located in Morristown, New Jersey, to its joint venture partner and realized a gain on the sale of $6.4 million.


86


unaudited):

 

 

Year Ended December 31,

 

 

 

2018

 

2017

 

2016

 

Total revenues

 

$

310,919

 

$

358,751

 

$

377,711

 

Operating and other expenses

 

(230,863

)

(297,492

)

(262,703

)

Depreciation and amortization

 

(40,193

)

(31,020

)

(75,512

)

Interest expense

 

(34,874

)

(25,822

)

(58,390

)

Net income (loss)

 

$

4,989

 

$

4,417

 

$

(18,894

)

5.    DEFERRED CHARGES, GOODWILL AND OTHER ASSETS, NET

 

 

December 31,

 

(dollars in thousands)

 

2018

 

2017

 

Deferred leasing costs

 

$

173,822

 

$

199,515

 

Deferred financing costs - unsecured revolving credit facility (a)

 

5,356

 

4,945

 

 

 

179,178

 

204,460

 

Accumulated amortization

 

(71,326

)

(98,956

)

Deferred charges, net

 

107,852

 

105,504

 

Notes receivable (b)

 

47,409

 

50,167

 

In-place lease values, related intangibles and other assets, net (c) (d)

 

89,860

 

102,757

 

Goodwill (e)

 

2,945

 

2,945

 

Prepaid expenses and other assets, net (f)

 

107,168

 

80,947

 

 

 

 

 

 

 

Total deferred charges, goodwill and other assets, net

 

$

355,234

 

$

342,320

 


(a)

      
                    December 31,
(dollars in thousands) 2015  2014
Deferred leasing costs$ 239,690 $ 239,138
Deferred financing costs  23,723   24,042
   263,413   263,180
Accumulated amortization  (126,816)   (122,358)
Deferred charges, net  136,597   140,822
Notes receivable (1)  13,496   21,491
In-place lease values, related intangibles and other assets, net (2)(3)  10,931   6,565
Goodwill  2,945   2,945
Prepaid expenses and other assets, net (4)  49,408   32,827
      
Total deferred charges, goodwill and other assets, net$ 213,377 $ 204,650

(1)Includes as of December 31, 2015: a mortgage receivable for $10.4 million which bears interest at LIBOR plus six percent and matures in August 2016; and an interest-free note receivable with a net present value of $3.1 million and matures in April 2023.  The Company believes these balances are fully collectible.
(2)
In accordance with ASC 805, Business Combinations, the Company recognizes rental revenue of acquired above and below market lease intangibles over the terms of the respective leases.  The impact of amortizating the acquired above and below-market lease intangibles increased revenue by approximately $0.2 million, $0.7 million and $1.5 million for the years ended December 31, 2015, 2014 and 2013, respectively.  The following table summarizes, as of December 31, 2015, the scheduled amortization of the Company’s acquired above and below-market lease intangibles for each of the five succeeding years (dollars in thousands)         Deferred financing costs related to all other debt liabilities (other than for the unsecured revolving credit facility) are netted against those debt liabilities for all periods presented. See Note 2: Significant Accounting Policies — Deferred Financing Costs.

(b).


         
  Acquired Above-  Acquired Below-   
  Market Lease  Market Lease  Total
Year Intangibles  Intangibles  Amortization
2016$ (776) $ 345 $ (431)
2017  (708)   339   (369)
2018  (645)   289   (356)
2019  (529)   156   (373)
2020  (341)   21   (320)

(3)
In accordance with ASC 805, Business Combinations, the value of acquired in-place lease intangibles are amortized to expense over the remaining initial terms of the respective leases.  The impact of the amortization of acquired in-place lease values is included in depreciation and amortization expense and amounted to approximately $1.4 million, $6.9 million and $10.7 million for the years ended December 31, 2015, 2014 and 2013, respectively.  The following table summarizes, as of December 31, 2014, the scheduled amortization of the Company’s acquired in-place lease values for each of the five succeeding years (dollars in thousands).
    
    
Year   
2016 $ 2,399
2017   2,093
2018   1,175
2019   979
2020   -


(4)         Includes as of December 31, 2015, deposits2018 and 2017, respectively, a mortgage receivable with a balance of $15.1$45.2 million and $45.7 million (acquired in August 2017) which bears interest at 5.85 percent and matures in July 2019, with a three-month extension option and an interest-free note receivable with a net present value of $2.2 million and $2.5 million, which matures in April 2023. The Company believes these balances are fully collectible.

(c)          In accordance with ASC 805, Business Combinations, the Company recognizes rental revenue of acquired above and below market lease intangibles over the terms of the respective leases.  The impact of amortizing the acquired above and below-market lease intangibles increased revenue by approximately $5.3 million, $7.9 million and $1.9 million for acquisitionsthe years ended December 31, 2018, 2017 and developments.



87


DERIVATIVE FINANCIAL INSTRUMENTS
2016, respectively.  The following table summarizes, as of December 31, 2018, the scheduled amortization of the Company’s acquired above and below-market lease intangibles for each of the five succeeding years (dollars in thousands):

 

 

Acquired Above-

 

Acquired Below-

 

 

 

 

 

Market Lease

 

Market Lease

 

Total

 

Year

 

Intangibles

 

Intangibles

 

Amortization

 

2019

 

$

(2,559

)

$

5,050

 

$

2,491

 

2020

 

(2,377

)

4,305

 

1,928

 

2021

 

(2,245

)

4,186

 

1,941

 

2022

 

(2,132

)

4,064

 

1,932

 

2023

 

(1,207

)

3,279

 

2,072

 

(d)         The value of acquired in-place lease intangibles are amortized to expense over the remaining initial terms of the respective leases.  The impact of the amortization of acquired in-place lease values is included in depreciation and amortization expense and amounted to approximately $17.9 million, $32.2 million and $14.3 million for the years ended December 31, 2018, 2017 and 2016, respectively.  The following table summarizes, as of December 31, 2018, the scheduled amortization of the Company’s acquired in-place lease values for each of the five succeeding years (dollars in thousands):

Year

 

 

 

2019

 

$

10,494

 

2020

 

8,050

 

2021

 

6,884

 

2022

 

6,059

 

2023

 

4,943

 

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

(f)           Includes as of December 31, 2018 and 2017, $49.2 million and $26.9 million, respectively, of proceeds from property sales held by a qualified intermediary.

DERIVATIVE FINANCIAL INSTRUMENTS

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company does not have any derivative instrumentsprimarily uses interest rate swaps as part of its interest rate risk management strategy.  As of December 31, 2018, the Company had outstanding interest rate swaps with a combined notional value of $675 million that were designated as cash flow hedges.  The following table summarizeshedges of interest rate risk. During the notional and fair value of the Company’s derivative financial instruments, designated as fair value hedges, as ofyear ending December 31, 2015 and 2014 (dollars in thousands):


                 
                                  Fair Value
  Notional  Strike  Effective Expiration                      December 31,
  Value(a) Rate  Date Date  2015  2014
LIBOR Cap$ 51,000   1.5% September 2014 October 2015 $ - $ 1 
LIBOR Cap  24,000   1.5% September 2014 October 2015   -   1 
LIBOR Cap  51,000   1.75% October 2015 October 2016   1   64 
LIBOR Cap  24,000   1.75% October 2015 October 2016   1   29 
            $ 2 $ 95 

(a)  The notional value is an indication2018, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

The effective portion of the extent of our involvement in these instruments at that time, but does not represent exposure to credit, interest rate or market risks.


The Company includes these derivative financial instruments, which were recorded in the year ended December 31, 2014, in deferred charges, goodwill and other assets, net.  As changes in the fair value of these derivative financial instruments arederivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the Company recorded a loss onperiod that the hedged forecasted transaction affects earnings.  The ineffective portion of the change in fair value of $93,000 and $79,000 duringthe derivatives is recognized directly in earnings. During the years ended December 31, 20152018, 2017 and 2014,2016 the Company recorded ineffectiveness gain (loss) of $ (0.2) million,  $(37,000) and 0.6 million, respectively, which is included in interest and other investment income (loss) in the consolidated statements of operations, attributable to a floor mismatch in the underlying indices of the derivatives and the hedged interest payments made on its variable-rate debt.  Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.  During the next 12 months, the Company estimates that an additional $6.7 million will be reclassified as a decrease to interest expense.

Undesignated Cash Flow Hedges of Interest Rate Risk

Interest rate caps not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements but do not meet the strict hedge accounting requirements.  Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings.  The Company recognized expenses of $2,000 for the year ended December 31, 2016, which is included in interest and other investment income (loss) in the consolidated statements of operations.


The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet as of December 31, 2018 and 2017 (dollars in thousands):

 

 

Fair Value

 

 

 

Asset Derivatives designated

 

December 31,

 

 

 

as hedging instruments

 

2018

 

2017

 

Balance sheet location

 

Interest rate swaps

 

$

10,175

 

$

8,060

 

Deferred charges, goodwill and other assets

 

The table below presents the effect of the Company’s derivative financial instruments on the Income Statement for the years ending December 31, 2018, 2017 and 2016 (dollars in thousands):

Derivatives in Cash Flow
Hedging Relationships

 

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

 

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

 

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

 

Location of Gain or
(Loss) Recognized in
Income on Derivative
(Ineffective Portion
and Amount
Excluded from
Effectiveness

 

Amount of Gain or (Loss)
Recognized in Income on
Derivative (Ineffective Portion,
Reclassification for Forecasted
Transactions No Longer
Probable of Occurring and
Amount Excluded from
Effectiveness Testing)

 

Year ended December 31,

 

2018

 

2017

 

2016

 

(Effective Portion)

 

2018

 

2017

 

2016

 

Testing)

 

2018

 

2017

 

2016

 

Interest rate swaps

 

$

5,262

 

$

2,869

 

$

(1,183

)

Interest expense

 

$

2,944

 

$

(2,381

)

$

(3,398

)

Interest and other investment income (loss)

 

$

(204

)

$

(37

)

$

631

 

Credit-risk-related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness.  As of December 31, 2018, the Company did not have derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements.  As of December 31, 2018, the Company has not posted any collateral related to these agreements.

6.    RESTRICTED CASH


Restricted cash generally includes tenant and resident 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:  following (dollars in thousands):

      
  December 31,
  2015  2014
Security deposits$ 7,785 $ 7,795
Escrow and other reserve funds  27,558   26,450
      
Total restricted cash$ 35,343 $ 34,245

 

 

December 31,

 

 

 

2018

 

2017

 

Security deposits

 

$

10,257

 

$

9,446

 

Escrow and other reserve funds

 

9,664

 

30,346

 

 

 

 

 

 

 

Total restricted cash

 

$

19,921

 

$

39,792

 

7.    DISCONTINUED OPERATIONS


On January 1, 2014, the Company early adopted the new discontinued operations accounting standard and as the properties disposed of during the year ended December 31, 2015 and 2014 did not represent a strategic shift (as the Company is not entirely exiting markets or property types), they have not been reflected as part of discontinued operations.  See Note 3: Recent Transactions – Dispositions.

During the year ended December 31, 2013, the Company disposed of 24 office properties located in New York, New Jersey, Pennsylvania and Connecticut aggregating 3 million square feet and three developable land parcels for total net sales proceeds of approximately $390.6 million.  The Company has presented these properties as discontinued operations in its statements of operations for all periods presented.


88


The following table summarizes income from discontinued operations and the related realized gains (losses) and unrealized losses on disposition of rental property and impairments, net, for the year ended December 31, 2013: (dollars in thousands)
Total revenues$ 33,601
Operating and other expenses (13,454)
Depreciation and amortization (8,218)
Interest expense (118)
Income from discontinued operations 11,811
Loss from early extinguishment of debt (703)
Impairments (1) (23,851)
Realized gains on disposition of rental property 83,371
Realized gains (losses) and unrealized losses on
   disposition of rental property and impairments, net 59,520
Total discontinued operations, net$ 70,628

(1)      Represents impairment charges recorded on certain properties prior to their sale.  

8.    SENIOR UNSECURED NOTES

On January 7, 2016, the Company obtained a new $350 million unsecured term loan, which matures in January 2019 with two one-year extension options. The interest rate for the new term loan is currently 140 basis points over LIBOR, subject to adjustment on a sliding scale based on the Company's unsecured debt ratings, or at the Company's option, a defined leverage ratio. The Company entered into interest rate swap arrangements to fix LIBOR for the duration of the term loan. Including costs, the loan provides for a current all-in fixed rate of 3.12 percent. The proceeds from the loan were used primarily to repay outstanding borrowings on its unsecured revolving credit facility and to repay the Company's $200 million, 5.8 percent senior unsecured notes that matured on January 15, 2016.

A summary of the Company’s senior unsecured notes as of December 31, 20152018 and 20142017 is as follows:  follows (dollars in thousands):

 

 

December 31,

 

December 31,

 

Effective

 

 

 

2018

 

2017

 

Rate (1)

 

4.500% Senior Unsecured Notes, due April 18, 2022

 

$

300,000

 

$

300,000

 

4.612

%

3.150% Senior Unsecured Notes, due May 15, 2023

 

275,000

 

275,000

 

3.517

 

Principal balance outstanding

 

575,000

 

575,000

 

 

 

Adjustment for unamortized debt discount

 

(2,838

)

(3,505

)

 

 

Unamortized deferred financing costs

 

(1,848

)

(2,350

)

 

 

 

 

 

 

 

 

 

 

Total senior unsecured notes, net

 

$

570,314

 

$

569,145

 

 

 


(1)


          
                  December 31, Effective 
   2015  2014 Rate (1) 
5.800% Senior Unsecured Notes, due January 15, 2016 (2) $ 200,010 $ 200,086  5.806%
2.500% Senior Unsecured Notes, due  December 15, 2017   249,446   249,150  2.803%
7.750% Senior Unsecured Notes, due August 15, 2019   249,227   249,013  8.017%
4.500% Senior Unsecured Notes, due April 18, 2022   299,624   299,565  4.612%
3.150% Senior Unsecured Notes, due May 15, 2023   270,537   269,930  3.517%
          
Total senior unsecured notes $ 1,268,844 $ 1,267,744   

(1)Includes the cost of terminated treasury lock agreements (if any), offering and other transaction costs and the discount/premium on the notes, as applicable.
(2)On January 15, 2016, the Company repaid these notes at their maturity using proceeds from a new unsecured term loan and borrowings under the Company’s unsecured revolving credit facility.

         Includes the cost of terminated treasury lock agreements (if any), offering and other transaction costs and the discount/premium on the notes, as applicable.

The terms of the Company’s senior unsecured notes include certain restrictions and covenants which require compliance with financial ratios relating to the maximum amount of debt leverage, the maximum amount of secured indebtedness, the minimum amount of debt service coverage and the maximum amount of unsecured debt as a percent of unsecured assets.   The Company was in compliance with its debt covenants under the indenture relating to its senior unsecured notes as of December 31, 2015.


2018.

9.    8.    UNSECURED REVOLVING CREDIT FACILITY AND TERM LOANS


On July 16, 2013,January 25, 2017, the Company entered into an amended revolving credit facility and new term loan agreement (“2017 Credit Agreement”) with a group of 13 lenders.  Pursuant to the 2017 Credit Agreement, the Company refinanced its existing $600 million unsecured revolving credit facility (“2017 Credit Facility”) and entered into a new $325 million unsecured, delayed draw term loan facility (“2017 Term Loan”).  Effective March 6, 2018, the Company elected to determine its interest rate under the 2017 Credit Agreement and under the 2017 Term Loan using the defined leverage ratio option, resulting in an interest rate of LIBOR plus 130 basis points and LIBOR plus 155 basis points, respectively.

The terms of the 2017 Credit Facility include: (1) a four-year term ending in January 2021, with two six-month extension options; (2) revolving credit loans may be made to the Company in an aggregate principal amount of up to $600 million (subject to increase as discussed below), with a sublimit under the 2017 Credit Facility for the issuance of letters of credit in an amount not to exceed $60 million (subject to increase as discussed below); (3) an interest rate, based on the Operating Partnership’s unsecured debt ratings from Moody’s or S&P, or, at the Operating Partnership’s option, if it no longer maintains a debt rating from Moody’s or S&P or such debt ratings fall below Baa3 and BBB-, based on a defined leverage ratio; and (4) a facility fee, currently 25 basis points, payable quarterly based on the Operating Partnership’s unsecured debt ratings from Moody’s or S&P, or, at the Operating Partnership’s option, if it no longer maintains a debt rating from Moody’s or S&P or such debt ratings fall below Baa3 and BBB-, based on a defined leverage ratio.

After electing to use the defined leverage ratio to determine the interest rate, the interest rates on outstanding borrowings, alternate base rate loans and the facility fee on the current borrowing capacity, payable quarterly in arrears, on the 2017 Credit Facility are currently based on the following total leverage ratio grid:

 

 

 

 

Interest Rate -

 

 

 

 

 

 

 

Applicable Basis Points

 

 

 

 

 

Interest Rate -

 

Above LIBOR for

 

 

 

 

 

Applicable Basis

 

Alternate Base Rate

 

Facility Fee

 

Total Leverage Ratio

 

Points above LIBOR

 

Loans

 

Basis Points

 

<45%

 

125.0

 

25.0

 

20.0

 

>45% and <50% (current ratio)

 

130.0

 

30.0

 

25.0

 

>50% and <55%

 

135.0

 

35.0

 

30.0

 

>55%

 

160.0

 

60.0

 

35.0

 

Prior to the election to use the defined leverage ratio option, the interest rates on outstanding borrowings, alternate base rate loans and the facility fee on the current borrowing capacity, payable quarterly in arrears, on the 2017 Credit Facility were based upon the Operating Partnership’s unsecured debt ratings, as follows:

 

 

 

 

Interest Rate -

 

 

 

 

 

 

 

Applicable Basis Points

 

 

 

Operating Partnership’s

 

Interest Rate -

 

Above LIBOR for

 

 

 

Unsecured Debt Ratings:

 

Applicable Basis Points

 

Alternate Base Rate

 

Facility Fee

 

Higher of S&P or Moody’s

 

Above LIBOR

 

Loans

 

Basis Points

 

No ratings or less than BBB-/Baa3

 

155.0

 

55.0

 

30.0

 

BBB- or Baa3 (interest rate based on Company’s election through March 5, 2018)

 

120.0

 

20.0

 

25.0

 

BBB or Baa2

 

100.0

 

0.0

 

20.0

 

BBB+ or Baa1

 

90.0

 

0.0

 

15.0

 

A- or A3 or higher

 

87.5

 

0.0

 

12.5

 

The terms of the 2017 Term Loan include: (1) a three-year term ending in January 2020, with two one-year extension options; (2) multiple draws of the term loan commitments may be made within 12 months of the effective date of the 2017 Credit Agreement up to an aggregate principal amount of $325 million (subject to increase as discussed below), with no requirement to be drawn in full; provided, that, if the Company does not borrow at least 50 percent of the initial term commitment from the term lenders (i.e. 50 percent of $325 million) on or before July 25, 2017, the amount of unused term loan commitments shall be reduced on such date so that, after giving effect to such reduction, the amount of unused term loan commitments is not greater than the outstanding term loans on such date; (3) an interest rate based on the Operating Partnership’s unsecured debt ratings from Moody’s or S&P, or, at the Operating Partnership’s option if it no longer maintains a debt rating from Moody’s or S&P or such debt ratings fall below Baa3 and BBB-, based on a defined leverage ratio; and (4) a term commitment fee on any unused term loan commitment during the first 12 months after the effective date of the 2017 Credit Agreement at a rate of 0.25 percent per annum on the sum of the average daily unused portion of the aggregate term loan commitments.

On March 22, 2017, the Company drew the full $325 million available under the 2017 Term Loan. On March 29, 2017, the Company executed interest rate swap arrangements to fix LIBOR with an aggregate average rate of 1.6473% for the swaps and a current aggregate fixed rate of 3.1973% on borrowings under the 2017 Term Loan.

After electing to use the defined leverage ratio to determine the interest rate, the interest rate under the 2017 Term Loan is currently based on the following total leverage ratio grid:

 

 

 

 

Interest Rate -

 

 

 

 

 

Applicable Basis Points

 

 

 

Interest Rate -

 

Above LIBOR for

 

 

 

Applicable Basis

 

Alternate Base Rate

 

Total Leverage Ratio

 

Points above LIBOR

 

Loans

 

<45%

 

145.0

 

45.0

 

>45% and <50% (current ratio)

 

155.0

 

55.0

 

>50% and <55%

 

165.0

 

65.0

 

>55%

 

195.0

 

95.0

 

Prior to the election to use the defined leverage ratio option, the interest rate on the 2017 Term Loan was based upon the Operating Partnership’s unsecured debt ratings, as follows:

 

 

 

 

Interest Rate -

 

 

 

 

 

Applicable Basis Points

 

Operating Partnership’s

 

Interest Rate -

 

Above LIBOR for

 

Unsecured Debt Ratings:

 

Applicable Basis Points

 

Alternate Base Rate

 

Higher of S&P or Moody’s

 

Above LIBOR

 

Loans

 

No ratings or less than BBB-/Baa3

 

185.0

 

85.0

 

BBB- or Baa3 (interest rate based on Company’s election through March 5, 2018)

 

140.0

 

40.0

 

BBB or Baa2

 

115.0

 

15.0

 

BBB+ or Baa1

 

100.0

 

0.0

 

A- or A3 or higher

 

90.0

 

0.0

 

On up to four occasions at any time after the effective date of the 2017 Credit Agreement, the Company may elect to request (1) an increase to the existing revolving credit commitments (any such increase, the “New Revolving Credit Commitments”) and/or (2) the establishment of one or more new term loan commitments (the “New Term Commitments”, together with the 2017 Credit Commitments, the “Incremental Commitments”), by up to an aggregate amount not to exceed $350 million for all Incremental Commitments.  The Company may also request that the sublimit for letters of credit available under the 2017 Credit Facility be increased to $100 million (without arranging any New Revolving Credit Commitments).  No lender or letter of credit issued has any obligation to accept any Incremental Commitment or any increase to the letter of credit subfacility.  There is no premium or penalty associated with full or partial prepayment of borrowings under the 2017 Credit Agreement.

The 2017 Credit Agreement, which applies to both the 2017 Credit Facility and 2017 Term Loan, includes certain restrictions and covenants which limit, among other things 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 2017 Credit Agreement (described below), or (ii) the property dispositions are completed while the Company is under an event of default under the 2017 Credit Agreement, 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 (60 percent), the maximum amount of secured indebtedness (40 percent), the minimum amount of fixed charge coverage (1.5 times), the maximum amount of unsecured indebtedness (60 percent), the minimum amount of unencumbered property interest coverage (2.0 times) and certain investment limitations (generally 15 percent of total capitalization).  If an event of default has occurred and is continuing, the entire outstanding balance under the 2017 Credit Agreement may (or, in the case of any bankruptcy event of default, shall) become immediately due and payable, and the Company will not make any excess distributions except to enable the General Partner to continue to qualify as a REIT under the IRS Code.

Before it amended and restated its unsecured revolving credit facility in January 2017, the Company had a $600 million unsecured revolving credit facility with a group of 17 lenders.  The $600 million facility is expandablelenders that was scheduled to $1 billion and maturesmature in July 2017.  It has two six-month extension options each requiring the payment of a 7.5 basis point fee.  The interest rate on outstanding borrowings (not electing the Company’s competitive bid feature) and the facility fee on the current borrowing capacity, payable quarterly in arrears, arewas based upon the Operating Partnership’s unsecured debt ratings at the time, as follows:

Operating Partnership’s

 

Interest Rate -

 

 

 

Unsecured Debt Ratings:

 

Applicable Basis Points

 

Facility Fee

 

Higher of S&P or Moody’s

 

Above LIBOR

 

Basis Points

 

No ratings or less than BBB-/Baa3

 

170.0

 

35.0

 

BBB- or Baa3 (since January 2017 amendment)

 

130.0

 

30.0

 

BBB or Baa2

 

110.0

 

20.0

 

BBB+ or Baa1

 

100.0

 

15.0

 

A- or A3 or higher

 

92.5

 

12.5

 

In January 2016, the Company obtained a $350 million unsecured term loan (“2016 Term Loan”), which matures in January 2019 with two one-year extension options.  On January 7, 2019, the Company exercised the first one-year extension option with the payment of an extension fee of $0.5 million, which extended the maturity of the 2016 Term Loan to January 2020.  The interest rate for the term loan is based on the Operating Partnership’s unsecured debt ratings, or, at the Company’s option, a defined leverage ratio. Effective March 6, 2018, the Company elected to determine its interest rate under the 2016 Term Loan using the defined leverage ratio option, resulting in an interest rate of LIBOR plus 155 basis points.  The Company entered into interest rate swap arrangements to fix LIBOR for the duration of the term loan.  Including costs, the current all-in fixed rate is 3.28 percent.  The proceeds from the loan were used primarily to repay outstanding borrowings on the Company’s then existing unsecured revolving credit facility and to repay $200 million senior unsecured notes that matured on January 15, 2016.

After electing to use the defined leverage ratio to determine the interest rate, the interest rate under the 2016 Term Loan is currently based on the following total leverage ratio grid:

Interest Rate -

Applicable Basis

Total Leverage Ratio

Points above LIBOR

<45%

145.0

>45% and <50% (current ratio)

155.0

>50% and <55%

165.0

>55%

195.0

Prior to the election to use the defined interest leverage ratio option, the interest rate on the 2016 Term Loan was based upon the Operating Partnership’s unsecured debt ratings, as follows:

     
Operating Partnership's Interest Rate -  
Unsecured Debt Ratings: Applicable Basis Points Facility Fee
Higher of S&P or Moody's Above LIBOR Basis Points
No ratings or less than BBB-/Baa3 170.0 35.0
BBB- or Baa3 (current) 130.0 30.0
BBB or Baa2 110.0 20.0
BBB+ or Baa1 100.0 15.0
A- or A3 or higher 92.5 12.5
89


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 those above.

Operating Partnership’s

Interest Rate -

Unsecured Debt Ratings:

Applicable Basis Points

Higher of S&P or Moody’s

Above LIBOR

No ratings or less than BBB-/Baa3

185.0

BBB- or Baa3 (interest rate based on Company’s election through March 5, 2018)

140.0

BBB or Baa2

115.0

BBB+ or Baa1

100.0

A- or A3 or higher

90.0

The terms of the unsecured facility2016 Term Loan include certain restrictions and covenants which limit, among other things 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 facilityterm loan described below, or (ii) the property dispositions are completed while the Company is under an event of default under the facility,term loan, 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 (60 percent), the maximum amount of secured indebtedness (40 percent), the minimum amount of fixed charge coverage (1.5 times), the maximum amount of unsecured indebtedness (60 percent), the minimum amount of unencumbered property interest coverage (2.0 times) and certain investment limitations (generally 15 percent of total capitalization).  If an event of default has occurred and is continuing, the Company will not make any excess distributions except to enable the CompanyGeneral Partner to continue to qualify as a REIT under the IRS Code.

On August 30, 2018, the Company entered into an amendment to the 2017 Credit Agreement (the “2017 Credit Agreement Amendment”) and an amendment to the 2016 Term Loan (the “2016 Term Loan Amendment”).

Each of the 2017 Credit Agreement Amendment and the 2016 Term Loan Amendment is effective as of June 30, 2018 and provides for the following material amendments to the terms of both the 2017 Credit Agreement and 2016 Term Loan):

1.              The unsecured debt ratio covenant has been modified with respect to the measurement of the unencumbered collateral pool of assets in the calculation of such ratio for the period commencing July 1, 2018 and continuing until December 31, 2019 to allow the Operating Partnership to utilize the “as-is” appraised value of the properties known as ‘Harborside Plaza I’ and ‘Harborside Plaza V’ properties located in Jersey City, NJ in such calculation; and

2.              A new covenant has been added that prohibits the Company from making any optional or voluntary payment, repayment, repurchase or redemption of any unsecured indebtedness of the Company (or any subsidiaries) that matures after January 25, 2022, at any time when any of the Total Leverage Ratio or the unsecured debt ratio covenants exceeds 60 percent (all as defined in the 2017 Credit Agreement and the 2016 Term Loan) or an appraisal is being used to determine the value of Harborside Plaza I and Harborside Plaza V for the unsecured debt ratio covenant.

All other terms and conditions of the 2017 Credit Agreement and the 2016 Term Loan remain unchanged.

The Company was in compliance with its debt covenants under its unsecured revolving credit facility and term loans as of December 31, 2015.


2018.

As of December 31, 2015,2018 and 2017, the Company hadCompany’s unsecured credit facility and term loans totaled $790.9 million and $822.3 million, respectively, comprised of: $117 million of outstanding borrowings under its unsecured revolving credit facility, $350.0 million from the 2016 Term Loan and $323.9 million from the 2017 Term Loan (net of $155unamortized deferred financing costs of $1.1 million) as of December 31, 2018, and $150 million of outstanding borrowings under its unsecured revolving credit facility and had no outstanding borrowings under$349.0 million from the facility2016 Term Loan (net of unamortized deferred financing costs of $1.0 million) $323.3 million from the 2017 Term Loan (net of unamortized deferred financing costs of $1.7 million) as of December 31, 2014.


Through July 15, 2013, the Company had a $600 million unsecured revolving credit facility, which had an interest rate on outstanding borrowings of LIBOR plus 125 basis points and a facility fee of 25 basis points.

10.   MORTGAGES, LOANS PAYABLE AND OTHER OBLIGATIONS

2017.

9.   MORTGAGES, LOANS PAYABLE AND OTHER OBLIGATIONS

The Company has mortgages, loans payable and other obligations which primarily consist of various loans collateralized by certain of the Company’s rental properties, land and development projects.  As of December 31, 2015, 232018, 16 of the Company’s properties, with a total carrying value of approximately $739 million,$2.1 billion, and fourone of the Company’s land and development projects, with a total carrying value of approximately $215$142 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.  Except as noted below, theThe Company was in compliance with its debt covenants under its mortgages and loans payable as of December 31, 2015.



90


2018.

A summary of the Company’s mortgages, loans payable and other obligations as of December 31, 20152018 and 20142017 is as follows: follows (dollars in thousands):

 

 

 

 

Effective

 

December 31,

 

December 31,

 

 

 

Property/Project Name

 

Lender

 

Rate (a)

 

2018

 

2017

 

Maturity

 

Harborside Plaza 5 (b)

 

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

 

6.84

%

$

 

$

209,257

 

 

 

23 Main Street (c)

 

Berkadia CMBS

 

5.59

%

 

27,090

 

 

 

One River Center (d)

 

Guardian Life Insurance Co.

 

7.31

%

 

40,485

 

 

 

Park Square (e)

 

Wells Fargo Bank N.A.

 

LIBOR+1.87

%

25,167

 

26,567

 

04/10/19

 

250 Johnson (f)

 

M&T Bank

 

LIBOR+2.35

%

41,769

 

32,491

 

05/20/19

 

Port Imperial 4/5 Hotel (g)

 

Fifth Third Bank & Santander

 

LIBOR+4.50

%

73,350

 

43,674

 

10/06/19

 

Worcester (h)

 

Citizens Bank

 

LIBOR+2.50

%

56,892

 

37,821

 

12/10/19

 

Monaco (i)

 

The Northwestern Mutual Life Insurance Co.

 

3.15

%

168,370

 

169,987

 

02/01/21

 

Port Imperial South 4/5 Retail

 

American General Life & A/G PC

 

4.56

%

4,000

 

4,000

 

12/01/21

 

Portside 7

 

CBRE Capital Markets/FreddieMac

 

3.57

%

58,998

 

58,998

 

08/01/23

 

Alterra I & II

 

Capital One/FreddieMac

 

3.85

%

100,000

 

100,000

 

02/01/24

 

The Chase at Overlook Ridge

 

New York Community Bank

 

3.74

%

135,750

 

135,750

 

01/01/25

 

Portside 5/6 (j)

 

New York Life Insurance Company

 

4.56

%

97,000

 

45,778

 

03/10/26

 

Marbella

 

New York Life Insurance Company

 

4.17

%

131,000

 

 

08/10/26

 

101 Hudson

 

Wells Fargo CMBS

 

3.20

%

250,000

 

250,000

 

10/11/26

 

Short Hills Portfolio (k)

 

Wells Fargo CMBS

 

4.15

%

124,500

 

124,500

 

04/01/27

 

150 Main St.

 

Natixis Real Estate Capital LLC

 

4.48

%

41,000

 

41,000

 

08/05/27

 

Port Imperial South 11 (l)

 

The Northwestern Mutual Life Insurance Co.

 

4.52

%

100,000

 

46,113

 

01/10/29

 

Port Imperial South 4/5 Garage

 

American General Life & A/G PC

 

4.85

%

32,600

 

32,600

 

12/01/29

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal balance outstanding

 

 

 

 

 

1,440,396

 

1,426,111

 

 

 

Unamortized deferred financing costs

 

 

 

 

 

(8,998

)

(7,976

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total mortgages, loans payable and other obligations, net

 

 

 

 

 

$

1,431,398

 

$

1,418,135

 

 

 


              
   Effective                      December 31,   
Property/Project NameLender Rate (a)   2015  2014 Maturity 
Overlook - Site IIID,IIIC, IIIA &             
Overlook - Site IIB (b)Wells Fargo Bank N.A. -    - $ 23,047  - 
10 Independence, 4 Sylvan, 210 Clay &             
5 Becker (c)Wells Fargo CMBS -    -   58,696  - 
6 Becker, 85 Livingston,             
75 Livingston & 20 WaterviewWells Fargo CMBS  10.260 % $ 63,279    65,035  08/11/14(d)
9200 Edmonston RoadPrincipal Commercial Funding L.L.C.  9.780 %   3,793    3,951  05/01/15(e)
Port Imperial SouthWells Fargo Bank N.A.LIBOR+1.75%   34,962    44,119  01/17/16(f)
4 BeckerWells Fargo CMBS  9.550 %   40,083    39,421  05/11/16 
Curtis Center (g)CCRE & PREFGLIBOR+5.912%(h)  64,000    64,000  10/09/16 
Various (i)Prudential Insurance  6.332 %   143,513    145,557  01/15/17 
150 Main St.Webster BankLIBOR+2.35%   10,937    1,193 (j)03/30/17 
23 Main StreetJPMorgan CMBS  5.587 %   28,541    29,210  09/01/18 
Harborside Plaza 5The Northwestern Mutual Life  6.842 %   217,736    221,563  11/01/18 
 Insurance Co. & New York Life            
 Insurance Co.            
100 Walnut AvenueGuardian Life Insurance Co.  7.311 %   18,273    18,542  02/01/19 
One River Center (k)Guardian Life Insurance Co.  7.311 %   41,859    42,476  02/01/19 
Park SquareWells Fargo Bank N.A.LIBOR+1.872%(l)  27,500    27,500  04/10/19 
Port Imperial South 4/5 RetailAmerican General Life & A/G PC 4.559%   4,000    4,000  12/01/21 
Port Imperial South 4/5 GarageAmerican General Life & A/G PC 4.853%   32,600    32,600  12/01/29 
              
Total mortgages, loans payable and other obligations    $ 731,076  $ 820,910    


(a)

(a)

Reflects effective rate of debt, including deferred financing costs, comprised of the cost of terminated treasury lock agreements (if any), debt initiation costs, mark-to-market adjustment of acquired debt and other transaction costs, as applicable.

(b)

On March 27, 2015,January 8, 2018, the Company repaid these loans, which had interest rates ranging from LIBOR plus 2.50 to 3.50 percent, at par,prepaid this loan in full upon payment of a fee of approximately $8.4 million using borrowings onfrom the Company'sCompany’s unsecured revolving credit facility.

(c)

During the year ended December 31, 2015,

On March 1, 2018, the Company transferred the deeds for these properties to the lender in satisfaction of its obligations on the loans with interest rates ranging from 10.260% to 19.450%.  See Note 3: Recent Transactions - Dispositions.

(d)Mortgage is cross collateralized by the four properties.  Theprepaid this loan was not repaid at maturity and the Company is in discussions with the lender regarding potential options in satisfaction of the obligation.
(e)Excess cash flow, as defined, is being held by the lender for re-leasing costs.  The deed for the property was placed in escrow and is available to the lender in the event of default or non-payment at maturity.  The mortgage loan was not repaid at maturity on May 1, 2015.  The Company is in discussions with the lender regarding a further extension of the loan.
(f)The loan was repaid in full at maturity,upon payment of a fee of approximately $0.1 million using borrowings from the Company'sCompany’s unsecured revolving credit facility.

(g)

(d)

The

Mortgage was collateralized by the three properties comprising One River Center. On March 29, 2018, the Company ownsprepaid this loan in full upon payment of a 50 percent tenants-in-common interest infee of approximately $1.8 million using borrowings from the Curtis Center property.  The Company’s $64.0 million loan consists of its 50 percent interest in a $102 million senior loan with a current rate of 3.491 percent at December 31, 2015 and its 50 percent interest in a $26 million mezzanine loan (with a maximum borrowing capacity of $48 million) with a current rate of 9.831 percent at December 31, 2015.  The senior loan rate is based on a floating rate of one-month LIBOR plus 329 basis points and the mezzanine loan rate is based on a floating rate of one-month LIBOR plus 950 basis points.  The Company has entered into LIBOR caps for the periods of the loans.  The loans provide for three one-year extension options.unsecured revolving credit facility.

(h)

(e)

The effective interest rate includes amortization

On January 16, 2019, the loan was repaid using proceeds from the disposition of deferred financing costs of 1.362 percent.Park Square.

(i)

(f)

Mortgage is cross collateralized by seven properties. The Company has agreed, subject to certain conditions, to guarantee repayment of $61.1 million of the loan. 
(j)

This construction loan has a maximum borrowing capacity of $28.8 million. $42 million and provides, subject to certain conditions, a one-year extension option with a fee of 25 basis points. 

(k)

(g)

Mortgage is collateralized

This construction loan has a maximum borrowing capacity of $94 million and provides, subject to certain conditions, two one-year extension options with a fee of 20 basis points for each year.  See Note 12: Commitments and Contingencies - Construction Projects.

(h)

This construction loan has a maximum borrowing capacity of $58 million and provides, subject to certain conditions, two one-year extension options with a fee of 15 basis points each year.

(i)

This mortgage loan, which includes unamortized fair value adjustment of $3.4 million as of December 31, 2018, was assumed by the three properties comprising One River Center. Company in April 2017 with the acquisition and consolidation of all the interests in the Monaco Towers property.

(l)

(j)

The effective interest rate includes amortization of

On December 7, 2018, the Company refinanced this loan, due to which unamortized deferred financing costs of 0.122 percent.$0.2 million pertaining to the initial loan were written off.  Concurrent with the refinancing, the Company repaid in full the property’s $70 million construction loan and obtained a new loan in the amount of $97 million.

(k)

This mortgage loan was obtained by the Company in March 2017 to partially fund the acquisition of the Short Hills/Madison portfolio.

(l)

On December 17, 2018, the Company refinanced this loan, due to which unamortized deferred financing costs of $0.3 million pertaining to the initial loan were written off.  Concurrent with the refinancing, the Company repaid in full the property’s $70.1 million construction loan and obtained a new loan in the amount of $100 million.




91


SCHEDULED PRINCIPAL PAYMENTS

Scheduled principal payments for the Company’s senior unsecured notes (see Note 8)7), unsecured revolving credit facility and term loan (see Note 9)8) and mortgages, loans payable and other obligations as of December 31, 20152018 are as follows: follows (dollars in thousands):

 

 

Scheduled

 

Principal

 

 

 

Period

 

Amortization

 

Maturities

 

Total

 

2019 (a)

 

$

532

 

$

546,711

 

$

547,243

 

2020

 

2,903

 

325,000

 

327,903

 

2021

 

3,227

 

285,800

 

289,027

 

2022

 

3,284

 

300,000

 

303,284

 

2023

 

3,412

 

333,998

 

337,410

 

Thereafter

 

7,230

 

991,929

 

999,159

 

Sub-total

 

20,588

 

2,783,438

 

2,804,026

 

Adjustment for unamortized debt discount/premium, net December 31, 2018

 

(2,838

)

 

(2,838

)

Unamortized mark to market

 

3,370

 

 

3,370

 

Unamortized deferred financing costs

 

(11,907

)

 

 

(11,907

)

 

 

 

 

 

 

 

 

Totals/Weighted Average

 

$

9,213

 

$

2,783,438

 

$

2,792,651

 


(a)




         
  Scheduled  Principal   
Period Amortization  Maturities  Total
2016$ 8,125 $ 406,465 $ 414,590
2017  7,275   557,088   564,363
2018  7,311   231,536   238,847
2019  723   331,567   332,290
2020  569   -   569
Thereafter  5,759   605,206   610,965
Sub-total  29,762   2,131,862   2,161,624
Adjustment for unamortized debt        
  discount/premium, net, as of        
 December 31, 2015  (6,704)   -   (6,704)
         
Totals/Weighted Average$ 23,058 $ 2,131,862 $ 2,154,920

         On January 7, 2019, the Company exercised the first one-year extension option on the $350 million term loan scheduled to mature in January 2019, which extended the maturity of the 2016 Term Loan to January 2020.

CASH PAID FOR INTEREST AND INTEREST CAPITALIZED

Cash paid for interest for the years ended December 31, 2015, 20142018, 2017 and 20132016 was $115,123,000, $119,664,000$97,744,000, $103,559,000 and $123,213,000,$122,414,000, respectively.  Interest capitalized by the Company for the years ended December 31, 2015, 20142018, 2017 and 20132016 was $16,217,000, $15,470,000,$27,047,000, $20,240,000, and $12,885,000,$19,316,000, respectively (of which these(which amounts included $5,325,000, $4,646,000$816,000, $1,056,000 and $1,326,000$5,055,000 for the years ended December 31, 2015, 20142018, 2017 and 2013,2016, respectively, forof interest capitalized on the Company’s investments in unconsolidated joint ventures which were substantially in development).


SUMMARY OF INDEBTEDNESS

As of December 31, 2015,2018, the Company’s total indebtedness of $2,154,920,000$2,807,396,000 (weighted average interest rate of 5.223.89 percent) was comprised of $292,399,000$314,177,000 of unsecured revolving credit facility borrowings and other variable rate mortgage debt (weighted average rate of 2.814.90 percent) and fixed rate debt and other obligations of $1,862,521,000$2,493,219,000 (weighted average rate of 5.603.76 percent).


As of December 31, 2014,2017, the Company’s total indebtedness of $2,088,654,000$2,826,110,000 (weighted average interest rate of 5.643.93 percent) was comprised of $159,860,000$382,443,000 of unsecured revolving credit facility borrowings and other variable rate mortgage debt (weighted average rate of 3.833.63 percent) and fixed rate debt and other obligations of $1,928,794,000$2,443,667,000 (weighted average rate of 5.793.98 percent).


11.  EMPLOYEE BENEFIT 401(k) PLANS AND DEFERRED RETIREMENT COMPENSATION AGREEMENTS

10.  EMPLOYEE BENEFIT 401(k) PLANS

Employees of the Company,General Partner, who meet certain minimum age and service requirements, are eligible to participate in the Mack-Cali Realty Corporation 401(k) Savings/Retirement Plan (the “401(k) Plan”).  Eligible employees may elect to defer from one percent up to 60 percent of their annual compensation on a pre-tax basis to the 401(k) Plan, subject to certain limitations imposed by federal law.  The amounts contributed by employees are immediately vested and non-forfeitable.  The Company may make discretionary matching or profit sharing contributions to the 401(k) Plan on behalf of eligible participants in any plan year.  Participants are always 100 percent vested in their pre-tax contributions and will begin vesting in any matching or profit sharing contributions made on their behalf after two years of service with the Company at a rate of 20 percent per year, becoming 100 percent vested after a total of six years of service with the Company.  All contributions are allocated as a percentage of compensation of the eligible participants for the Plan year.  The assets of the 401(k) Plan are held in trust and a separate account is established for each participant.  A participant may receive a distribution of his or her vested account balance in the 401(k) Plan in a single sum or in installment payments upon his or her termination of service with the Company.  Total expense recognized by the Company for the 401(k) Plan for the years ended December 31, 2015, 20142018, 2017 and 20132016 was $970,000, zero$886,000, $1,055,000 and $117,000,$1,029,000, respectively.


On September 12, 2012, the Board of Directors of the Company approved multi-year deferred retirement compensation agreements for those executive officers in place on such date (the “Deferred Retirement Compensation Agreements”).  Pursuant to the Deferred Retirement Compensation Agreements, the Company was to make annual contributions of stock units (“Stock Units”) representing shares of the Company’s common stock on January 1 of each year from 2013 through 2017 into a deferred compensation account maintained on behalf of each participating executive.  Vesting of each annual contribution of Stock Units was to occur on December 31 of each year, subject to continued employment.  In connection with the separation from service to the Company of certain executive officers effective March 31, 2014, the Company agreed to make cash payments totaling $1.2 million for all vested and unvested Stock Units and future cash contributions pursuant to the Deferred Retirement Compensation Agreements.  In connection with the separation from service to the Company of its former president and chief executive officer effective June 30, 2015, the Company agreed to make cash payments of $2.3 million on the separation date for all vested and unvested Stock Units and future cash contributions pursuant to his Deferred Retirement Compensation Agreement.  Total expense recognized by the Company under the Deferred Retirement Compensation Agreements for the years ended December 31, 2015, 2014 and 2013 was zero, $2,957,000 and $595,000, respectively.
92


12.  11.  DISCLOSURE OF FAIR VALUE OF ASSETS AND LIABILITIES


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 assets and liabilities at December 31, 20152018 and 2014.2017.  The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.


Cash equivalents, receivables, notes receivables, accounts payable, and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of December 31, 20152018 and 2014.


2017.

The fair value of the Company’s long-term debt, consisting of senior unsecured notes, unsecured term loans, an unsecured revolving credit facility and mortgages, loans payable and other obligations aggregated approximately $2,160,034,000$2,711,712,000 and $2,133,214,000$2,764,033,000 as compared to the book value of approximately $2,154,920,000$2,792,651,000 and $2,088,654,000$2,809,568,000 as of December 31, 20152018 and 2014,2017, respectively.  The fair value of the Company’s long-term debt was categorized as a level 3 basis (as provided by ASC 820, Fair Value Measurements and Disclosures).  The fair value was estimated using a discounted cash flow analysis valuation based on the borrowing rates currently available to the Company for loans with similar terms and maturities.  The fair value of the mortgage debt and the unsecured notes was determined by discounting the future contractual interest and principal payments by a market rate.  Although the Company has determined that the majority of the inputs used to value its derivative financial instruments fall within level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivative financial instruments utilize level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties.  The Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivative financial instruments.  As a result, the Company has determined that its derivative financial instruments valuations in their entirety are classified in level 2 of the fair value hierarchy.


The fair value measurements used in the evaluation of the Company’s rental properties are considered to be Level 3 valuations within the fair value hierarchy, as there are significant unobservable inputs.  Examples of inputs that were utilized in the fair value calculations include estimated holding periods, discount rates, market capitalization rates, expected lease rental rates, and third party broker information.

Valuations of rental property identified as held for sale are based on estimated sale prices, net of estimated selling costs, of such property.

The valuation techniquesCompany identified as held for sale six office properties and significant unobservable inputs useda 159 unit multi-family rental property as of December 31, 2018 with an aggregate carrying value for the Company’s Level 3rental property of $108.8 million.  The total estimated sales proceeds, net of expected selling costs, from the sales are expected to be approximately $124 million.  The Company determined that the carrying value of four of the properties was not expected to be recovered from estimated net sales proceeds and accordingly recognized an unrealized loss allowance of $20.1 million for the year ended December 31, 2018.

The Company identified as held for sale 21 office properties as of December 31, 2017 with an aggregate carrying value of $171.6 million.  The total estimated sales proceeds from the sales were expected to be approximately $223 million.  The Company determined that the carrying value of seven of these properties was not expected to be recovered from estimated net sales proceeds and accordingly recognized an unrealized loss allowance of $12.3 million during the year ended December 31, 2017.

The Company owns two separate developable land parcels in Conshohocken and Bala Cynwyd, Pennsylvania, that were being considered for development into multi-family rental properties.  During the fourth quarter 2018, the Company made the decision to pursue selling the land parcels as opposed to development.  Due to the shortening of the expected periods of ownership, the Company determined that it was necessary to reduce the carrying values of the land parcels to their estimated fair values (ascertained by broker opinions of value measurementsobtained during the marketing process) and recorded a land impairments charge of $24.6 million at December 31, 2015 were as follows:


Fair Value atPrimary
December 31,ValuationUnobservableLocationRange of
Description2015TechniquesInputsTypeRates
Properties held and used on which the Company recognized impairment losses$ 404,863,000Discounted cash flowsDiscount rateSuburban8%  - 15%
Central Business District6% - 9.5%
Exit Capitalization rateSuburban7.5% - 9%
Central Business District5%  - 5.75%

2018.

Disclosure about fair value of assets and liabilities is based on pertinent information available to management as of December 31, 20152018 and 2014.2017.  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, 20152018 and current estimates of fair value may differ significantly from the amounts presented herein.


13.  12.  COMMITMENTS AND CONTINGENCIES


TAX ABATEMENT AGREEMENTS

Pursuant to agreements with certain municipalities, the Company is required to make payments in lieu of property taxes (“PILOT”) on certain of its properties and has tax abatement agreements on other properties, as follows:

The Harborside Plaza 4-A agreement with the City of Jersey City, as amended, which commenced in 2002, is for a term of 20 years.  The annual PILOT is equal to two percent of Total Project Costs, as defined.  Total Project Costs are $49.5 million.  The PILOT totaled $990,000$1.1 million, $1.1 million and $1.1 million for each of the years ended December 31, 2015, 20142018, 2017 and 2013.

93


2016, respectively.

The Harborside Plaza 5 agreement, also with the City of Jersey City, as amended, which commenced in 2002, is for a term of 20 years.  The annual PILOT is equal to two percent of Total Project Costs, as defined.  Total Project Costs are $170.9 million.  The PILOT totaled $3.4$4.4 million, $3.9 million and $3.9 million for each of the years ended December 31, 2015, 20142018, 2017 and 2013.


2016, respectively.

The Port Imperial 4/5 Garage development project agreement with the City of Weehawken had a term of five years beginning when the project was substantially complete, which occurred in 2013.  The agreement, which expired in December 2018, provided that real estate taxes be paid initially on the land value of the project only and allowed for itsa phase in of real estate taxes on the value of the improvements at zero percent year one and 80 percent in years two through five.

The Port Imperial 4/5 garageSouth 1/3 Garage development project agreement with the City of Weehawken has a term of five years beginning when the project is substantially complete, which occurred in the thirdfourth quarter 2013.of 2015.  The agreement provides that real estate taxes be paid initiallyat 100 percent on the land value of the project only over the five year period and allows for a phase in of real estate taxes on the building improvement value of the improvements over a fiveat zero percent in year period.


one and 95 percent in years two through five.

The Port Imperial Hotel development project agreement with the City of RahwayWeehawken is for its Park Square multi-family rental property provided that real estate taxes would be partially abated,a term of 15 years following substantial completion, which commenced initial operation in December 2018.  The annual PILOT is equal to two percent of Total Project Costs, as defined therein.

The Port Imperial South 11 development project agreement with the City of Weehawken is for a term of 15 years following substantial completion, which occurred in August 2018.  The annual PILOT is equal to 10 percent of Gross Revenues, as defined therein.

The 111 River Realty agreement with the City of Hoboken, which commenced on October 1, 2001 expires in April 2022.  The PILOT payment equaled $1.2 million annually through April 2017 and then increased to $1.4 million annually until expiration.  The PILOT totaled $1.4 million, $1.3 million and $0.6 million for the years ended December 31, 2018, 2017 and 2016, respectively.

The Monaco Towers agreement with the City of Jersey City, which commenced in 2011, is for a declining scale,term of 10 years.  The annual PILOT is equal to 10 percent of gross revenues, as defined.  The PILOT totaled $2.4 million for fourthe year ended December 31, 2018 and $1.6 million for the period from acquisition (April 2017) through December 31, 2017.

The Marbella Tower agreement with the City of Jersey City, which commenced in 2003, expired in December 2018.  The annual PILOT was equal to 15 percent of gross revenues, as defined therein.  The PILOT totaled $0.9 million for the period from acquisition (August 2018), through December 31, 2018.

The Marbella II agreement with the City of Jersey City, which commenced in 2016, is for a term of 10 years.  The annual PILOT is equal to 10 percent of gross revenues for Years 1-4, 12 percent of gross revenues for Years 5-8 and 14 percent of gross revenue for years through 2015.


9-10, as defined therein.

The Port Imperial South Parcel 8/9 development project agreement with the City of Weehawken is for a term of 25 years following substantial completion, which is anticipated to occur in the fourth quarter 2020.  The annual PILOT is equal to 11 percent of gross revenue for Years 1-10, 12.5 percent for Years 11-18 and 14 percent for Years 19-25, as defined therein.

At the conclusion of the above-referenced 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.


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, 2015,2018, are as follows: follows (dollars in thousands):

   
Year Amount
2016$ 387
2017  267
2018  232
2019  235
2020  235
2021 through 2084  15,348
   
Total$ 16,704

Year

 

Amount

 

2019

 

$

2,470

 

2020

 

2,491

 

2021

 

2,491

 

2022

 

2,491

 

2023

 

2,491

 

2024 through 2084

 

210,117

 

 

 

 

 

Total

 

$

222,551

 

Ground lease expense incurred by the Company during each of the years ended December 31, 2015, 20142018, 2017 and 20132016 amounted to $406,000.


ROSELAND CONTINGENT CONSIDERATION
The purchase price for the Roseland transaction in 2012 included the fair value of contingent consideration pursuant to an earn-out (“Earn Out”) agreement of approximately $10 million.  Since the acquisition,$2.3 million, $2.6 million and $1.5 million, respectively.

CONSTRUCTION PROJECTS

In 2015, the Company recognized chargesentered into a 90-percent owned joint venture with XS Port Imperial Hotel, LLC to form XS Hotel Urban Renewal Associates LLC, which is developing a 372-key hotel (164 keys Residence Inn and benefits related208 keys Marriott Envue) in Weehawken, New Jersey.  The Residence Inn opened in 4Q 2018 and the Marriott Envue is expected to changesopen in fair value in the Earn Out liability and, as a result2Q 2019.   The construction of the achievementproject is estimated to cost $159.9 million, with construction costs of certain of$147.1 million incurred by the defined criteria, paid certain amounts such that there was no remaining amount in the Earn Outventure through December 31, 2018.  The project costs are expected to be funded from a $94 million construction loan (with $73.4 million outstanding as of December 31, 2015.   Related2018).

The Company is developing a 313-unit multi-family project known as Building 8/9 at Port Imperial in Weehawken, New Jersey, which began construction in third quarter 2018.  The construction project, which is estimated to changescost $142.6 million, of which construction costs of $35.4 million have been incurred through December 31, 2018, is expected to be ready for occupancy in fourth quarter 2020.  The Company is expected to fund $50.6 million of construction costs, of which the Company has funded $35.4 million as of December 31, 2018, and the remaining construction costs are expected to be funded primarily from a $92 million construction loan.

The Company is developing a 326-unit multi-family project known as Chase III at Overlook Ridge in Malden, Massachusetts, which began construction in third quarter 2018.  The construction project, which is estimated to cost $99.9 million, of which $20.2 million have been incurred through December 31, 2018, is expected to be ready for occupancy in fourth quarter 2020.  The Company is expected to fund $37.9 million of construction costs, of which the Company has funded $20.2 million as of December 31, 2018, and the remaining construction costs are expected to be funded primarily from a $62 million construction loan.

CHANGES IN EXECUTIVE OFFICERS

On October 31, 2018, RRT entered into a separation and consulting agreement with Robert Andrew Marshall, the President and Executive Vice President of Development of RRT (the “Separation and Consulting Agreement”).  Pursuant to the Separation and Consulting Agreement, Mr. Marshall’s employment with RRT was terminated, effective as of October 31, 2018 (the “Termination Date”), and Mr. Marshall has agreed to provide consulting services to RRT and the Company during the period beginning on November 1, 2018 and ending on March 31, 2019 (the “Consulting Period”).

Under the terms of the Separation and Consulting Agreement, Mr. Marshall will receive the following separation payments:

·                  accrued but unpaid base salary through October 31, 2018;

��                  unreimbursed expenses incurred by Mr. Marshall prior to the Termination Date; and

·                  COBRA payments through January 31, 2019, in an aggregate amount equal to approximately $7,533.

·                  In addition, during the Consulting Period, Mr. Marshall will receive a monthly consulting fee of $22,500.

·                  The Separation and Consulting Agreement provides that Mr. Marshall will continue to vest during the Consulting Period in all of the 22,120 Time-Based Long-Term Incentive Plan Awards originally issued in March 2016 (the “Vested 2016 Time-Based LTIP Awards”) and 28,880 of the 35,697 Performance-Based Long-Term Incentive Plan Awards originally issued in March 2016 (the “Vested 2016 Performance-Based LTIP Awards” and, together with the Vested 2016 Time-Based LTIP Awards, the “Vested 2016 LTIP Awards”).  The Vested 2016 LTIP awards will vest on the earliest to occur of (i) Mr. Marshall’s death, (ii) the termination of Mr. Marshall’s consulting services by the Company for any reason other than for Cause (as defined in the fair valueSeparation and Consulting Agreement) prior to March 31, 2019 or (iii) March 8, 2019 (such earliest date, the “Vesting Date”), subject to Mr. Marshall’s continuous performance of the Earn Out liability,consulting services through the applicable Vesting Date. All other equity awards previously issued to Mr. Marshall, including the remaining 6,817 Performance-Based LTIP Awards

originally issued in March 2016, 4,449 Time-Based Long-Term Incentive Plan Awards originally issued in April 2017, 13,473 Performance-Based Long-Term Incentive Plan Awards originally issued in April 2017, 11,799 Time-Based Long-Term Incentive Plan Awards originally issued in April 2018, and 22,676 Performance-Based Long-Term Incentive Plan Awards originally issued in April 2018, expired and were forfeited and cancelled, effective as of the Termination Date.

·                  The Separation and Consulting Agreement further provides that on the earliest to occur of (i) March 11, 2019, (ii) five (5) business days after RRT receives written notice of Mr. Marshall’s death, or (iii) the date on which Mr. Marshall’s consulting services are terminated by the Company recognizedfor any reason other than for Cause, the Company will purchase from Mr. Marshall all of the Vested 2016 LTIP Awards for an aggregate purchase price in cash equal to the product of (x) the total number of Vested 2016 LTIP Awards (which will amount to a net chargetotal of $219,00051,000) and (y) the average closing price per share of the Company’s common stock, as reported on the New York Stock Exchange for the period of five trading days ending on the applicable Vesting Date.

The Company’s total estimated costs in connection with the departure of Mr. Marshall of approximately $0.1 million (net of a reversal of $0.3 million of amortization of stock compensation expense due to the forfeiture of the unvested securities) during the year ended December 31, 2015, and recognized benefits of $1.5 million and $2.3 million during the years ended December 31, 2014 and 2013, respectively.  The Earn Out liability was remeasured at fair value until the contingency was resolved, with any changes in fair value representing a charge or benefit directly to earnings (with no adjustment to purchase accounting).  The measures of the Earn Out were based on significant inputs that are not observable in the market, which ASC 820 refers to as level 3 inputs.  In addition to an appropriate discount rate, the key assumption affecting the valuation for the Roseland assets component was the probability of occurrence of the payment events under the relevant provisions (management assumed between 92 and 99 percent for completion/start criteria and 50 percent for the tax credit/grant criteria in its initial valuation).  The valuation of the TRS component included assumptions for the risk-free rate and various other factors (i.e., stock price, dividend levels and volatility) for the Company and the relevant peer group, as defined in the Earn Out agreement.


DEPARTURE OF EXECUTIVE OFFICERS
The Company’s total estimated costs for the departure of the Company’s former president and chief executive officer and of the departure of certain of the Company’s executive officers of approximately $23.8 million during the year ended December 31, 20142018 was included in general and administrative expense (approximately $11.7 million and $11.6$1.0 million was included in accounts payable, accrued expenses and other liabilities as of December 31, 20152018).

In June 2018, the General Partner entered into a separation and 2014, respectively).  On January 4, 2016,general release agreement with Mitchell E. Rudin, pursuant to which Mr. Rudin’s employment with the Company satisfied $11.4as its Vice Chairman was terminated effective as of June 5, 2018.

Under the terms of the Rudin separation agreement, Mr. Rudin is entitled to receive the following separation payments:

·                  Accrued but unpaid base salary through June 5, 2018;

·                  A lump sum cash payment of $2,558,082;

·                  Payment of unreimbursed expenses incurred by Mr. Rudin prior to termination, in the amount of $50,000 in the aggregate; and

·                  COBRA payments for up to 18 months after termination, in an amount equal to approximately $34,047.

·                  The Rudin separation agreement reflects that certain equity awards previously issued to Mr. Rudin, including time-vesting options, restricted stock units and performance share units, vested in full as of June 5, 2018 in accordance with their terms. Pursuant to the Rudin separation agreement, other than the equity awards that were fully vested as of June 5, 2018, as set forth in the Rudin separation agreement, all other equity awards granted to Mr. Rudin, including 32,311 LTIP Units subject to time-based vesting and 175,127 LTIP Units subject to performance-based vesting, expired and were immediately forfeited and canceled, effective as of June 5, 2018.

The Company’s total estimated costs in connection with the departure of Mr. Rudin of approximately $1.2 million (net of a reversal of $1.6 million of amortization of stock compensation expense due to the accrued expense balance fromforfeiture of the unvested securities) during the year ended December 31, 2015.

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CONSTRUCTION PROJECTS
The Company owns a 76.25 percent interest2018 was included in a consolidated joint venture which is constructing a 108-unit multi-family development rental property locatedgeneral and administrative expense (approximately $23,000 was included in Eastchester, New York (the “Eastchester Project”).  The project is expected to be ready for occupancy by the second quarter of 2016.  The Eastchester Project is estimated to cost a total of $50 million (of which development costs of $29.6 million have been incurred through December 31, 2015).  The venture has a $28.8 million construction loan (with $10.9 million outstandingaccounts payable, accrued expenses and other liabilities as of December 31, 2015)2018).

In January 2018, the Company announced the appointment of David J. Smetana as chief financial officer and Nicholas Hilton as executive vice president of leasing of the General Partner. Mr. Smetana began to perform his duties as chief financial officer and Anthony Krug ceased to serve as chief financial officer immediately following the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.  Mr. Krug remained an employee of the General Partner and provided transition services through March 31, 2018.  Mr. Hilton’s employment commenced on February 12, 2018 following the departure of Christopher DeLorenzo.  In connection with these management changes, the General Partner entered into a separation agreement and release with each of Messrs. Krug and DeLorenzo.

Under the terms of the Krug separation agreement, Mr. Krug is entitled to receive the following severance benefits:

·                  Earned but unpaid compensation through the date of termination, including base salary, 2017 bonus (when determined), a pro rata portion of his annual car allowance, and any unused vacation time;

·                  A lump sum cash severance payment of $1,312,500;

·                  A prorated portion of his 2018 target bonus equal to $93,750;

·                  COBRA payments for up to two years after termination, in an amount equal to approximately $42,000; and

·                  Accelerated vesting of all unvested LTIP units in the Operating Partnership, consisting of 13,306 LTIP units subject to time-based vesting and 18,665 LTIP units subject to performance-based vesting, with LTIP units subject to performance-based vesting criteria vesting at target performance.

Under the terms of the DeLorenzo separation agreement, Mr. DeLorenzo is entitled to receive the following severance benefits:

·                  Earned but unpaid compensation through the date of termination, including base salary, 2017 bonus (when determined), a pro rata portion of his annual car allowance, and any unused vacation time;

·                  A lump sum cash severance payment of $500,000;

·                  COBRA payments for up to 18 months after termination, in an amount equal to approximately $42,000; and

·                  Partial accelerated vesting of unvested LTIP units in the Operating Partnership, consisting of 9,111 LTIP units subject to time based vesting and 13,982 LTIP units subject to performance-based vesting, with LTIP units subject to performance based vesting criteria vesting at target performance.

The Company expects to fundCompany’s total estimated costs in connection with the departure of Messrs. Krug and DeLorenzo of approximately $20.9$2.7 million forduring the development of the project (of which,year ended December 31, 2018 was included in general and administrative expense (approximately $43,000 was included in accounts payable, accrued expenses and other liabilities as of December 31, 2015, the Company has incurred $14.7 million of the development costs and estimates it will need to fund an additional $6.2 million for the completion of the project)2018).


OTHER

On April 1, 2015,August 11, 2017, the Company acquired an existing mortgage note receivable encumbering a vacant developable land to accommodateparcel located in Jersey City, New Jersey (the “Land Property”) with a two-phase developmentbalance of the CitySquare Project for a purchase price$44.7 million (the “Land Note Receivable”).  The Land Note Receivable matures in July 2019 and earns interest at an annual rate of $3.1 million with an additional $1.25 million to be paid (which5.85 percent which accrues monthly and is accrued as of December 31, 2015), subject to certain conditions, in accordance with the terms of the purchase and sale agreement.  The purchase price for the acquisition was funded primarily through borrowing under the Company’s unsecured revolving credit facility.  The first phase with 237 units started construction in the third quarter 2015 with anticipated initial deliveries in the second quarter 2017.  The second phase, with 128 units, is projected to begin construction in 2017.  On December 10, 2015,payable at maturity.  In March 2018, the Company obtainedreceived a construction loan withpartial prepayment of $3 million.  The Land Property is currently an unimproved land parcel which operates as a maximum borrowing amount of $41.5 million (with no outstanding balance as of December 31, 2015).  Total development costs are estimated to be approximately $92.5 million (of which $9.1 million was incurred by the Company through December 31, 2015 and estimates it will need to fund an additional $41.9 million for the completion of the project).


On October 6, 2015,surface parking facility.  Additionally, the Company entered into a joint venture partnership with XS Port Imperial Hotel, LLC (“XS”)an agreement to form XS Hotel Urban Renewal Associates LLC (“XS Hotel URA”)acquire the Land Property, subject to the Company’s ability to obtain all necessary development rights and entitlements to develop an apartment building on the land, and other related conditions to ensure that the Company can develop the project. The purchase price is $73 million, subject to adjustment based on the level of development rights obtained for the development and ownershipconstruction of a ­­­364-key dual branded hotel property located in Weehawken, New Jersey (“Port Imperial Hotel”).  Concurrently,multifamily apartment building.

Through February 2016, the Company and XS entered into a separate joint venture partnership to form XS Hotel Associates, L.L.C. (“XS Hotel”) for the management and operations of the completed hotel development.  The Company holds a 90 percent interest and XS holds the remaining 10 percent interest in the consolidated joint ventures, XS Hotel URA and XS Hotel, with the Company having full and complete authority, power, and discretion to manage and control the ventures’ business, affairs, and property.  The construction of the Port Imperial Hotel is estimated to cost a total of $105.9 million, which will be funded by a $94 million construction loan with the balance to be funded with members’ capital.  Upon closing, Mack-Cali’s initial contribution was $27.3 million, which included a capital credit of $23.7 million for its contributed Hotel Condominium Land unit, and XS Hotel’s initial contribution was $3 million.  As of December 31, 2015, the Company incurred development costs of $1.5 million and estimates it will need to fund an additional $3.3 million for the completion of the project.


The Company owns developable land to accommodate a multi-phase development project of approximately 1,034-unit multi-family rental property located in Malden, Massachusetts.  The initial phase commenced construction of 292 units in the third quarter of 2015 (the “Chase II Project”).  The Chase II Project is estimated to cost a total of $74.9 million (of which the Company has incurred $22.1 million through December 31, 2015) and is expected to be ready for occupancy by second quarter 2017.  On December 16, 2015, the Company obtained a construction loan with a maximum borrowing amount of $48 million (with no outstanding balance as of December 21, 2015).  The Company estimates it will need to fund additional costs of $4.8 million for the completion of the Chase II Project.

OTHER
The Company maycould not dispose of or distribute certain of its properties, currently comprised of seven properties with an aggregate net carrying value of approximately $57.1 million, which were originally contributed by certain unrelated common unitholders of the Operating Partnership, without the express written consent of such common unitholders, as applicable, except in a manner which doesdid not result in recognition of any built-in-gain (which may result in an income tax liability) or which reimbursesreimbursed the appropriate specific common unitholders for the tax consequences of the recognition of such built-in-gains (collectively, the “Property Lock-Ups”).  The aforementioned restrictions do not apply in the event that the Company sells all of its properties or in connection with a sale transaction which the Company’s Board of Directors determines is reasonably necessary to satisfy a material monetary default on any unsecured debt, judgment or liability of the Company or to cure any material monetary default on any mortgage secured by a property.  The Property Lock-Ups expire in 2016.  Upon the expiration in February 2016 of the Property Lock-Ups, the Company is generally required to use commercially reasonable efforts to prevent any sale, transfer or other disposition of the subject properties from resulting in the recognition of built-in gain to the specific common unitholders, which include members of the Mack Group (which includes William L. Mack, Chairman of the Company’sGeneral Partner’s Board of Directors; David S. Mack, director; and Earle I. Mack, a former director), the Robert Martin Group (which includes Robert F. Weinberg, a former director and current member of itsthe General Partner’s Advisory Board), and the Cali Group (which includes John R. Cali, a former director and current member of itsthe General Partner’s Advisory Board). 110As of December 31, 2018, after the effects of tax-free exchanges on certain of the originally contributed properties, either wholly or partially, over time, 79 of the Company’s properties, primarily a portfolio of flex properties in Westchester County, New York with an aggregate net bookcarrying value of approximately $1.3$1.4 billion, have lapsed restrictions and are subject to these conditions.
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14.  13.  TENANT LEASES


The Properties are leased to tenants under operating leases with various expiration dates through 2035.2036.  Substantially all of the commercial 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 commercial operating leases at December 31, 20152018 are as follows (dollars in thousands):


   
   
Year Amount
2016$ 463,029
2017  423,654
2018  342,756
2019  280,123
2020  239,079
2021 and thereafter  902,403
   
Total$ 2,651,044

Year

 

Amount

 

2019

 

$

314,708

 

2020

 

306,559

 

2021

 

284,120

 

2022

 

258,076

 

2023

 

220,533

 

2024 and thereafter

 

923,061

 

 

 

 

 

Total

 

$

2,307,057

 

Multi-family rental property residential leases are excluded from the above table as they generally expire within one year.


14.REDEEMABLE NONCONTROLLING INTERESTS

The Company evaluates the terms of the partnership units issued in accordance with the FASB’s Distinguishing Liabilities from Equity guidance.  Units which embody an unconditional obligation requiring the Company to redeem the units for cash after a specified or determinable date (or dates) or upon the occurrence of an event that is not solely within the control of the issuer are determined to be contingently redeemable under this guidance and are included as Redeemable noncontrolling interests and classified within the mezzanine section between Total liabilities and Stockholders’ equity on the Company’s Consolidated Balance Sheets.  Convertible units for which the Company has the option to settle redemption amounts in cash or Common Stock are included in the caption Noncontrolling interests in subsidiaries within the equity section on the Company’s Consolidated Balance Sheet.

Rockpoint Transaction

On February 27, 2017, the Company, RRT, the Company’s wholly-owned subsidiary through which the Company conducts its multi-family residential real estate operations, Roseland Residential, L.P. (“RRLP”), the operating partnership through which RRT conducts all of its operations, and certain other affiliates of the Company entered into an equity investment agreement (the “Investment Agreement”) with Rockpoint Group, L.L.C. and certain of its affiliates (collectively, “Rockpoint”).  The Investment Agreement provides for multiple equity investments by Rockpoint in RRLP from time to time for up to an aggregate of $300 million of equity units of limited partnership interests of RRLP (the “Rockpoint Units”).  The initial closing under the Investment Agreement occurred on March 10, 2017 for $150 million of Rockpoint Units and the parties agreed that the Company’s contributed equity value, (“RRT Contributed Equity Value”), was $1.23 billion at closing.  Additional closings of Rockpoint Units to be issued and sold to Rockpoint pursuant to the Investment Agreement may occur from time to time in increments of not less than $10 million per closing, with the balance of the full $300 million by March 1, 2019.  During the year ended December 31, 2018, a total additional amount of $105 million of Rockpoint Units were issued and sold to Rockpoint pursuant to the Investment Agreement.

The Company has a participation right, where prior to March 1, 2022 and following either the full investment of $300 million by Rockpoint or in certain other limited circumstances, the Company may contribute up to $200 million to obtain equity units on substantially the same terms and conditions as the Rockpoint Units to be issued and sold to Rockpoint.

Under the terms of the transaction, the cash flow from operations of RRLP will be distributable to RRT and Rockpoint as follows:

first, to provide a 6% annual return to Rockpoint (and to the Company after it contributes to RRT to obtain equity units, as described above) on its invested capital (“Preferred Base Return”);

second, to provide a 6% annual return on the equity value of the properties contributed by it to the partnership (“RRT Base Return”) with 95% of the RRT Base Return to RRT and 5% of the RRT Base Return to Rockpoint; and

third, pro rata between Rockpoint (and the Company upon its contribution to obtain equity units) and RRT based on total respective invested capital by Rockpoint and RRT Initial Capital Contribution.

Based on Rockpoint’s $255 million invested capital and RRT’s Initial Capital Contribution, at December 31, 2018 this pro rata distribution would be approximately 17.1% to Rockpoint and 82.9% to RRT.

RRLP’s cash flow from capital events will generally be distributable to RRT and Rockpoint as follows:

first, to Rockpoint (and the Company after it contributes to RRT to obtain equity units) to the extent there is any unpaid, accrued Preferred Base Return;

second, as a return of capital to Rockpoint (and the Company after it contributes to RRT to obtain equity units);

third, to RRT to the extent there is any unpaid, accrued RRT Base Return (with Rockpoint entitled to 5% of the amounts distributable to RRT);

fourth, as a return of capital to RRT based on the equity value of the properties contributed by it to the partnership (with Rockpoint entitled to 5% of the amounts distributable to RRT);

fifth, pro rata between Rockpoint (and the Company after it contributes to RRT to obtain equity units) and RRT based on total respective invested capital and contributed equity value until Rockpoint has achieved an 11% internal rate of return; and

sixth, to Rockpoint (and to the Company after it contributes to RRT to obtain equity units) based on 50% of its pro rata share described in “fifth” above and the balance to RRT.

In general, RRLP may not sell its properties in a taxable transaction, although it may engage in tax-deferred like-kind exchanges of properties or it may proceed in another manner designed to avoid the recognition of gains for tax purposes.

Beginning March 1, 2022, except in certain limited circumstances as defined in the agreement, either RRT or Rockpoint may cause RRT to redeem (a “Put/Call Event”) all, but not less than all, of Rockpoint’s interest in the Rockpoint Units based on a liquidation value of RRLP to be determined by a third party valuation of the real estate assets and generally based on the capital event waterfall described above.  On a Put/Call Event, other than the sale of RRLP, Rockpoint can either demand payment in cash or may elect to convert all, but not less than all, of its investment to common equity in RRLP.  As such, the Rockpoint Units contain a substantive redemption feature that is outside of the Company’s control and accordingly, pursuant to ASC 480-1—S99-3A, the Rockpoint Units are classified in mezzanine equity measured based on the estimated future redemption value as of December 31, 2018.  The Company determines the redemption value of these interests by hypothetically liquidating the estimated Net Asset Value (“NAV”) of the RRT real estate portfolio including debt principal through the applicable waterfall provisions of the RRLP partnership agreement.  The estimation of NAV includes unobservable inputs that consider assumptions of market participants in pricing the underlying assets of RRLP. For properties under development, the Company applies a discount rate to the estimated future cash flows allocable to the Company during the period under construction and then applies a direct capitalization method to the estimated stabilized cash flows.  For operating properties the direct capitalization method is used by applying a capitalization rate to the projected net operating income. Estimated future cash flows used in such analyses are based on the Company’s business plan for each respective property including capital expenditures, management’s views of market and economic conditions, and considers items such as current and future rental rates, occupancies and market transactions for comparable properties.  The estimated future redemption value of Rockpoint Units is approximately $330 million as of December 31, 2018.

Preferred Units

On February 3, 2017, the Operating Partnership issued 42,800 shares of a new class of 3.5 percent Series A Preferred Limited Partnership Units of the Operating Partnership (the “Series A Units”).  The Series A Units were issued to the Company’s partners in the Plaza VIII & IX Associates L.L.C. joint venture that owns a development site adjacent to the Company’s Harborside property in Jersey City, New Jersey as non-cash consideration for their approximate 37.5 percent interest in the joint venture.

Each Series A Unit has a stated value of $1,000, pays dividends quarterly at an annual rate of 3.5 percent (subject to increase under certain circumstances), is convertible into 28.15 common units of limited partnership interests of the Operating Partnership beginning generally five years from the date of issuance, or an aggregate of up to 1,204,820 common units.  The conversion rate was based on a value of $35.52 per common unit.  The Series A Units have a liquidation and dividend preference senior to the common units and include customary anti-dilution protections for stock splits and similar events.  The Series A Units are redeemable for cash at their stated value beginning five years from the date of issuance at the option of the holder.

On February 28, 2017, the Operating Partnership authorized the issuance of 9,213 shares of a new class of 3.5 percent Series A-1 Preferred Limited Partnership Units of the Operating Partnership (the “Series A-1 Units”).  9,122 Series A-1 Units were issued on February 28, 2017 and an additional 91 Series A-1 Units were issued in April 2017 pursuant to acquiring additional interests in a joint venture that owns Monaco Towers in Jersey City, New Jersey.  The Series A-1 Units were issued as non-cash consideration for the partner’s approximate 13.8 percent ownership interest in the joint venture.

Each Series A-1 Unit has a stated value of $1,000 (the “Stated Value”), pays dividends quarterly at an annual rate equal to the greater of (x) 3.5 percent, or (y) the then-effective annual dividend yield on the General Partner’s common stock, and is convertible into 27.936 common units of limited partnership interests of the Operating Partnership beginning generally five years from the date of issuance, or an aggregate of up to 257,375 Common Units.  The conversion rate was based on a value of $35.80 per common unit.  The Series A-1 Units have a liquidation and dividend preference senior to the Common Units and include customary anti-dilution protections for stock splits and similar events.  The Series A-1 Units are redeemable for cash at their stated value beginning five years from the date of issuance at the option of the holder.  The Series A-1 Units are pari passu with the 42,800 3.5% Series A Units issued on February 3, 2017.

The following table sets forth the changes in Redeemable noncontrolling interests for the year ended December 31, 2018 (dollars in thousands):

 

 

Series A and

 

 

 

Total

 

 

 

A-1 Preferred

 

Rockpoint

 

Redeemable

 

 

 

Units

 

Interests

 

Noncontrolling

 

 

 

In MCRLP

 

in RRT

 

Interests

 

Balance January 1, 2018

 

$

52,324

 

$

159,884

 

$

212,208

 

Redeemable Noncontrolling Interests Issued

 

 

105,000

 

105,000

 

Net

 

52,324

 

264,884

 

317,208

 

Income Attributed to Noncontrolling Interests

 

1,820

 

12,159

 

13,979

 

Distributions

 

(1,820

)

(12,159

)

(13,979

)

Redemption Value Adjustment

 

 

13,251

 

13,251

 

Redeemable noncontrolling interests as of December 31, 2018

 

$

52,324

 

$

278,135

 

$

330,459

 

15.MACK-CALI REALTY CORPORATION STOCKHOLDERS’ EQUITY


AND MACK-CALI REALTY, L.P.’S PARTNERS’ CAPITAL

To maintain its qualification as a REIT, not more than 50 percent in value of the outstanding shares of the CompanyGeneral Partner 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,General Partner, other than its initial taxable year (defined to include certain entities), applying certain constructive ownership rules.  To help ensure that the CompanyGeneral Partner will not fail this test, the Company’sGeneral Partner’s Charter provides, 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 CompanyGeneral Partner 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.


SHARE

Partners’ Capital in the accompanying consolidated financial statements relates to (a) General Partners’ capital consisting of common units in the Operating Partnership held by the General Partner, and (b) Limited Partners’ capital consisting of common units and LTIP units held by the limited partners.  See Note 16: Noncontrolling Interests in Subsidiaries.

Any transactions resulting in the issuance of additional common and preferred stock of the General Partner result in a corresponding issuance by the Operating Partnership of an equivalent amount of common and preferred units to the General Partner.

SHARE/UNIT REPURCHASE PROGRAM

In September 2012, the Board of Directors of the General Partner renewed and authorized an increase to the Company’sGeneral Partner’s repurchase program (“Repurchase Program”).  The CompanyGeneral Partner has authorization to repurchase up to $150 million of its outstanding common stock under the renewed Repurchase Program, which it may repurchase from time to time in open market transactions at prevailing prices or through privately negotiated transactions.  The CompanyAs of December 31, 2018, the General Partner has purchasedrepurchased and retired 394,625 shares of its outstanding common stock for an aggregate cost of approximately $11 million (all of which occurred in the year ended December 31, 2012), with a remaining authorization under the Repurchase Program of $139 million.

  Concurrent with these repurchases, the General Partner sold to the Operating Partnership common units for approximately $11 million.

DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN

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


STOCK OPTION PLANS

In May 2013, the CompanyGeneral Partner established the 2013 Incentive Stock Plan (the “2013 Plan”) under which a total of 4,600,000 shares have been reserved for issuance.  In May 2004, the Company established the 2004 Incentive Stock Plan (the “2004 Plan”) under which a total of 2,500,000 shares had been reserved for issuance.  The 2004 Plan was terminated upon establishment of the 2013 Plan.  No options were granted under the 2004 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” and together with the 2000 Employee Plan, the “2000 Plans”).  In May 2002, shareholders of the Company approved amendments to both of the 2000 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).  As the 2000 Plans expired in 2010, stock options may no longer be issued under those plans.  Stock options granted under the 2000 Employee Plan became exercisable over a five-year period.  All stock options granted under the 2000 Director Plan became exercisable in one year.  All options were granted at the fair market value at the dates of grant and have terms of 10 years.  As of December 31, 2015 and 2014, the stock options outstanding had a weighted average remaining contractual life of approximately 9.4 years and 4.9 years, respectively.

96


On June 5, 2015, in connection with employment agreements entered into with each of Messrs. Rudin and DeMarco (together, the Executive“Executive Employment Agreements,Agreements”), the Company granted options to purchase a total of 800,000 shares of the Company’sGeneral Partner’s common stock, exercisable for a period of ten years with an exercise price equal to the closing price of the Company’sGeneral Partner’s common stock on the grant date of $17.31 per share, with 400,000 of such options vesting in three equal annual installments commencing on the first anniversary of the grant date (“Time Vesting Options”), and fully vesting on June 5, 2018, and 400,000 of such options vesting if the Company’sGeneral Partner’s common stock trades at or above $25.00 per share for 30 consecutive trading days while the executive is employed (“Price Vesting Options”), or on or before June 30, 2019, subject to certain conditions. 


The Price Vesting Options vested on July 5, 2016 on account of the price vesting condition being achieved.

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

        
        
    Weighted  Aggregate
    Average  Intrinsic
 Shares  Exercise  Value
 Under Options  Price  $(000’s)
Outstanding at January 1, 2013 183,870 $ 29.51   -
Lapsed or Cancelled (168,870)   28.53   
Outstanding at December 31, 2013  ($35.59 – $45.47) 15,000 $ 40.54   -
Granted 5,000   21.25   
Lapsed or Cancelled (10,000)   38.07   
Outstanding at December 31, 2014 ($21.25 - $45.47) 10,000 $ 33.36   -
Granted 800,000   17.31   
Lapsed or Cancelled (5,000)   45.47   
Outstanding at December 31, 2015 ($17.31 – $21.25) 805,000 $ 17.33 $ 4,843
Options exercisable at December 31, 2015 -      
Available for grant at December 31, 2015 3,416,581      


97


The weighted average fair value of options granted during the year ended December 31, 2015 and 2014 was $3.06 and $1.71 per option, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes model for Time Vesting Options granted during the year ended December 31, 2015 and for options granted during the year ended December 31, 2014 and the Monte Carlo method for Price Vesting Options granted during the year ended December 31, 2015.  The following weighted average assumptions are included in the Company’s fair value calculations of stock options granted during the year ended December 31, 2015 and 2014:

       
     2015 2014 
 Time Vesting Price Vesting Stock 
 Options Options Options 
Expected life (in years)6.0 5.8 6.0 
Risk-free interest rate2.04%1.96%1.50%
Volatility29.0%29.0%20.26%
Dividend yield3.5%3.5%5.65%

 

 

 

 

Weighted

 

Aggregate

 

 

 

 

 

Average

 

Intrinsic

 

 

 

Shares

 

Exercise

 

Value

 

 

 

Under Options

 

Price

 

$(000’s)

 

Outstanding at January 1, 2016

 

805,000

 

$

17.33

 

$

4,843

 

Lapsed or Cancelled

 

(5,000

)

21.25

 

 

Outstanding at December 31, 2016 ($17.31)

 

800,000

 

$

17.31

 

9,368

 

Granted, Lapsed or Cancelled

 

 

 

 

 

Outstanding at December 31, 2017 ($17.31)

 

800,000

 

$

17.31

 

3,400

 

Granted, Lapsed or Cancelled

 

 

 

 

 

Outstanding at December 31, 2018 ($17.31)

 

800,000

 

$

17.31

 

$

1,824

 

Options exercisable at December 31, 2018

 

800,000

 

 

 

 

 

Available for grant at December 31, 2018

 

1,580,869

 

 

 

 

 

There were no stock options exercised under allany stock option plans for the years ended December 31, 2015, 20142018, 2017 and 2013.2016.  The Company has a policy of issuing new shares to satisfy stock option exercises.


As of December 31, 2018 and 2017, the stock options outstanding had a weighted average remaining contractual life of approximately 6.4 years and 7.4 years, respectively.

The Company recognized stock options expense of $432,000, $4,000$193,000, $464,000 and zero$1,407,000 for the years ended December 31, 2015, 20142018, 2017 and 2013,2016, respectively.


RESTRICTED STOCK AWARDS

The Company has issued stock awards (“Restricted Stock Awards”) to officers, certain other employees and non-employee members of the Board of Directors of the Company,General Partner, which allow the holders to each receive a certain amount of shares of the Company’sGeneral Partner’s common stock generally over a one to seven-year vesting period, of which 98,66967,289 unvested shares were legally outstanding at December 31, 2015.  Of2018.  Vesting of the Restricted Stock Awards issued to executive officers and certain other employees 210,000 were contingent upon the Company meeting certain performance goals to be set by the Committee each year (“Performance Shares”), with the remainingis based on time and service.


On September 12, 2012, the Company granted Restricted Stock Awards totaling 319,667 shares for those executive officers in place on such date.  The Restricted Stock Awards were to vest commencing January 1, 2014 and with the number of Restricted Stock Awards scheduled to be vested and earned on each vesting date on an annual basis over a five to seven year vesting schedule, with each annual vesting of each tranche of Restricted Stock Awards being subject to the attainment of annual performance targets to be set by the Committee for each year.  In connection with the departure of two executive officers effective March 31, 2014, the Company agreed to grant and accelerate vesting of 109,667 shares of Restricted Stock Awards on April 1, 2014.  In connection with the departure of the Company’s former president and chief executive officer effective June 30, 2015, the Company agreed to vest 84,000 Performance Shares and to grant and accelerate the vesting of 126,000 Performance Shares on the Separation Date.

On June 5, 2015, in connection with the Executive Employment Agreements, the Company granted a total of 37,550.54 Restricted Stock Awards, which were valued in accordance with ASC 718 Stock Compensation, at their fair value.  These awards are scheduled to vestvested equally over a three-year period on each annual anniversary date of the grant date.


All currently outstanding and unvested Restricted Stock Awards provided to the officers, certain other employees, and members of the Board of Directors of the CompanyGeneral Partner were issued under the 2013 Plan.



98


Information regarding the Restricted Stock Awards grant activity is summarized below:

     
    Weighted-Average
    Grant – Date
 Shares  Fair Value
Outstanding at January 1, 2013 134,328 $ 31.65
Granted (a) (b) 168,841   23.99
Vested (149,463)   29.63
Forfeited (146)   26.36
Outstanding at December 31, 2013 153,560 $ 25.20
Granted (c) (d) (e) 376,719   20.04
Vested (183,214)   22.37
Forfeited (119)   26.36
Outstanding at December 31, 2014 346,946 $ 21.09
Granted (f) 41,337   17.51
Vested (250,132)   21.44
Forfeited (1,931)   20.31
Outstanding at December 31, 2015 136,220 $ 19.36

(a)Included in the 168,841 Restricted Stock Awards granted in 2013 were 106,933 awards granted to the Company’s then four executive officers, Mitchell E. Hersh, Barry Lefkowitz, Roger W. Thomas and Anthony Krug.
(b)Includes 63,933 Performance Shares which were legally granted in 2013 for which the 2013 performance goals were not met, which may be earned if subsequent years’ performance goals are met.
(c)Included in the 376,719 Restricted Stock Awards granted in 2014 were 8,211 awards granted to the Company’s two executive officers, Anthony Krug and Gary Wagner.
(d)Includes 42,000 Performance Shares which were legally granted in 2013 for which the 2014 performance goals were set by the Committee on March 31, 2014.  Also includes 87,734 shares which were additionally considered granted for accounting purposes to two executive officers in connection with their departure effective March 31, 2014, which vested on April 1, 2014.
(e)Includes 126,000 Performance Shares which were legally granted in 2013 for which future performance goals had not yet been set by the Committee.  These awards were not considered granted for accounting purposes until these goals are set.  These were considered granted in 2014 for accounting purposes in connection with the announcement of the departure of Mitchell E. Hersh in the fourth quarter 2014.
(f)Included in the 41,337 Restricted Stock Awards granted in 2015 were 37,551 awards granted to the Company’s two executive officers, Mitchell E. Rudin and Michael J. DeMarco.

 

 

 

 

Weighted-Average

 

 

 

 

 

Grant – Date

 

 

 

Shares

 

Fair Value

 

Outstanding at January 1, 2016

 

136,220

 

$

19.36

 

Granted

 

74,622

 

23.79

 

Vested

 

(61,654

)

18.94

 

Forfeited

 

(3,910

)

21.58

 

Outstanding at December 31, 2016

 

145,278

 

$

21.76

 

Granted

 

59,985

 

27.00

 

Vested

 

(95,009

)

20.73

 

Forfeited

 

(1,936

)

25.83

 

Outstanding at December 31, 2017

 

108,318

 

$

25.49

 

Granted

 

40,185

 

20.16

 

Vested

 

(72,502

)

25.33

 

Forfeited

 

(8,712

)

25.83

 

Outstanding at December 31, 2018

 

67,289

 

$

22.43

 

As of December 31, 2015,2018, the Company had $2.0$0.5 million of total unrecognized compensation cost related to unvested Restricted Stock Awards granted under the Company’s stock compensation plans.  That cost is expected to be recognized over a weighted average period of 1.80.5 years.


PERFORMANCE SHARE UNITS/TSR-BASED AWARDS

On September 12, 2012, the Board of Directors of the Company approved the recommendations and ratified the determinations of the Committee with respect to new multi-year TSR based awards (the “TSR-Based Awards”) totaling 5,160 performance shares (the “TSR Performance Shares”) for those executive officers in place on such date, each TSR Performance Share evidencing the right to receive $1,000 in the Company’s common stock upon vesting.  In accordance with the amended and restated TSR-Based Awards agreements entered into between the Company and those executive officers in June 2013, the TSR Performance Shares were to vest commencing December 31, 2014, with the number of TSR Performance Shares scheduled to be granted annually over the next four years.  The Company granted 1,032 TSR Performance Shares in the year ended December 31, 2013, which were valued in accordance with ASC 718, Compensation - Stock Compensation, at their fair value, utilizing a Monte-Carlo simulation to estimate the probability of the vesting conditions being satisfied.  In connection with the departure of two executive officers effective March 31, 2014, the Company agreed to vest 357 TSR Performance Shares and to grant and accelerate the vesting of 528 TSR Performance Shares, for which the Company issued 45,062 shares of common stock on April 2, 2014.  In connection with the departure of the Company’s former president and chief executive officer effective June 30, 2015, the Company agreed to vest 675 TSR Performance Shares on the Separation Date, for which it issued 41,811 shares of common stock.

UNITS

On June 5, 2015, in connection with the Executive Employment Agreements, the Company granted a total of 112,651.64 performance share units (“PSUs”) which willwas to vest from 0 to 150 percent of the number of PSUs granted based on the Company’s total shareholder return relative to a peer group of equity office REITs over a three-year performance period starting from the grant date, each PSU evidencing the right to receive a share of the Company’sGeneral Partner’s common stock upon vesting.  The PSUs arewere also entitled to the payment of dividend equivalents in respect of vested PSUs in the form of additional PSUs.  The PSUs were valued in accordance with ASC 718, Compensation - Stock Compensation, at their fair value on the grant date, utilizing a Monte-Carlo simulation to estimate the probability of the vesting conditions being satisfied.

The PSUs vested at 100 percent on June 5, 2018 based on the calculation of the achievement of the Company’s total shareholder return, for which shares of the General Partner’s common stock were issued under the 2013 Plan.

As of December 31, 2018, the Company had no unrecognized compensation cost as there are no unvested PSUs outstanding under the Company’s stock compensation plans.

LONG-TERM INCENTIVE PLAN AWARDS

On March 8, 2016, the Company granted Long-Term Incentive Plan (“LTIP”) awards to senior management of the Company, including the General Partner’s executive officers (the “2016 LTIP Awards”).  All of the 2016 LTIP Awards were in the form of units in the Operating Partnership (“LTIP Units”) and constitute awards under the 2013 Plan. For Messrs. Rudin, DeMarco and Tycher, approximately 25 percent of the target 2016 LTIP Award was in the form of a time-based award that vests after three years on March 8, 2019 (the “2016 TBV LTIP Units”), and the remaining approximately 75 percent of the target 2016 LTIP Award was in the form of a performance-based award under a new Outperformance Plan (the “2016 OPP”) adopted by the General Partner’s Board of Directors consisting of a multi-year, performance-based equity compensation plan and related forms of award agreement (the “2016 PBV LTIP Units”).  For all other executive officers, approximately 40 percent of the target 2016 LTIP Award was in the form of 2016 TBV LTIP Units and the remaining approximately 60 percent of the target 2016 LTIP Award was in the form of 2016 PBV LTIP Units.

The 2016 OPP was designed to align the interests of senior management to relative and absolute performance of the Company over a three-year performance period from March 8, 2016 through March 7, 2019.  Participants in the 2016 OPP will only earn the full awards if, over the three-year performance period, the Company achieves a 50 percent absolute total stockholder return (“TSR”) and if the Company is in the 75th percentile of performance versus the NAREIT Office Index.

On April 4, 2017, the Company granted LTIP awards to senior management of the Company, including the General Partner’s executive officers (the “2017 LTIP Awards”). All of the 2017 LTIP Awards were in the form of LTIP Units and constitute awards under the 2013 Plan.  For Messrs. DeMarco, Tycher and Rudin, approximately twenty-five percent (25%) of the 2017 LTIP Award was in the form of a time-based award that vests after three years on April 4, 2020 (the “2017 TBV LTIP Units”), and the remaining approximately seventy-five percent (75%) of the 2017 LTIP Award was in the form of a performance-based award under the Company’s Outperformance Plan

(the “2017 OPP”) adopted by the General Partner’s Board of Directors, consisting of a multi-year, performance-based equity compensation plan and related forms of award agreement (the “2017 PBV LTIP Units”).  For all other executive officers, approximately forty percent (40%) of the 2017 LTIP Award was in the form of 2017 TBV LTIP Units and the remaining approximately sixty percent (60%) of the 2017 LTIP Award was in the form of 2017 PBV LTIP Units.

The 2017 OPP was designed to align the interests of senior management to relative and absolute performance of the Company over a three-year performance period from April 4, 2017 through April 3, 2020. Participants in the 2017 OPP will only earn the full awards if, over the three-year performance period, the Company achieves a thirty-six percent (36%) absolute TSR and if the Company is in the 75th percentile of performance as compared to the NAREIT office index.

On April 20, 2018, the Company granted LTIP awards to senior management of the Company, including the General Partner’s executive officers (the “2018 LTIP Awards”).  All of the 2018 LTIP Awards were in the form of LTIP Units and constitute awards under the 2013 Plan.  For Messrs.  DeMarco and Tycher, approximately twenty-five percent (25%) of the grant date fair value of the 2018 LTIP Award was in the form of a time-based award that vests after three years on April 20, 2021 (the “2018 TBV LTIP Units”), and the remaining approximately seventy-five percent (75%) of the grant date fair value of the 2018 LTIP Award was in the form of a performance-based award under the Company’s Outperformance Plan (the “2018 OPP”) adopted by the General Partner’s Board of Directors, consisting of a multi-year, performance-based equity compensation plan and related forms of award agreement (the “2018 PBV LTIP Units”).  For all other executive officers, approximately fifty percent (50%) of the grant date fair value of the 2018 LTIP Award was in the form of 2018 TBV LTIP Units and the remaining approximately fifty percent (50%) of the grant date fair value of the 2018 LTIP Award was in the form of 2018 PBV LTIP Units.

The 2018 OPP was designed to align the interests of senior management to relative and absolute performance of the Company over a three-year performance period from April 20, 2018 through April 19, 2021.  Participants in the 2018 OPP will only earn the full awards if, over the three-year performance period, the Company achieves a thirty-six percent (36%) absolute TSR and if the Company’s TSR is in the 75th percentile of performance as compared to the office REITs in the NAREIT index.

LTIP Units will remain subject to forfeiture depending on the extent that the 2016 LTIP Awards, 2017 LTIP Awards and 2018 LTIP Awards vest. The number of LTIP Units to be issued initially to recipients of the 2016 PBV LTIP Awards, 2017 PBV LTIP Awards and 2018 PBV LTIP Awards is the maximum number of LTIP Units that may be earned under the awards.  The number of LTIP Units that actually vest for each award recipient will be determined at the end of the performance measurement period.  TSR for the Company and for the Index over the three-year measurement period and other circumstances will determine how many LTIP Units vest for each recipient; if they are fewer than the number issued initially, the balance will be forfeited as of the performance measurement date.

Prior to vesting, recipients of LTIP Units will be entitled to receive per unit distributions equal to one-tenth (10 percent) of the regular quarterly distributions payable on a common unit of limited partnership interest in the Operating Partnership (a “common unit”), but will not be entitled to receive any special distributions. Distributions with respect to the other nine-tenths (90 percent) of regular quarterly distributions payable on a common unit will accrue but shall only become payable upon vesting of the LTIP Unit.  After vesting of the 2016 TBV LTIP Units, 2017 TBV LTIP Units and 2018 LTIP TBV Units or the end of the measurement period for the 2016 PBV LTIP Units, 2017 PBV LTIP Units and 2018 LTIP PBV Units, the number of LTIP Units, both vested and unvested, will be entitled to receive distributions in an amount per unit equal to distributions, both regular and special, payable on a common unit.

As a result of certain executive management and other personnel changes during the year ended December 31, 2018, the former employees forfeited and cancelled 189,273 2016 LTIP Awards, 105,443 2017 LTIP Awards and 38,015 2018 LTIP Awards, and the Company accelerated the vesting of 22,215 2016 LTIP Awards and 32,849 2017 LTIP Awards.  As of December 31, 2018, a total of 332,302 2016 PBV LTIP Units, 108,764 2016 TBV LTIP Units, 370,509 2017 PBV LTIP Units, 69,522 2017 TBV LTIP Units, 629,252 2018 PBV LTIP Units and 196,757 2018 TBV LTIP Units, net of LTIP Units forfeited and cancelled resulting from executive management and other personnel changes, were outstanding.  The LTIP Units were valued in accordance with ASC 718 — Stock Compensation, at their fair value.  The Company has reserved shares of common stock under the 2004 Plan and 2013 Plan for issuance upon vesting and conversion of the TSR Performance Shares and PSUsLTIP Units in accordance with thetheir terms and conditionsconditions.

As of December 31, 2018, the TSR-Based Awards and PSUs.

99


Company had $11.2 million of total unrecognized compensation cost related to unvested LTIP awards granted under the Company’s stock compensation plans.  That cost is expected to be recognized over a weighted average period of 2.4 years.

DEFERRED STOCK COMPENSATION PLAN FOR DIRECTORS

The Amended and Restated 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, 2015, 20142018, 2017 and 2013, 19,702, 20,2612016, 26,620, 19,728 and 22,39214,274 deferred stock units were earned, respectively.  As of December 31, 20152018 and 2014,2017, there were 178,039236,383 and 157,730210,738 deferred stock units outstanding, respectively.


EARNINGS PER SHARE

SHARE/UNIT

Basic EPS or EPU excludes dilution and is computed by dividing net income available to common shareholders or unitholders by the weighted average number of shares or units outstanding for the period.  Diluted EPS or EPU 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, 2015, 20142018, 2017 and 20132016 in accordance with ASC 260, Earnings Per Share: Share (dollars in thousands, except per share amounts):

Mack-Cali Realty Corporation:

        
                  Year Ended December 31,
Computation of Basic EPS 2015  2014 2013
Income (loss) from continuing operations$ (142,052) $ 31,391 $ (89,686)
Add: Noncontrolling interest in consolidated joint ventures  1,044   778   2,199 
Add:  Noncontrolling interest in Operating Partnership  15,256   (3,602)  10,459 
Income (loss) from continuing operations available to common shareholders  (125,752)   28,567   (77,028)
Income from discontinued operations available to common shareholders  -   -  62,119 
Net income (loss) available to common shareholders$ (125,752) $ 28,567 $ (14,909)
        
Weighted average common shares  89,291   88,727   87,762 
        
Basic EPS:
       
Income (loss) from continuing operations available to common shareholders$ (1.41) $ 0.32 $ (0.88)
Income from discontinued operations available to common shareholders  -   -  0.71 
Net income (loss) available to common shareholders$ (1.41) $ 0.32 $ (0.17)




        
                     Year Ended December 31,
Computation of Diluted EPS 2015  2014 2013
Income (loss) from continuing operations available to common shareholders$ (125,752) $ 28,567 $ (77,028)
Add (deduct): Noncontrolling interest in Operating Partnership  (15,256)   3,602   (10,459)
Income (loss) from continuing operations for diluted earnings per share  (141,008)   32,169   (87,487)
Income from discontinued operations for diluted earnings per share  -   -  70,628 
Net income (loss) for diluted earnings per share$ (141,008) $ 32,169 $ (16,859)
        
Weighted average common shares  100,222   100,041   99,785 
        
Diluted EPS:
       
Income (loss) from continuing operations available to common shareholders$ (1.41) $ 0.32 $ (0.88)
Income from discontinued operations available to common shareholders  -   -  0.71 
Net income (loss) available to common shareholders$ (1.41) $ 0.32 $ (0.17)


100


 

 

Year Ended December 31,

 

Computation of Basic EPS

 

2018

 

2017

 

2016

 

Net income

 

$

106,401

 

$

33,718

 

$

130,294

 

Add: Noncontrolling interest in consolidated joint ventures

 

1,216

 

1,018

 

651

 

Add (deduct): Noncontrolling interest in Operating Partnership

 

(9,527

)

(2,711

)

(13,721

)

Deduct: Redeemable noncontrolling interest

 

(13,979

)

(8,840

)

 

Deduct: Redemption value adjustment of redeemable noncontrolling interests attributable to common shareholders

 

(11,425

)

(17,951

)

 

Net income available to common shareholders for basic earnings per share

 

$

72,686

 

$

5,234

 

$

117,224

 

 

 

 

 

 

 

 

 

Weighted average common shares

 

90,388

 

90,005

 

89,746

 

 

 

 

 

 

 

 

 

Basic EPS:

 

 

 

 

 

 

 

Net income available to common shareholders

 

$

0.80

 

$

0.06

 

$

1.31

 

 

 

Year Ended December 31,

 

Computation of Diluted EPS

 

2018

 

2017

 

2016

 

Net income available to common shareholders for basic earnings per share

 

$

72,686

 

$

5,234

 

$

117,224

 

Add (deduct): Noncontrolling interest in Operating Partnership

 

9,527

 

2,711

 

13,721

 

Deduct: Redemption value adjustment of redeemable noncontrolling interests attributable to the Operating Partnership unitholders

 

(1,296

)

(2,074

)

 

Net income available for diluted earnings per share

 

$

80,917

 

$

5,871

 

$

130,945

 

 

 

 

 

 

 

 

 

Weighted average common shares

 

100,724

 

100,703

 

100,498

 

 

 

 

 

 

 

 

 

Diluted EPS:

 

 

 

 

 

 

 

Net income available to common shareholders

 

$

0.80

 

$

0.06

 

$

1.30

 

The following schedule reconciles the weighted average shares used in the basic EPS calculation to the shares used in the diluted EPS calculation:

calculation (in thousands)
    
                       Year Ended December 31,
 201520142013
Basic EPS shares 89,291 88,727 87,762
Add:   Operating Partnership – common units 10,931 11,272 12,023
          Restricted Stock Awards - 42 -
Diluted EPS Shares 100,222 100,041 99,785

:

 

 

Year Ended December 31,

 

 

 

2018

 

2017

 

2016

 

Basic EPS shares

 

90,388

 

90,005

 

89,746

 

Add: Operating Partnership — common and vested LTIP units

 

10,246

 

10,405

 

10,499

 

Restricted Stock Awards

 

 

40

 

43

 

Stock Options

 

90

 

253

 

210

 

Diluted EPS Shares

 

100,724

 

100,703

 

100,498

 

Contingently issuable shares under the PSU awards and Price Vesting OptionsAwards were excluded from the denominator in 20152017 and 2016 because the criteria had not been met for the period.periods.  Contingently issuable shares under the TSR Performance SharesRestricted Stock Awards were excluded from the denominator in 2013 because the criteria had not been met for2018 as

such securities were anti-dilutive during the period.  NotAlso not included in the computations of diluted EPS were 405,000, 10,000 and 15,000 stock optionsthe unvested LTIP Units as such securities were anti-dilutive during the years ended December 31, 2015, 2014 and 2013, respectively.all periods presented.  Unvested restricted stock outstanding as of December 31, 2015, 20142018, 2017 and 20132016 were 98,669, 136,94667,289, 95,801 and 409,294120,245 shares, respectively.


Dividends declared per common share for the years ended December 31, 2015, 20142018, 2017 and 20132016 was $0.60,$0.80, $0.75 and $1.35$0.60 per share, respectively.


Mack-Cali Realty, L.P.:

 

 

Year Ended December 31,

 

Computation of Basic EPU

 

2018

 

2017

 

2016

 

Net income

 

$

106,401

 

$

33,718

 

$

130,294

 

Add: Noncontrolling interest in consolidated joint ventures

 

1,216

 

1,018

 

651

 

Deduct: Redeemable noncontrolling interest

 

(13,979

)

(8,840

)

 

Deduct: Redemption value adjustment of redeemable noncontrolling interests

 

(12,721

)

(20,025

)

 

Net income available to common unitholders for basic earnings per unit

 

$

80,917

 

$

5,871 

 

$

130,945

 

 

 

 

 

 

 

 

 

Weighted average common units

 

100,634

 

100,410

 

100,245

 

 

 

 

 

 

 

 

 

Basic EPU:

 

 

 

 

 

 

 

Net income available to common unitholders for basic earnings per unit

 

$

0.80

 

$

0.06

 

$

1.31

 

 

 

Year Ended December 31,

 

Computation of Diluted EPU

 

2018

 

2017

 

2016

 

Net income available to common unitholders for diluted earnings per unit

 

$

80,917

 

$

5,871

 

$

130,945

 

 

 

 

 

 

 

 

 

Weighted average common unit

 

100,724

 

100,703

 

100,498

 

 

 

 

 

 

 

 

 

Diluted EPU:

 

 

 

 

 

 

 

Net income available to common unitholders

 

$

0.80

 

$

0.06

 

$

1.30

 

The following schedule reconciles the weighted average units used in the basic EPU calculation to the units used in the diluted EPU calculation (in thousands):

 

 

Year Ended December 31,

 

 

 

2018

 

2017

 

2016

 

Basic EPU units

 

100,634

 

100,410

 

100,245

 

Add: Restricted Stock Awards

 

 

40

 

43

 

Stock Options

 

90

 

253

 

210

 

Diluted EPU Units

 

100,724

 

100,703

 

100,498

 

Contingently issuable shares under the PSU Awards were excluded from the denominator in 2017 and 2016 because the criteria had not been met for the periods. Contingently issuable shares under Restricted Stock Awards were excluded from the denominator in 2018 as such securities were anti-dilutive during the period.  Also not included in the computations of diluted EPU were the unvested LTIP Units as such securities were anti-dilutive during all periods presented.  Unvested restricted stock outstanding as of December 31, 2018, 2017 and 2016 were 67,289, 95,801 and 120,245 shares, respectively.

Distributions declared per common unit for the years ended December 31, 2018, 2017 and 2016 was $0.80, $0.75 and $0.60 per unit, respectively.

16.   NONCONTROLLING INTERESTS IN SUBSIDIARIES


Noncontrolling interests in subsidiaries in the accompanying consolidated financial statements relate to (i) common units and LTIP units in the Operating Partnership, held by parties other than the Company,General Partner (“Limited Partners”), and (ii) interests in consolidated joint ventures for the portion of such ventures not owned by the Company.


Pursuant to ASC 810, Consolidation, on the accounting and reporting for noncontrolling interests and changes in ownership interests of a subsidiary, changes in a parent’s ownership interest (and transactions with noncontrolling interest unitholders in the subsidiary) while the parent retains its controlling interest in its subsidiary should be accounted for as equity transactions.  The carrying value of the

noncontrolling interest shall be adjusted to reflect the change in its ownership interest in the subsidiary, with the offset to equity attributable to the parent.  Accordingly, as a result of equity transactions which caused changes in ownership percentages between Mack-Cali Realty Corporation stockholders’ equity and noncontrolling interests in the Operating Partnership that occurred during the year ended December 31, 2018, the Company has decreased noncontrolling interests in the Operating Partnership and increased additional paid-in capital in Mack-Cali Realty Corporation stockholders’ equity by approximately $2.2 million as of December 31, 2018.

NONCONTROLLING INTEREST IN OPERATING PARTNERSHIP


(applicable only to General Partner)

Common Units

Certain individuals and entities own common units in the Operating Partnership.  A common unit and a share of Common Stock of the CompanyGeneral Partner 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 unitholders have the right to redeem their common units, subject to certain restrictions.  The redemption is required to be satisfied in shares of Common Stock, cash, or a combination thereof, calculated as follows:  one share of the Company’sGeneral Partner’s Common Stock, or cash equal to the fair market value of a share of the Company’sGeneral Partner’s Common Stock at the time of redemption, for each common unit.  The Company,General Partner, in its sole discretion, determines the form of redemption of common units (i.e., whether a common unitholder receives Common Stock, cash, or any combination thereof).  If the CompanyGeneral Partner elects to satisfy the redemption with shares of Common Stock as opposed to cash, it is obligated to issue shares of its Common Stock to the redeeming unitholder.  Regardless of the rights described above, the common unitholders may not put their units for cash to the CompanyGeneral Partner or the Operating Partnership under any circumstances.  When a unitholder redeems a common unit, noncontrolling interest in the Operating Partnership is reduced and Mack-Cali Realty Corporation Stockholders’ equity is increased.


LTIP Units

On March 8, 2016, the Company granted 2016 LTIP Awards to senior management of the Company, including the General Partner’s executive officers.  On April 4, 2017, the Company granted 2017 LTIP Awards to senior management of the Company, including the General Partner’s executive officers.  On April 20, 2018, the Company granted 2018 LTIP Awards to senior management of the Company, including the General Partner’s executive officers.  All of the 2016 LTIP Awards, 2017 LTIP Awards and 2018 LTIP Awards are in the form of units in the Operating Partnership.  See Note 15: Mack-Cali Realty Corporation Stockholders’ Equity and Mack-Cali Realty, L.P.’s Partners’ Capital — Long-Term Incentive Plan Awards.

LTIP Units are designed to qualify as “profits interests” in the Operating Partnership for federal income tax purposes.  As a general matter, the profits interests characteristics of the LTIP Units mean that initially they will not be economically equivalent in value to a common unit.  If and when events specified by applicable tax regulations occur, LTIP Units can over time increase in value up to the point where they are equivalent to common units on a one-for-one basis.  After LTIP Units are fully vested, and to the extent the special tax rules applicable to profits interests have allowed them to become equivalent in value to common units, LTIP Units may be converted on a one-for-one basis into common units. Common units in turn have a one-for-one relationship in value with shares of the General Partner’s common stock, and are redeemable on a one-for-one basis for cash or, at the election of the Company, shares of the General Partner’s common stock.

Unit Transactions

The following table sets forth the changes in noncontrolling interests in subsidiaries which relate to the common units and LTIP units in the Operating Partnership for the years ended December 31, 2015, 20142018, 2017 and 2013:


Common
Units
Balance at January 1, 2013 12,141,836
  Redemption of common units for shares of common stock (277,061)
Balance at December 31, 201311,864,775
Redemption of common units for shares of common stock (780,899)
Balance at December 31, 201411,083,876
Redemption of common units for shares of common stock (567,032)
Balance at December 31, 2015 10,516,844

Pursuant to ASC 810, Consolidation, on the accounting and reporting for noncontrolling interests and changes in ownership interests of a subsidiary, changes in a parent’s ownership interest (and transactions with noncontrolling interest unitholders in the subsidiary) while the parent retains its controlling interest in its subsidiary should be accounted for as equity transactions.  The carrying value of the noncontrolling interest shall be adjusted to reflect the change in its ownership interest in the subsidiary, with the offset to equity attributable to the parent.  Accordingly, as a result of equity transactions which caused changes in ownership percentages between Mack-Cali Realty Corporation stockholders’ equity and noncontrolling interests in the Operating Partnership that occurred during the year ended December 31, 2015, the Company has increased noncontrolling interests in the Operating Partnership and decreased additional paid-in capital in Mack-Cali Realty Corporation stockholders’ equity by approximately $0.4 million as of December 31, 2015.
101


2016:

 

 

Common

 

LTIP

 

 

 

Units

 

Units

 

Balance at January 1, 2016

 

10,516,844

 

 

Redemption of common units for shares of common stock

 

(28,739

)

 

Issuance of units

 

 

657,373

 

Balance at December 31, 2016

 

10,488,105

 

657,373

 

Redemption of common units for shares of common stock

 

(148,662

)

 

Issuance of units

 

99,412

 

578,323

 

Cancellation of units

 

 

(4,819

)

Balance at December 31, 2017

 

10,438,855

 

1,230,877

 

Redemption of common units for shares of common stock

 

(264,570

)

 

Issuance of units

 

 

864,024

 

Cancellation of units

 

 

(332,731

)

 

 

 

 

 

 

Balance at December 31, 2018

 

10,174,285

 

1,762,170

 

Noncontrolling Interest Ownership

in Operating Partnership

As of December 31, 20152018 and 2014,2017, the noncontrolling interest common unitholders owned 10.510.2 percent and 11.110.4 percent of the Operating Partnership, respectively.


NONCONTROLLING INTEREST IN CONSOLIDATED JOINT VENTURES

(applicable to General Partner and Operating Partnership)

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


PARTICIPATION RIGHTS

The Company’s interests in certain real estate projects (three(two properties and a future development) each provide for the initial distributions of net cash flow solely to the Company, and thereafter, other parties have 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 IRR of 10 percent per annum.


17.   SEGMENT REPORTING


The Company operates in threetwo business segments: (i) commercial and other real estate and (ii) multi-family real estate and (iii) multi-family services.  The Company provides leasing, property management, acquisition, development, construction and tenant-related services for its commercial and other real estate and multi-family real estate portfolio.  The Company’s multi-family services business also provides similar services for third parties.  The Company no longer considers construction services as a reportable segment as it phased out this line of business in 2014.  The Company had no revenues from foreign countries recorded for the years ended December 31, 2015, 20142018, 2017 and 2013.2016.  The Company had no long lived assets in foreign locations as of December 31, 20152018 and 2014.2017.  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 and operations in each of its real estate segments (commercial and other real estate, and multi-family)multi-family real estate and from its multi-family services segment.



102


services).

Selected results of operations for the years ended December 31, 2015, 20142018, 2017 and 2013,2016, and selected asset information as of December 31, 20152018 and 20142017 regarding the Company’s operating segments are as follows.  Amounts for prior periods have been restated to conform to the current period segment reporting presentation: presentation (dollars in thousands):


                
  Real Estate          
  Commercial     Multi-family   Corporate  Total
  & Other  Multi-family  Services    & Other (d)  Company
Total revenues:               
2015$ 538,323 $ 27,787 $ 33,112(e) $ (4,339) $ 594,883
2014  585,491    24,971    30,533 (f)   (4,196)   636,799 
2013  621,352    12,792    25,710 (g)   7,177    667,031 
                
Total operating and               
   interest expenses (a):               
2015$ 264,967 $ 17,642 $ 37,090(h) $ 105,452 $ 425,151
2014  295,416    12,235    38,377 (i)   138,733    484,761 
2013  285,755    6,482    32,415 (j)   135,963    460,615 
                
Equity in earnings (loss) of               
   unconsolidated joint ventures:               
2015$ 5,104 $ (9,879) $ 1,603  $ - $ (3,172)
2014  4,236    (8,790)   2,131     -   (2,423)
2013  6,280    (10,615)   2,008     -   (2,327)
                
Net operating income (loss) (b):               
2015$ 278,460 $ 266 $ (2,375)  $ (109,791) $ 166,560
2014  294,311    3,946    (5,713)    (142,929)   149,615 
2013  341,877    (4,305)   (4,697)    (128,786)   204,089 
                
Total assets:               
2015$ 3,167,408 $ 838,874 $ 9,831  $ 47,377 $ 4,063,490
2014  3,636,126    492,362    11,158     52,601    4,192,247 
                
Total long-lived assets (c):               
2015$ 2,886,583 $ 577,705 $ 3,670  $ (1,531) $ 3,466,427
2014  3,344,840    318,524    3,858     3,482    3,670,704 
                
Total investments in               
   unconsolidated joint ventures:               
2015$ 76,140 $ 225,850 $ 1,467  $ - $ 303,457
2014  81,649    164,912    907     -   247,468 
                

(a)Total operating and interest expenses represent the sum of: real estate taxes; utilities; operating services; direct construction costs; real estate services expenses; general and administrative and interest expense (net of interest income).  All interest expense, net of interest and other investment 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 goodwill.  The Company recorded an impairment charge of $197.9 million on assets included in the commercial and other real estate business segment for the year ended December 31, 2015.  See Note 3: Recent Transactions – Impairments on Properties Held and Used
(d)Corporate & Other represents all corporate-level items (including interest and other investment income, interest expense, non-property general and administrative expense, construction services revenue and direct construction costs) as well as intercompany eliminations necessary to reconcile to consolidated Company totals.
(e)Includes $6.6 million of fees and salary reimbursements earned for this period from the multi-family real estate segment, which are eliminated in consolidation.
(f)Includes $2.3 million of fees and salary reimbursements earned for this period from the multi-family real estate segment, which are eliminated in consolidation.
(g)Includes $2.2 million of fees and salary reimbursements earned for this period from the multi-family real estate segment, which are eliminated in consolidation.
(h)Includes $3.9 million of management fees and salary reimbursement expenses for this period for the multi-family real estate segment, which are eliminated in consolidation.
(i)Includes $2.9 million of management fees and salary reimbursement expenses for this period for the multi-family real estate segment, which are eliminated in consolidation.
(j)Includes $1.3 million of management fees and salary reimbursement expenses for this period for the multi-family real estate segment, which are eliminated in consolidation.
103

 

 

Commercial

 

Multi-family

 

Corporate

 

Total

 

 

 

& Other Real Estate

 

Real Estate & Services (d)

 

 & Other (e)

 

Company

 

Total revenues:

 

 

 

 

 

 

 

 

 

2018

 

$

416,369

 

$

113,805

 

$

432

 

$

530,606

 

2017

 

522,223

 

90,654

 

3,323

 

616,200

 

2016

 

541,271

 

69,873

 

2,254

 

613,398

 

 

 

 

 

 

 

 

 

 

 

Total operating and interest expenses (a):

 

 

 

 

 

 

 

 

 

2018

 

$

183,439

 

$

70,280

 

$

104,788

 

$

358,507

 

2017

 

238,055

 

63,589

 

94,662

 

396,306

 

2016

 

263,663

 

60,646

 

91,042

 

415,351

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings (loss) of unconsolidated joint ventures:

 

 

 

 

 

 

 

 

 

2018

 

$

2,319

 

$

(2,446

)

$

 

$

(127

)

2017

 

1,644

 

(7,725

)

 

(6,081

)

2016

 

23,796

 

(5,008

)

 

18,788

 

 

 

 

 

 

 

 

 

 

Net operating income (loss) (b):

 

 

 

 

 

 

 

 

 

2018

 

$

235,249

 

$

41,079

 

$

(104,356

)

$

171,972

 

2017

 

285,812

 

19,340

 

(91,339

)

213,813

 

2016

 

301,404

 

4,219

 

(88,788

)

216,835

 

 

 

 

 

 

 

 

 

 

 

Total assets:

 

 

 

 

 

 

 

 

 

2018

 

$

2,687,178

 

$

2,260,497

 

$

112,969

 

$

5,060,644

 

2017

 

2,915,646

 

1,937,708

 

104,531

 

4,957,885

 

 

 

 

 

 

 

 

 

 

 

Total long-lived assets (c):

 

 

 

 

 

 

 

 

 

2018

 

$

2,413,696

 

$

1,973,826

 

$

33,157

 

$

4,420,679

 

2017

 

2,613,815

 

1,645,410

 

31,901

 

4,291,126

 

 

 

 

 

 

 

 

 

 

 

Total investments in unconsolidated joint ventures:

 

 

 

 

 

 

 

 

 

2018

 

$

13,699

 

$

218,771

 

$

280

 

$

232,750

 

2017

 

15,143

 

237,321

 

162

 

252,626

 


(a)         Total operating and interest expenses represent the sum of: real estate taxes; utilities; operating services; real estate services expenses; general and administrative, acquisition-related costs and interest expense (net of interest income).  All interest expense, net of interest and other investment 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 and classified 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 goodwill.

(d)         Segment assets and operations were owned through a consolidated variable interest entity commencing in February 2018.

(e)          Corporate & Other represents all corporate-level items (including interest and other investment income, interest expense, non-property general and administrative expense) as well as intercompany eliminations necessary to reconcile to consolidated Company totals.

Mack-Cali Realty Corporation

The following schedule reconciles net operating income to net income available to common shareholders: shareholders (dollars in thousands):

 

 

Year Ended December 31,

 

 

 

2018

 

2017

 

2016

 

Net operating income

 

$

171,972

 

$

213,813

 

$

216,835

 

Add (deduct):

 

 

 

 

 

 

 

Depreciation and amortization

 

(174,847

)

(205,169

)

(186,684

)

Land Impairments

 

(24,566

)

 

 

Gain on change of control of interests

 

14,217

 

 

15,347

 

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

 

99,436

 

2,364

 

109,666

 

Gain on disposition of developable land

 

30,939

 

 

 

Gain on sale of investment in unconsolidated joint venture

 

 

23,131

 

5,670

 

Loss from extinguishment of debt, net

 

(10,750

)

(421

)

(30,540

)

Net income

 

106,401

 

33,718

 

130,294

 

Noncontrolling interest in consolidated joint ventures

 

1,216

 

1,018

 

651

 

Noncontrolling interest in Operating Partnership

 

(9,527

)

(2,711

)

(13,721

)

Redeemable noncontrolling interest

 

(13,979

)

(8,840

)

 

Net income available to common shareholders

 

$

84,111

 

$

23,185

 

$

117,224

 

Mack-Cali Realty, L.P.



         
         
                Year Ended December 31,
  2015  2014  2013
Net operating income$ 166,560 $ 149,615 $ 204,089
Add (deduct):        
Depreciation and amortization  (170,402)   (172,490)   (182,766)
Realized gains on disposition of        
   rental property, net  53,261   54,848   -
Gain on sale of investment in unconsolidated joint venture  6,448   -   -
Loss from early extinguishment of debt  -   (582)   (156)
Impairments  (197,919)   -   (110,853)
Income (loss) from continuing operations  (142,052)   31,391   (89,686)
Discontinued operations        
Income from discontinued operations  -   -   11,811
Loss from early extinguishment of debt  -   -   (703)
Realized gains (losses) and unrealized losses on        
   disposition of rental property and impairments, net  -   -   59,520
Total discontinued operations, net  -   -   70,628
Net income (loss)  (142,052)   31,391   (19,058)
Noncontrolling interest in consolidated joint ventures  1,044   778   2,199
Noncontrolling interest in Operating Partnership  15,256   (3,602)   10,459
Noncontrolling interest in discontinued operations  -   -   (8,509)
Net income (loss) available to common shareholders$ (125,752) $ 28,567 $ (14,909)

The following schedule reconciles net operating income to net income available to common unitholders (dollars in thousands):

 

 

Year Ended December 31,

 

 

 

2018

 

2017

 

2016

 

Net operating income

 

$

171,972

 

$

213,813

 

$

216,835

 

Add (deduct):

 

 

 

 

 

 

 

Depreciation and amortization

 

(174,847

)

(205,169

)

(186,684

)

Land Impairments

 

(24,566

)

 

 

Gain on change of control of interests

 

14,217

 

 

15,347

 

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

 

99,436

 

2,364

 

109,666

 

Gain on disposition of developable land

 

30,939

 

 

 

Gain on sale of investment in unconsolidated joint venture

 

 

23,131

 

5,670

 

Loss from extinguishment of debt, net

 

(10,750

)

(421

)

(30,540

)

Net income

 

106,401

 

33,718

 

130,294

 

Noncontrolling interest in consolidated joint ventures

 

1,216

 

1,018

 

651

 

Redeemable noncontrolling interest

 

(13,979

)

(8,840

)

 

 

Net income available to common unitholders

 

$

93,638

 

$

25,896

 

$

130,945

 

18.   RELATED PARTY TRANSACTIONS


William L. Mack, Chairman of the Board of Directors of the Company,General Partner, David S. Mack, a director of the Company,General Partner, and Earle I. Mack, a former director of the Company,General Partner, are the executive officers, directors and stockholders of a corporation that leases approximately 7,034 square feet at one of the Company’s office properties (the Company disposed of this property in January 2019), which is scheduled to expire in May 2018, subject to two, three-year renewal options.September 2019.  The Company has recognized $204,000, $231,000$193,000, $187,000 and $226,000$193,000 in revenue under this lease for the years ended December 31, 2015, 20142018, 2017 and 2013,2016, respectively, and had no accounts receivable from the corporation as of December 31, 20152018 and 2014.


2017.

The adult children of Marshall Tycher, Chairman of RRT, own minority equity interests in a vendor to the Company.  Additionally, Mr. Tycher’s son-in-law is an employee of the vendor.  The Company recognized $148,000 in expense for this vendor during the year ended December 31, 2018 and had no accounts payable to this vendor as of December 31, 2018.

Certain executive officers of the Company’s Roseland subsidiaryRRT and/or their family members (“RG”) directly or indirectly hold small noncontrolling interests in a certain consolidated joint venture.  Additionally, the Company earned $2,542,000, $2,401,000$1,114,000, $1,873,000, and $2,272,000$2,464,000 from entities in which RG has ownership interests for the years ended December 31, 2015, 20142018, 2017 and 2013,2016, respectively.



104


19.   CONDENSED QUARTERLY FINANCIAL INFORMATION (unaudited)

(unaudited)Mack-Cali Realty Corporation


The following summarizes the condensed quarterly financial information for the Company:Company (dollars in thousands):

Quarter Ended 2018

 

December 31

 

September 30

 

June 30

 

March 31

 

Total revenues

 

$

132,936

 

$

132,114

 

$

126,589

 

$

138,967

 

Net income

 

$

52,523

 

$

1,689

 

$

1,501

 

$

50,688

 

Net income (loss) available to common shareholders

 

$

43,804

 

$

(1,478

)

$

(1,251

)

$

43,036

 

 

 

 

 

`

 

 

 

 

 

Basic earnings per common share:

 

 

 

 

 

 

 

 

 

Net income (loss) available to common shareholders

 

$

0.45

 

$

(0.05

)

$

(0.05

)

$

0.45

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share:

 

 

 

 

 

 

 

 

 

Net income (loss) available to common shareholders

 

$

0.45

 

$

(0.05

)

$

(0.05

)

$

0.45

 

Quarter Ended 2017

 

December 31

 

September 30

 

June 30

 

March 31

 

Total revenues

 

$

143,529

 

$

160,018

 

$

162,766

 

$

149,887

 

Net income (loss)

 

$

5,411

 

$

44,703

 

$

(39,125

)

$

22,729

 

Net income (loss) available to common shareholders

 

$

2,582

 

$

38,054

 

$

(37,330

)

$

19,879

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share:

 

 

 

 

 

 

 

 

 

Net income (loss) available to common shareholders

 

$

(0.01

)

$

0.39

 

$

(0.44

)

$

0.11

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share:

 

 

 

 

 

 

 

 

 

Net income (loss) available to common shareholders

 

$

(0.01

)

$

0.39

 

$

(0.44

)

$

0.11

 

Mack-Cali Realty, L.P.

The following summarizes the condensed quarterly financial information for the Company (dollars in thousands):

Quarter Ended 2018

 

December 31

 

September 30

 

June 30

 

March 31

 

Total revenues

 

$

132,936

 

$

132,114

 

$

126,589

 

$

138,967

 

Net income

 

$

52,523

 

$

1,689

 

$

1,501

 

$

50,688

 

Net income (loss) available to common unitholders

 

$

48,757

 

$

(1,645

)

$

(1,393

)

$

47,919

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common unit:

 

 

 

 

 

 

 

 

 

Net income (loss) available to common unitholders

 

$

0.45

 

$

(0.05

)

$

(0.05

)

$

0.45

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common units:

 

 

 

 

 

 

 

 

 

Net income (loss) available to common unitholders

 

$

0.45

 

$

(0.05

)

$

(0.05

)

$

0.45

 

Quarter Ended 2017

 

December 31

 

September 30

 

June 30

 

March 31

 

Total revenues

 

$

143,529

 

$

160,018

 

$

162,766

 

$

149,887

 

Net income (loss)

 

$

5,411

 

$

44,703

 

$

(39,125

)

$

22,729

 

Net income (loss) available to common unitholders

 

$

2,881

 

$

42,467

 

$

(41,626

)

$

22,174

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common unit:

 

 

 

 

 

 

 

 

 

Net income (loss) available to common unitholders

 

$

(0.01

)

$

0.39

 

$

(0.44

)

$

0.11

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common unit:

 

 

 

 

 

 

 

 

 

Net income (loss) available to common unitholders

 

$

(0.01

)

$

0.39

 

$

(0.44

)

$

0.11

 

MACK-CALI REALTY CORPORATION, MACK-CALI REALTY, L.P. AND SUBSIDIARIES

REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION

December 31, 2018

(dollars in thousands)

SCHEDULE III



            
Quarter Ended 2015 December 31  September 30  June 30  March 31
Total revenues$146,443 $146,158 $148,567 $153,715
Operating and other expenses 60,846  56,850  60,653  68,255
Real estate service salaries 6,063  6,673  6,208  6,639
General and administrative 12,589  13,670  11,877  11,011
Acquisition-related costs 1,449   -  111   -
Depreciation and amortization 43,136  44,099  42,365  40,802
Impairments (1)  33,743    164,176    -   -
Total expenses 157,826  285,468  121,214  126,707
Operating Income (loss) (11,383)  (139,310)  27,353  27,008
Interest expense (24,374)  (24,689)  (26,773)  (27,215)
Interest and other investment income 231  5  291  267
Equity in earnings (loss) of unconsolidated           
joint ventures (449)  3,135  (2,329)  (3,529)
Realized gains (losses) on disposition of rental properties  -   18,718    34,399    144 
Gain on sale of investment in unconsolidated joint venture  -   -   6,448    -
Total other (expense) income (24,592)  (2,831)  12,036  (30,333)
Net income (loss) (35,975)  (142,141)  39,389  (3,325)
Noncontrolling interest in consolidated joint ventures 462  (281)  373  490
Noncontrolling interest in Operating Partnership 3,795  15,530  (4,383)  314
Net income (loss) available to common shareholders$(31,718) $(126,892) $35,379 $(2,521)
            
Basic earnings per common share:           
Net income (loss) available to common shareholders$(0.35) $(1.42) $0.40 $(0.03)
            
Diluted earnings per common share:           
Net income (loss) available to common shareholders$(0.35) $(1.42) $0.40 $(0.03)
            
Dividends declared per common share$0.15 $0.15 $0.15 $0.15

(1)  Amounts for the year ended December 31, 2015 relate to impairment charges as further described in Note 3: Recent Transactions – Impairments on Properties Held and Used.

105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amount at Which

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

Carried at Close of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial Costs

 

Capitalized

 

Period (a)

 

 

 

 

 

 

 

Property

 

Year

 

 

 

Related

 

 

 

Building and

 

Subsequent to

 

 

 

Building and

 

 

 

Accumulated

 

Property Location

 

Type

 

Built

 

Acquired

 

Encumbrances

 

Land

 

Improvements

 

Acquisition(e)

 

Land

 

Improvements

 

Total (d)

 

Depreciation (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW JERSEY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bergen County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fort Lee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One Bridge Plaza

 

Office

 

1981

 

1996

 

 

2,439

 

24,462

 

7,436

 

2,439

 

31,898

 

34,337

 

17,658

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Essex County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Millburn

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

150 J.F. Kennedy Parkway

 

Office

 

1980

 

1997

 

 

12,606

 

50,425

 

17,073

 

12,606

 

67,498

 

80,104

 

33,259

 

Roseland

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51 J.F. Kennedy Parkway

 

Office

 

1988

 

2017

 

69,459

 

5,873

 

100,359

 

575

 

5,873

 

100,934

 

106,807

 

6,806

 

101 J.F. Kennedy Parkway

 

Office

 

1981

 

2017

 

29,197

 

4,380

 

59,730

 

1,151

 

4,380

 

60,881

 

65,261

 

4,063

 

103 J.F. Kennedy Parkway

 

Office

 

1981

 

2017

 

24,875

 

3,158

 

50,813

 

469

 

3,158

 

51,282

 

54,440

 

3,434

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hudson County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hoboken

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

111 River Street

 

Office

 

2002

 

2016

 

 

204

 

198,609

 

14,932

 

 

213,745

 

213,745

 

14,364

 

Jersey City

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Harborside Plaza 1

 

Office

 

1983

 

1996

 

 

3,923

 

51,013

 

26,426

 

3,923

 

77,439

 

81,362

 

41,749

 

Harborside Plaza 2

 

Office

 

1990

 

1996

 

 

17,655

 

101,546

 

53,393

 

8,364

 

164,230

 

172,594

 

69,838

 

Harborside Plaza 3

 

Office

 

1990

 

1996

 

 

17,655

 

101,878

 

53,060

 

8,363

 

164,230

 

172,593

 

69,838

 

Harborside Plaza 4A

 

Office

 

2000

 

2000

 

 

1,244

 

56,144

 

8,688

 

1,244

 

64,832

 

66,076

 

31,301

 

Harborside Plaza 5

 

Office

 

2002

 

2002

 

 

6,218

 

170,682

 

60,698

 

5,705

 

231,893

 

237,598

 

101,850

 

101 Hudson Street

 

Office

 

1992

 

2005

 

248,460

 

45,530

 

271,376

 

33,508

 

45,530

 

304,884

 

350,414

 

103,639

 

Rosegarden Monaco

 

Multi-Family

 

2011

 

2017

 

168,370

 

58,761

 

240,871

 

434

 

58,761

 

241,305

 

300,066

 

10,720

 

Marbella I

 

Multi-Family

 

2003

 

2018

 

130,040

 

48,820

 

160,740

 

1,306

 

48,820

 

162,046

 

210,866

 

1,711

 

Weehawken

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Avenue at Port Imperial

 

Other

 

2016

 

2016

 

 

350

 

 

4,205

 

471

 

4,084

 

4,555

 

310

 

500 Avenue at Port Imperial

 

Other

 

2013

 

2013

 

36,568

 

13,099

 

56,669

 

(19,756

)

13,099

 

36,913

 

50,012

 

4,925

 

Port Imperial South 11

 

Multi-Family

 

2018

 

2018

 

99,792

 

 

 

 

22,047

 

108,392

 

130,439

 

577

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mercer County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Princeton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Overlook Center

 

Office

 

1988

 

1997

 

 

2,378

 

21,754

 

4,577

 

2,378

 

26,331

 

28,709

 

13,218

 

5 Vaughn Drive

 

Office

 

1987

 

1995

 

 

657

 

9,800

 

1,564

 

657

 

11,364

 

12,021

 

6,529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Middlesex County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Edison

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

333 Thornall Street

 

Office

 

1984

 

2015

 

 

5,542

 

40,762

 

3,686

 

5,542

 

44,448

 

49,990

 

4,933

 

343 Thornall Street

 

Office

 

1991

 

2006

 

 

6,027

 

39,101

 

15,160

 

6,027

 

54,261

 

60,288

 

16,308

 

Iselin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101 Wood Avenue South

 

Office

 

1990

 

2016

 

 

8,509

 

72,738

 

1,183

 

7,384

 

75,046

 

82,430

 

6,936

 

New Brunswick

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Richmond Court

 

Multi-Family

 

1997

 

2013

 

 

2,992

 

13,534

 

1,908

 

2,992

 

15,442

 

18,434

 

1,856

 

Riverwatch Commons

 

Multi-Family

 

1995

 

2013

 

 

4,169

 

18,974

 

2,187

 

4,169

 

21,161

 

25,330

 

2,534

 

Plainsboro

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

500 College Road East (c)

 

Office

 

1984

 

1998

 

 

 

614

 

20,626

 

5,776

 

614

 

26,402

 

27,016

 

14,225

 

Woodbridge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

581 Main Street

 

Office

 

1991

 

1997

 

 

3,237

 

12,949

 

35,315

 

8,115

 

43,386

 

51,501

 

16,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Monmouth County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Holmdel

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23 Main Street

 

Office

 

1977

 

2005

 

 

4,336

 

19,544

 

6,377

 

4,336

 

25,921

 

30,257

 

8,116

 

Middletown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One River Center, Building 1

 

Office

 

1983

 

2004

 

 

3,070

 

17,414

 

16,094

 

2,451

 

34,127

 

36,578

 

8,385

 

One River Center, Building 2

 

Office

 

1983

 

2004

 

 

2,468

 

15,043

 

4,175

 

2,452

 

19,234

 

21,686

 

7,880

 

One River Center, Building 3

 

Office

 

1984

 

2004

 

 

4,051

 

24,790

 

5,688

 

4,627

 

29,902

 

34,529

 

11,525

 

Neptune

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3600 Route 66

 

Office

 

1989

 

1995

 

 

1,098

 

18,146

 

11,461

 

1,098

 

29,607

 

30,705

 

15,555

 

Red Bank

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Schultz Drive

 

Office

 

1989

 

2017

 

 

1,953

 

6,790

 

1,126

 

1,953

 

7,916

 

9,869

 

905

 

200 Schultz Drive

 

Office

 

1989

 

2017

 

 

2,184

 

8,259

 

1,165

 

2,184

 

9,424

 

11,608

 

1,003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amount at Which

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

Carried at Close of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial Costs

 

Capitalized

 

Period (a)

 

 

 

 

 

 

 

Property

 

Year

 

 

 

Related

 

 

 

Building and

 

Subsequent to

 

 

 

Building and

 

 

 

Accumulated

 

Property Location

 

Type

 

Built

 

Acquired

 

Encumbrances

 

Land

 

Improvements

 

Acquisition(e)

 

Land

 

Improvements

 

Total (d)

 

Depreciation (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Morris County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Florham Park

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

325 Columbia Parkway

 

Office

 

1987

 

1994

 

 

1,564

 

 

18,616

 

1,564

 

18,616

 

20,180

 

13,036

 

Madison

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Giralda Farms

 

Office

 

1982

 

2017

 

 

3,370

 

27,145

 

734

 

3,370

 

27,879

 

31,249

 

2,260

 

7 Giralda Farms

 

Office

 

1997

 

2017

 

 

5,402

 

37,664

 

510

 

5,402

 

38,174

 

43,576

 

2,766

 

Morris Plains

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Place

 

Multi-Family

 

 

 

 

 

41,703

 

930

 

 

56,373

 

930

 

56,373

 

57,303

 

922

 

Parsippany

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4 Campus Drive

 

Office

 

1983

 

2001

 

 

5,213

 

20,984

 

4,052

 

5,213

 

25,036

 

30,249

 

11,490

 

6 Campus Drive

 

Office

 

1983

 

2001

 

 

4,411

 

17,796

 

3,945

 

4,411

 

21,741

 

26,152

 

9,665

 

7 Campus Drive

 

Office

 

1982

 

1998

 

 

1,932

 

27,788

 

6,757

 

1,932

 

34,545

 

36,477

 

18,408

 

8 Campus Drive

 

Office

 

1987

 

1998

 

 

1,865

 

35,456

 

12,475

 

1,865

 

47,931

 

49,796

 

22,089

 

9 Campus Drive

 

Office

 

1983

 

2001

 

 

3,277

 

11,796

 

22,721

 

5,842

 

31,952

 

37,794

 

13,474

 

2 Dryden Way

 

Office

 

1990

 

1998

 

 

778

 

420

 

110

 

778

 

530

 

1,308

 

320

 

4 Gatehall Drive

 

Office

 

1988

 

2000

 

 

8,452

 

33,929

 

7,788

 

8,452

 

41,717

 

50,169

 

18,726

 

2 Hilton Court

 

Office

 

1991

 

1998

 

 

1,971

 

32,007

 

4,474

 

1,971

 

36,481

 

38,452

 

19,992

 

1 Sylvan Way

 

Office

 

1989

 

1998

 

 

1,689

 

24,699

 

4,984

 

1,021

 

30,351

 

31,372

 

14,094

 

3 Sylvan Way

 

Office

 

1988

 

2015

 

 

5,590

 

4,710

 

9,840

 

5,590

 

14,550

 

20,140

 

845

 

5 Sylvan Way

 

Office

 

1989

 

1998

 

 

1,160

 

25,214

 

7,056

 

1,161

 

32,269

 

33,430

 

14,774

 

7 Sylvan Way

 

Office

 

1987

 

1998

 

 

2,084

 

26,083

 

14,823

 

2,084

 

40,906

 

42,990

 

15,697

 

5 Wood Hollow Road

 

Office

 

1979

 

2004

 

 

5,302

 

26,488

 

21,087

 

5,302

 

47,575

 

52,877

 

21,689

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW YORK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Westchester County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eastchester

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarry Place at Tuckahoe

 

Multi-Family

 

2016

 

2016

 

40,433

 

5,585

 

3,400

 

48,718

 

5,585

 

52,118

 

57,703

 

2,573

 

Elmsford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11 Clearbrook Road

 

Office/Flex

 

1974

 

1997

 

 

149

 

2,159

 

504

 

149

 

2,663

 

2,812

 

1,479

 

75 Clearbrook Road

 

Office/Flex

 

1990

 

1997

 

 

2,314

 

4,716

 

57

 

2,314

 

4,773

 

7,087

 

2,621

 

100 Clearbrook Road

 

Office

 

1975

 

1997

 

 

220

 

5,366

 

1,846

 

220

 

7,212

 

7,432

 

3,620

 

125 Clearbrook Road

 

Office/Flex

 

2002

 

2002

 

 

1,055

 

3,676

 

(292

)

1,055

 

3,384

 

4,439

 

1,685

 

150 Clearbrook Road

 

Office/Flex

 

1975

 

1997

 

 

497

 

7,030

 

2,198

 

497

 

9,228

 

9,725

 

4,927

 

175 Clearbrook Road

 

Office/Flex

 

1973

 

1997

 

 

655

 

7,473

 

973

 

655

 

8,446

 

9,101

 

4,731

 

200 Clearbrook Road

 

Office/Flex

 

1974

 

1997

 

 

579

 

6,620

 

1,667

 

579

 

8,287

 

8,866

 

4,343

 

250 Clearbrook Road

 

Office/Flex

 

1973

 

1997

 

 

867

 

8,647

 

2,387

 

867

 

11,034

 

11,901

 

5,813

 

50 Executive Boulevard

 

Office/Flex

 

1969

 

1997

 

 

237

 

2,617

 

540

 

237

 

3,157

 

3,394

 

1,731

 

77 Executive Boulevard

 

Office/Flex

 

1977

 

1997

 

 

34

 

1,104

 

179

 

34

 

1,283

 

1,317

 

740

 

85 Executive Boulevard

 

Office/Flex

 

1968

 

1997

 

 

155

 

2,507

 

456

 

155

 

2,963

 

3,118

 

1,584

 

101 Executive Boulevard

 

Office

 

1971

 

1997

 

 

101

 

5,197

 

5,298

 

101

 

5,197

 

5,298

 

119

 

300 Executive Boulevard

 

Office/Flex

 

1970

 

1997

 

 

460

 

3,609

 

307

 

460

 

3,916

 

4,376

 

2,132

 

350 Executive Boulevard

 

Office/Flex

 

1970

 

1997

 

 

100

 

1,793

 

175

 

100

 

1,968

 

2,068

 

1,146

 

399 Executive Boulevard

 

Office/Flex

 

1962

 

1997

 

 

531

 

7,191

 

163

 

531

 

7,354

 

7,885

 

4,077

 

400 Executive Boulevard

 

Office/Flex

 

1970

 

1997

 

 

2,202

 

1,846

 

1,140

 

2,202

 

2,986

 

5,188

 

1,807

 

500 Executive Boulevard

 

Office/Flex

 

1970

 

1997

 

 

258

 

4,183

 

508

 

258

 

4,691

 

4,949

 

2,655

 

525 Executive Boulevard

 

Office/Flex

 

1972

 

1997

 

 

345

 

5,499

 

837

 

345

 

6,336

 

6,681

 

3,661

 

1 Westchester Plaza

 

Office/Flex

 

1967

 

1997

 

 

199

 

2,023

 

183

 

199

 

2,206

 

2,405

 

1,214

 

2 Westchester Plaza

 

Office/Flex

 

1968

 

1997

 

 

234

 

2,726

 

914

 

234

 

3,640

 

3,874

 

1,971

 

3 Westchester Plaza

 

Office/Flex

 

1969

 

1997

 

 

655

 

7,936

 

1,433

 

655

 

9,369

 

10,024

 

4,876

 

4 Westchester Plaza

 

Office/Flex

 

1969

 

1997

 

 

320

 

3,729

 

1,531

 

320

 

5,260

 

5,580

 

2,512

 

5 Westchester Plaza

 

Office/Flex

 

1969

 

1997

 

 

118

 

1,949

 

303

 

118

 

2,252

 

2,370

 

1,184

 

6 Westchester Plaza

 

Office/Flex

 

1968

 

1997

 

 

164

 

1,998

 

202

 

164

 

2,200

 

2,364

 

1,197

 

7 Westchester Plaza

 

Office/Flex

 

1972

 

1997

 

 

286

 

4,321

 

1,168

 

286

 

5,489

 

5,775

 

2,781

 

8 Westchester Plaza

 

Office/Flex

 

1971

 

1997

 

 

447

 

5,262

 

2,127

 

447

 

7,389

 

7,836

 

4,025

 

Hawthorne

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

200 Saw Mill River Road

 

Office/Flex

 

1965

 

1997

 

 

353

 

3,353

 

833

 

353

 

4,186

 

4,539

 

2,110

 

1 Skyline Drive

 

Office

 

1980

 

1997

 

 

66

 

1,711

 

210

 

66

 

1,921

 

1,987

 

1,102

 

2 Skyline Drive

 

Office

 

1987

 

1997

 

 

109

 

3,128

 

1,474

 

109

 

4,602

 

4,711

 

2,909

 

4 Skyline Drive

 

Office/Flex

 

1987

 

1997

 

 

363

 

7,513

 

2,140

 

363

 

9,653

 

10,016

 

5,635

 

5 Skyline Drive

 

Office/Flex

 

1980

 

2001

 

 

2,219

 

8,916

 

1,472

 

2,219

 

10,388

 

12,607

 

5,340

 

6 Skyline Drive

 

Office/Flex

 

1980

 

2001

 

 

740

 

2,971

 

535

 

740

 

3,506

 

4,246

 

1,942

 

7 Skyline Drive

 

Office

 

1987

 

1998

 

 

330

 

13,013

 

2,733

 

330

 

15,746

 

16,076

 

8,071

 

8 Skyline Drive

 

Office/Flex

 

1985

 

1997

 

 

212

 

4,410

 

836

 

212

 

5,246

 

5,458

 

3,036

 

10 Skyline Drive

 

Office/Flex

 

1985

 

1997

 

 

134

 

2,799

 

271

 

134

 

3,070

 

3,204

 

1,630

 

11 Skyline Drive (c)

 

Office/Flex

 

1989

 

1997

 

 

 

4,788

 

763

 

 

5,551

 

5,551

 

2,906

 

12 Skyline Drive (c)

 

Office/Flex

 

1999

 

1999

 

 

1,562

 

3,254

 

218

 

1,320

 

3,714

 

5,034

 

1,911

 

15 Skyline Drive (c)

 

Office/Flex

 

1989

 

1997

 

 

 

7,449

 

1,858

 

 

9,307

 

9,307

 

4,537

 

17 Skyline Drive (c)

 

Office

 

1989

 

1997

 

 

 

7,269

 

1,248

 

 

8,517

 

8,517

 

4,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amount at Which

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

Carried at Close of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial Costs

 

Capitalized

 

Period (a)

 

 

 

 

 

 

 

Property

 

Year

 

 

 

Related

 

 

 

Building and

 

Subsequent to

 

 

 

Building and

 

 

 

Accumulated

 

Property Location

 

Type

 

Built

 

Acquired

 

Encumbrances

 

Land

 

Improvements

 

Acquisition(e)

 

Land

 

Improvements

 

Total (d)

 

Depreciation (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tarrytown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

230 White Plains Road

 

Retail

 

1984

 

1997

 

 

124

 

1,845

 

288

 

124

 

2,133

 

2,257

 

1,108

 

Yonkers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Corporate Boulevard

 

Office/Flex

 

1987

 

1997

 

 

602

 

9,910

 

1,175

 

602

 

11,085

 

11,687

 

6,143

 

200 Corporate Boulevard South

 

Office/Flex

 

1990

 

1997

 

 

502

 

7,575

 

2,585

 

502

 

10,160

 

10,662

 

5,017

 

1 Executive Boulevard

 

Office

 

1982

 

1997

 

 

1,104

 

11,904

 

3,688

 

1,105

 

15,591

 

16,696

 

8,210

 

2 Executive Boulevard

 

Retail

 

1986

 

1997

 

 

89

 

2,439

 

107

 

89

 

2,546

 

2,635

 

1,397

 

3 Executive Boulevard

 

Office

 

1987

 

1997

 

 

385

 

6,256

 

1,803

 

385

 

8,059

 

8,444

 

4,496

 

4 Executive Plaza

 

Office/Flex

 

1986

 

1997

 

 

584

 

6,134

 

854

 

584

 

6,988

 

7,572

 

3,723

 

6 Executive Plaza

 

Office/Flex

 

1987

 

1997

 

 

546

 

7,246

 

2,212

 

546

 

9,458

 

10,004

 

5,127

 

1 Odell Plaza

 

Office/Flex

 

1980

 

1997

 

 

1,206

 

6,815

 

2,349

 

1,206

 

9,164

 

10,370

 

5,093

 

3 Odell Plaza

 

Office

 

1984

 

2003

 

 

1,322

 

4,777

 

2,360

 

1,322

 

7,137

 

8,459

 

3,976

 

5 Odell Plaza

 

Office/Flex

 

1983

 

1997

 

 

331

 

2,988

 

476

 

331

 

3,464

 

3,795

 

2,029

 

7 Odell Plaza

 

Office/Flex

 

1984

 

1997

 

 

419

 

4,418

 

1,303

 

419

 

5,721

 

6,140

 

2,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONNECTICUT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fairfield County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stamford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

419 West Avenue

 

Office/Flex

 

1986

 

1997

 

 

4,538

 

9,246

 

482

 

4,538

 

9,728

 

14,266

 

5,316

 

500 West Avenue

 

Office/Flex

 

1988

 

1997

 

 

415

 

1,679

 

646

 

415

 

2,325

 

2,740

 

1,221

 

550 West Avenue

 

Office/Flex

 

1990

 

1997

 

 

1,975

 

3,856

 

133

 

1,975

 

3,989

 

5,964

 

2,172

 

600 West Avenue

 

Office/Flex

 

1999

 

1999

 

 

2,305

 

2,863

 

1,184

 

2,305

 

4,047

 

6,352

 

1,739

 

650 West Avenue

 

Office/Flex

 

1998

 

1998

 

 

1,328

 

 

3,247

 

1,328

 

3,247

 

4,575

 

1,805

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MASSACHUSETTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Middlesex County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Malden

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Chase at Overlook Ridge

 

Multi-Family

 

2016

 

2016

 

134,839

 

11,072

 

87,793

 

74,692

 

21,827

 

151,730

 

173,557

 

9,969

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suffolk County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Boston

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portside at Pier One

 

Multi-Family

 

2016

 

2016

 

58,644

 

 

73,713

 

446

 

 

74,159

 

74,159

 

6,163

 

Portside 5/6

 

Multi-Family

 

2018

 

2018

 

96,369

 

 

 

 

 

113,913

 

113,913

 

1,268

 

Revere

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alterra at Overlook Ridge IA

 

Multi-Family

 

2004

 

2013

 

40,102

 

9,042

 

50,671

 

1,072

 

9,042

 

51,743

 

60,785

 

7,933

 

Alterra at Overlook Ridge II

 

Multi-Family

 

2008

 

2013

 

59,371

 

12,055

 

71,409

 

409

 

12,056

 

71,817

 

83,873

 

10,980

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development and Developable Land

 

 

 

 

 

 

 

128,017

 

363,272

 

489,567

 

 

363,272

 

489,567

 

852,839

 

14,608

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Furniture, Fixtures and Equipment

 

 

 

 

 

 

 

 

 

 

53,718

 

 

53,718

 

53,718

 

15,879

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTALS

 

 

 

 

 

 

 

1,406,239

 

788,261

 

3,455,975

 

817,429

 

807,236

 

4,498,781

 

5,306,017

 

1,097,868

 






            
Quarter Ended 2014 December 31  September 30  June 30  March 31
Total revenues$151,414 $155,489 $160,300 $169,596
Operating and other expenses 64,177  64,374  65,788  81,854
Real estate service salaries 5,923  6,933  6,571  6,709
General and administrative 23,775  12,665  11,730  22,881
Acquisition-related costs 175   -  1,943   -
Depreciation and amortization 40,811  41,983  44,711  44,985
Total expenses 134,861  125,955  130,743  156,429
Operating Income 16,553  29,534  29,557  13,167
Interest expense (27,420)  (27,353)  (28,159)  (29,946)
Interest and other investment income 1,399  908  922  386
Equity in earnings (loss) of unconsolidated           
joint ventures (363)  (1,268)  443  (1,235)
Realized gains (losses) on disposition of rental properties  -  264  54,584   -
Loss from early extinguishment of debt (582)   -   -   -
Total other (expense) income (26,966)  (27,449)  27,790  (30,795)
Net income (loss) (10,413)  2,085  57,347  (17,628)
Noncontrolling interest in consolidated joint ventures 21  145  290  322
Noncontrolling interest in Operating Partnership 1,152  (248)  (6,514)  2,008
Net income (loss) available to common shareholders$(9,240) $1,982 $51,123 $(15,298)
            
Basic earnings per common share:           
Net income (loss) available to common shareholders$(0.10) $0.02 $0.58 $(0.17)
            
Diluted earnings per common share:           
Net income (loss) available to common shareholders$(0.10) $0.02 $0.58 $(0.17)
            
Dividends declared per common share$0.15 $0.15 $0.15 $0.30


106






            
            
    MACK-CALI REALTY CORPORATION    
  REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION  
    December 31, 2015    
    (dollars in thousands)    
           SCHEDULE III
      Gross Amount at Which  
       CostsCarried at Close of  
     Initial CostsCapitalizedPeriod (a)  
 PropertyYear Related Building andSubsequent Building and Accumulated
Property LocationTypeBuiltAcquiredEncumbrancesLandImprovementsto AcquisitionLandImprovementsTotalDepreciation (b)
            
NEW JERSEY           
Bergen County           
Fort Lee           
One Bridge PlazaOffice19811996 - 2,439 24,462 7,444 2,439 31,906 34,345 14,813
2115 Linwood AvenueOffice19811998 - 474 4,419 7,017 474 11,436 11,910 4,083
Montvale           
135 Chestnut Ridge RoadOffice19811997 - 2,587 10,350 (4,659) 1,437 6,841 8,278 3,026
Paramus           
15 East Midland AvenueOffice19881997 12,438 10,375 41,497 2,490 10,374 43,988 54,362 19,632
140 East Ridgewood AvenueOffice19811997 11,720 7,932 31,463 7,578 7,932 39,041 46,973 17,789
461 From RoadOffice19881997 - 13,194 52,778 10,587 13,194 63,365 76,559 24,838
650 From RoadOffice19781997 22,484 10,487 41,949 8,189 10,487 50,138 60,625 22,344
61 South Paramus Road (c)Office19851997 22,005 9,005 36,018 9,162 9,005 45,180 54,185 20,390
Rochelle Park           
120 West Passaic StreetOffice19721997 - 1,354 5,415 431 1,357 5,843 7,200 2,582
365 West Passaic StreetOffice19761997 11,720 4,148 16,592 5,497 4,148 22,089 26,237 9,804
395 West Passaic StreetOffice19792006 - 2,550 17,131 1,020 2,550 18,151 20,701 4,324
Upper Saddle River           
1 Lake StreetOffice19941997 40,184 13,952 55,812 (37,797) 6,268 25,699 31,967 15,132
10 Mountainview RoadOffice19861998 - 4,240 20,485 4,743 4,240 25,228 29,468 11,358
Woodcliff Lake           
400 Chestnut Ridge RoadOffice19821997 - 4,201 16,802 (6,770) 2,312 11,921 14,233 6,579
50 Tice BoulevardOffice19841994 22,962 4,500 - 27,862 4,500 27,862 32,362 19,320
300 Tice BoulevardOffice19911996 - 5,424 29,688 6,385 5,424 36,073 41,497 16,438
            
Burlington County           
Burlington           
3 Terri LaneOffice/Flex19911998 - 652 3,433 1,549 658 4,976 5,634 2,285
5 Terri LaneOffice/Flex19921998 - 564 3,792 2,272 569 6,059 6,628 2,856
Moorestown           
2 Commerce DriveOffice/Flex19861999 - 723 2,893 544 723 3,437 4,160 1,461
101 Commerce DriveOffice/Flex19881998 - 422 3,528 436 426 3,960 4,386 1,893
102 Commerce DriveOffice/Flex19871999 - 389 1,554 482 389 2,036 2,425 732
201 Commerce DriveOffice/Flex19861998 - 254 1,694 349 258 2,039 2,297 922
202 Commerce DriveOffice/Flex19881999 - 490 1,963 384 490 2,347 2,837 919
1 Executive DriveOffice/Flex19891998 - 226 1,453 772 228 2,223 2,451 979
2 Executive DriveOffice/Flex19882000 - 801 3,206 980 801 4,186 4,987 1,530
101 Executive DriveOffice/Flex19901998 - 241 2,262 701 244 2,960 3,204 1,328
102 Executive DriveOffice/Flex19901998 - 353 3,607 420 357 4,023 4,380 1,812
225 Executive DriveOffice/Flex19901998 - 323 2,477 457 326 2,931 3,257 1,280
97 Foster RoadOffice/Flex19821998 - 208 1,382 389 211 1,768 1,979 885
1507 Lancer DriveOffice/Flex19951998 - 119 1,106 209 120 1,314 1,434 612
1245 North Church StreetOffice/Flex19982001 - 691 2,810 110 691 2,920 3,611 1,078
1247 North Church StreetOffice/Flex19982001 - 805 3,269 175 805 3,444 4,249 1,287


107





            
            
    MACK-CALI REALTY CORPORATION    
  REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION  
    December 31, 2015    
    (dollars in thousands)    
           SCHEDULE III
      Gross Amount at Which  
       CostsCarried at Close of  
     Initial CostsCapitalizedPeriod (a)  
  Year Related Building andSubsequent Building and Accumulated
Property Location BuiltAcquiredEncumbrancesLandImprovementsto AcquisitionLandImprovementsTotalDepreciation (b)
            
1256 North Church StreetOffice/Flex19841998 - 354 3,098 658 357 3,753 4,110 1,678
840 North Lenola RoadOffice/Flex19951998 - 329 2,366 499 333 2,861 3,194 1,286
844 North Lenola RoadOffice/Flex19951998 - 239 1,714 298 241 2,010 2,251 957
915 North Lenola RoadOffice/Flex19982000 - 508 2,034 215 508 2,249 2,757 985
2 Twosome DriveOffice/Flex20002001 - 701 2,807 225 701 3,032 3,733 1,077
30 Twosome DriveOffice/Flex19971998 - 234 1,954 510 236 2,462 2,698 1,251
31 Twosome DriveOffice/Flex19982001 - 815 3,276 258 815 3,534 4,349 1,303
40 Twosome DriveOffice/Flex19961998 - 297 2,393 160 301 2,549 2,850 1,180
41 Twosome DriveOffice/Flex19982001 - 605 2,459 214 605 2,673 3,278 1,016
50 Twosome DriveOffice/Flex19971998 - 301 2,330 98 304 2,425 2,729 1,133
            
Essex County           
Millburn           
150 J.F. Kennedy ParkwayOffice19801997 - 12,606 50,425 8,203 12,606 58,628 71,234 25,768
Roseland           
4 Becker Farm RoadOffice19832009 40,083 5,600 38,285 (9,089) 4,271 30,525 34,796 6,756
6 Becker Farm RoadOffice19832009 13,829 2,600 15,548 (7,006) 1,556 9,586 11,142 2,055
101 Eisenhower ParkwayOffice19801994 - 228 - 21,850 228 21,850 22,078 14,063
103 Eisenhower ParkwayOffice19851994 - - - 16,898 2,300 14,598 16,898 9,448
105 Eisenhower ParkwayOffice20012001 - 4,430 42,898 5,670 3,835 49,163 52,998 22,616
75 Livingston AvenueOffice19852009 10,599 1,900 6,312 (1,630) 1,281 5,301 6,582 1,206
85 Livingston AvenueOffice19852009 14,862 2,500 14,238 (8,238) 1,234 7,266 8,500 1,622
            
Hudson County           
Jersey City           
Harborside Plaza 1Office19831996 - 3,923 51,013 27,985 3,923 78,998 82,921 39,183
Harborside Plaza 2Office19901996 - 17,655 101,546 25,245 12,844 131,602 144,446 58,486
Harborside Plaza 3Office19901996 - 17,655 101,878 24,911 12,843 131,601 144,444 58,486
Harborside Plaza 4AOffice20002000 - 1,244 56,144 14,601 1,244 70,745 71,989 30,770
Harborside Plaza 5Office20022002 217,736 6,218 170,682 56,368 5,705 227,563 233,268 86,807
101 Hudson StreetOffice19922005 - 45,530 271,376 4,723 45,530 276,099 321,629 76,102
Weehawken           
500 Avenue at Port ImperialOther20132013 36,600 13,099 56,669 (21,005) 13,099 35,664 48,763 2,174
            
Mercer County           
Hamilton Township           
3 AAA DriveOffice19812007 - 242 3,218 1,391 242 4,609 4,851 1,321
100 Horizon Center BoulevardOffice/Flex19891995 - 205 1,676 730 325 2,286 2,611 1,029
200 Horizon DriveOffice/Flex19911995 - 205 3,027 715 357 3,590 3,947 1,845
300 Horizon DriveOffice/Flex19891995 - 379 4,355 1,428 531 5,631 6,162 2,641
500 Horizon DriveOffice/Flex19901995 - 379 3,395 901 496 4,179 4,675 2,152
600 Horizon DriveOffice/Flex20022002 - - 7,549 709 685 7,573 8,258 2,478
            


108





            
            
    MACK-CALI REALTY CORPORATION    
  REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION  
    December 31, 2015    
    (dollars in thousands)    
           SCHEDULE III
      Gross Amount at Which  
       CostsCarried at Close of  
     Initial CostsCapitalizedPeriod (a)  
  Year Related Building andSubsequent Building and Accumulated
Property Location BuiltAcquiredEncumbrancesLandImprovementsto AcquisitionLandImprovementsTotalDepreciation (b)
            
700 Horizon DriveOffice20072007 - 490 43 16,663 865 16,331 17,196 4,028
2 South Gold DriveOffice19742007 - 476 3,487 846 476 4,333 4,809 967
Princeton           
103 Carnegie CenterOffice19841996 - 2,566 7,868 3,304 2,566 11,172 13,738 5,460
2 Independence WayOffice19852009 - 1,300 7,246 (4,079) 702 3,765 4,467 166
3 Independence WayOffice19831997 - 1,997 11,391 4,374 1,997 15,765 17,762 7,732
100 Overlook CenterOffice19881997 - 2,378 21,754 3,666 2,378 25,420 27,798 11,149
5 Vaughn DriveOffice19871995 - 657 9,800 2,962 657 12,762 13,419 6,823
            
Middlesex County           
East Brunswick           
377 Summerhill RoadOffice19771997 - 649 2,594 324 649 2,918 3,567 1,349
Edison           
333 Thornall StreetOffice19842015 - 5,542 40,762 - 5,542 40,762 46,304 247
343 Thornall StreetOffice19912006 - 6,027 39,101 3,349 6,027 42,450 48,477 12,243
New Brunswick           
Richmond CourtMulti-Family19972013 - 2,992 13,534 1,601 2,992 15,135 18,127 689
Riverwatch CommonsMulti-Family19952013 - 4,169 18,974 729 4,169 19,703 23,872 965
Plainsboro           
500 College Road East (c)Office19841998 - 614 20,626 4,839 614 25,465 26,079 11,312
Woodbridge           
581 Main StreetOffice19911997 - 3,237 12,949 26,135 8,115 34,206 42,321 16,730
            
Monmouth County           
Freehold           
2 Paragon WayOffice19892005 - 999 4,619 (864) 720 4,034 4,754 1,263
3 Paragon WayOffice19912005 - 1,423 6,041 (979) 1,020 5,465 6,485 1,809
4 Paragon WayOffice20022005 - 1,961 8,827 (3,107) 1,404 6,277 7,681 1,585
100 Willow Brook RoadOffice19882005 - 1,264 5,573 (1,543) 869 4,425 5,294 1,442
Holmdel           
23 Main StreetOffice19772005 28,541 4,336 19,544 9,133 4,336 28,677 33,013 12,775
Middletown           
One River Center, Building 1Office19832004 10,721 3,070 17,414 4,065 2,451 22,098 24,549 7,840
One River Center, Building 2Office19832004 12,026 2,468 15,043 3,894 2,452 18,953 21,405 5,441
One River Center, Building 3Office19842004 19,112 4,051 24,790 6,171 4,627 30,385 35,012 9,435
Neptune           
3600 Route 66Office19891995 - 1,098 18,146 11,397 1,098 29,543 30,641 11,448
Wall Township           
1305 Campus ParkwayOffice19881995 - 335 2,560 707 291 3,311 3,602 1,618
1325 Campus ParkwayOffice/Flex19881995 - 270 2,928 725 270 3,653 3,923 1,914
1340 Campus ParkwayOffice/Flex19921995 - 489 4,621 1,836 489 6,457 6,946 3,434
1345 Campus ParkwayOffice/Flex19951997 - 1,023 5,703 1,772 1,024 7,474 8,498 3,841
1350 Campus ParkwayOffice19901995 - 454 7,134 1,049 454 8,183 8,637 4,016
1433 Highway 34Office/Flex19851995 - 889 4,321 1,655 889 5,976 6,865 2,972


109





            
            
    MACK-CALI REALTY CORPORATION    
  REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION  
    December 31, 2015    
    (dollars in thousands)    
           SCHEDULE III
      Gross Amount at Which  
       CostsCarried at Close of  
     Initial CostsCapitalizedPeriod (a)  
  Year Related Building andSubsequent Building and Accumulated
Property Location BuiltAcquiredEncumbrancesLandImprovementsto AcquisitionLandImprovementsTotalDepreciation (b)
            
1320 Wyckoff AvenueOffice/Flex19861995 - 255 1,285 291 216 1,615 1,831 908
1324 Wyckoff AvenueOffice/Flex19871995 - 230 1,439 317 190 1,796 1,986 853
            
Morris County           
Florham Park           
325 Columbia ParkwayOffice19871994 - 1,564 - 17,770 1,564 17,770 19,334 11,013
Morris Plains           
250 Johnson RoadOffice19771997 - 2,004 8,016 (3,806) 930 5,284 6,214 4,265
201 Littleton RoadOffice19791997 - 2,407 9,627 3,351 2,407 12,978 15,385 5,661
Parsippany           
4 Campus DriveOffice19832001 - 5,213 20,984 3,953 5,213 24,937 30,150 8,914
6 Campus DriveOffice19832001 - 4,411 17,796 3,368 4,411 21,164 25,575 8,231
7 Campus DriveOffice19821998 - 1,932 27,788 6,298 1,932 34,086 36,018 15,795
8 Campus DriveOffice19871998 - 1,865 35,456 4,823 1,865 40,279 42,144 17,257
9 Campus DriveOffice19832001 - 3,277 11,796 16,882 5,842 26,113 31,955 10,295
4 Century DriveOffice19812004 - 1,787 9,575 (3,432) 1,086 6,844 7,930 2,188
5 Century DriveOffice19812004 - 1,762 9,341 (3,796) 953 6,354 7,307 2,109
6 Century DriveOffice19812004 - 1,289 6,848 (631) 990 6,516 7,506 1,966
2 Dryden WayOffice19901998 - 778 420 110 778 530 1,308 264
4 Gatehall DriveOffice19882000 - 8,452 33,929 4,055 8,452 37,984 46,436 15,223
2 Hilton CourtOffice19911998 - 1,971 32,007 4,434 1,971 36,441 38,412 16,638
1633 Littleton RoadOffice19782002 - 2,283 9,550 507 2,355 9,985 12,340 6,117
600 Parsippany RoadOffice19781994 - 1,257 5,594 3,102 1,257 8,696 9,953 4,631
1 Sylvan WayOffice19891998 - 1,689 24,699 2,914 1,021 28,281 29,302 13,702
3 Sylvan WayOffice19882015 - 5,590 4,710 - 5,590 4,710 10,300 -
5 Sylvan WayOffice19891998 - 1,160 25,214 2,866 1,161 28,079 29,240 12,067
7 Sylvan WayOffice19871998 - 2,084 26,083 1,185 2,084 27,268 29,352 11,760
20 Waterview BoulevardOffice19882009 23,989 4,500 27,246 (4,222) 3,816 23,708 27,524 4,895
35 Waterview BoulevardOffice19902006 - 5,133 28,059 1,161 5,133 29,220 34,353 8,100
5 Wood Hollow RoadOffice19792004 - 5,302 26,488 15,538 5,302 42,026 47,328 15,275
            
Passaic County           
Totowa           
1 Center CourtOffice/Flex19991999 - 270 1,824 490 270 2,314 2,584 990
2 Center CourtOffice/Flex19981998 - 191 - 2,476 191 2,476 2,667 1,089
11 Commerce WayOffice/Flex19891995 - 586 2,986 1,000 586 3,986 4,572 2,086
20 Commerce WayOffice/Flex19921995 - 516 3,108 111 516 3,219 3,735 1,600
29 Commerce WayOffice/Flex19901995 - 586 3,092 961 586 4,053 4,639 1,809
40 Commerce WayOffice/Flex19871995 - 516 3,260 1,509 516 4,769 5,285 2,293
45 Commerce WayOffice/Flex19921995 - 536 3,379 497 536 3,876 4,412 1,940
60 Commerce WayOffice/Flex19881995 - 526 3,257 507 526 3,764 4,290 2,048
80 Commerce WayOffice/Flex19961996 - 227 - 1,348 227 1,348 1,575 638
100 Commerce WayOffice/Flex19961996 - 226 - 1,348 226 1,348 1,574 637
120 Commerce WayOffice/Flex19941995 - 228 - 1,284 229 1,283 1,512 657
140 Commerce WayOffice/Flex19941995 - 229 - 1,282 228 1,283 1,511 657
999 Riverview DriveOffice19881995 - 476 6,024 2,766 1,102 8,164 9,266 4,367


110





            
            
    MACK-CALI REALTY CORPORATION    
  REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION  
    December 31, 2015    
    (dollars in thousands)    
           SCHEDULE III
      Gross Amount at Which  
       CostsCarried at Close of  
     Initial CostsCapitalizedPeriod (a)  
  Year Related Building andSubsequent Building and Accumulated
Property Location BuiltAcquiredEncumbrancesLandImprovementsto AcquisitionLandImprovementsTotalDepreciation (b)
            
Somerset County           
Basking Ridge           
222 Mt. Airy RoadOffice19861996 - 775 3,636 1,848 697 5,562 6,259 2,747
233 Mt. Airy RoadOffice19871996 - 1,034 5,033 1,254 915 6,406 7,321 2,677
Bridgewater           
440 Route 22 EastOffice19902010 - 3,986 13,658 4,940 3,986 18,598 22,584 4,638
721 Route 202/206Office19891997 - 6,730 26,919 (952) 5,067 27,630 32,697 14,895
            
Union County           
Clark           
100 Walnut AvenueOffice19851994 18,273 - - 17,801 1,822 15,979 17,801 10,958
Cranford           
6 Commerce DriveOffice19731994 - 250 - 1,728 250 1,728 1,978 704
11 Commerce DriveOffice19811994 - 470 - 5,490 470 5,490 5,960 4,644
12 Commerce DriveOffice19671997 - 887 3,549 1,543 887 5,092 5,979 2,566
14 Commerce DriveOffice19712003 - 1,283 6,344 1,613 1,283 7,957 9,240 2,477
20 Commerce DriveOffice19901994 - 2,346 - 21,663 2,346 21,663 24,009 11,901
25 Commerce DriveOffice19712002 - 1,520 6,186 864 1,520 7,050 8,570 3,239
65 Jackson DriveOffice19841994 - 541 - 6,377 542 6,376 6,918 4,381
New Providence           
890 Mountain RoadOffice19771997 - 2,796 11,185 (4,798) 1,719 7,464 9,183 3,212
Rahway           
Park SquareMulti-Family20112013 27,500 4,000 40,670 256 4,000 40,926 44,926 2,148
            
NEW YORK           
New York County           
New York           
125 Broad StreetOffice19702007 - 50,191 207,002 (48,039) 33,829 175,325 209,154 37,852
            
Westchester County           
Elmsford           
11 Clearbrook RoadOffice/Flex19741997 - 149 2,159 602 149 2,761 2,910 1,278
75 Clearbrook RoadOffice/Flex19901997 - 2,314 4,716 57 2,314 4,773 7,087 2,259
100 Clearbrook RoadOffice19751997 - 220 5,366 1,617 220 6,983 7,203 3,352
125 Clearbrook RoadOffice/Flex20022002 - 1,055 3,676 (445) 1,055 3,231 4,286 1,145
150 Clearbrook RoadOffice/Flex19751997 - 497 7,030 2,221 497 9,251 9,748 4,104
175 Clearbrook RoadOffice/Flex19731997 - 655 7,473 762 655 8,235 8,890 3,863
200 Clearbrook RoadOffice/Flex19741997 - 579 6,620 1,888 579 8,508 9,087 3,852
250 Clearbrook RoadOffice/Flex19731997 - 867 8,647 2,395 867 11,042 11,909 4,697
50 Executive BoulevardOffice/Flex19691997 - 237 2,617 441 237 3,058 3,295 1,404
77 Executive BoulevardOffice/Flex19771997 - 34 1,104 212 34 1,316 1,350 677
85 Executive BoulevardOffice/Flex19681997 - 155 2,507 516 155 3,023 3,178 1,284
101 Executive BoulevardOffice19711997 - 267 5,838 (3,528) 101 2,476 2,577 2,468
300 Executive BoulevardOffice/Flex19701997 - 460 3,609 306 460 3,915 4,375 1,802



111





            
            
    MACK-CALI REALTY CORPORATION    
  REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION  
    December 31, 2015    
    (dollars in thousands)    
           SCHEDULE III
      Gross Amount at Which  
       CostsCarried at Close of  
     Initial CostsCapitalizedPeriod (a)  
  Year Related Building andSubsequent Building and Accumulated
Property Location BuiltAcquiredEncumbrancesLandImprovementsto AcquisitionLandImprovementsTotalDepreciation (b)
            
350 Executive BoulevardOffice/Flex19701997 - 100 1,793 175 100 1,968 2,068 942
399 Executive BoulevardOffice/Flex19621997 - 531 7,191 163 531 7,354 7,885 3,502
400 Executive BoulevardOffice/Flex19701997 - 2,202 1,846 938 2,202 2,784 4,986 1,407
500 Executive BoulevardOffice/Flex19701997 - 258 4,183 434 258 4,617 4,875 2,268
525 Executive BoulevardOffice/Flex19721997 - 345 5,499 837 345 6,336 6,681 3,082
700 Executive BoulevardLand LeaseN/A1997 - 970 - - 970 - 970 -
1 Warehouse Lane (c)Industrial/Warehouse19571997 - 3 268 233 3 501 504 238
2 Warehouse Lane (c)Industrial/Warehouse19571997 - 4 672 232 4 904 908 378
3 Warehouse Lane (c)Industrial/Warehouse19571997 - 21 1,948 363 21 2,311 2,332 1,181
4 Warehouse Lane (c)Industrial/Warehouse19571997 - 84 13,393 3,405 85 16,797 16,882 7,261
5 Warehouse Lane (c)Industrial/Warehouse19571997 - 19 4,804 943 19 5,747 5,766 2,745
6 Warehouse Lane (c)Industrial/Warehouse19821997 - 10 4,419 2,381 10 6,800 6,810 2,764
1 Westchester PlazaOffice/Flex19671997 - 199 2,023 469 199 2,492 2,691 1,318
2 Westchester PlazaOffice/Flex19681997 - 234 2,726 686 234 3,412 3,646 1,510
3 Westchester PlazaOffice/Flex19691997 - 655 7,936 1,343 655 9,279 9,934 4,453
4 Westchester PlazaOffice/Flex19691997 - 320 3,729 1,244 320 4,973 5,293 2,455
5 Westchester PlazaOffice/Flex19691997 - 118 1,949 425 118 2,374 2,492 1,219
6 Westchester PlazaOffice/Flex19681997 - 164 1,998 166 164 2,164 2,328 1,012
7 Westchester PlazaOffice/Flex19721997 - 286 4,321 681 286 5,002 5,288 2,187
8 Westchester PlazaOffice/Flex19711997 - 447 5,262 1,917 447 7,179 7,626 3,157
Hawthorne           
200 Saw Mill River RoadOffice/Flex19651997 - 353 3,353 533 353 3,886 4,239 1,831
1 Skyline DriveOffice19801997 - 66 1,711 210 66 1,921 1,987 943
2 Skyline DriveOffice19871997 - 109 3,128 1,474 109 4,602 4,711 2,270
4 Skyline DriveOffice/Flex19871997 - 363 7,513 2,873 363 10,386 10,749 5,320
5 Skyline DriveOffice/Flex19802001 - 2,219 8,916 1,747 2,219 10,663 12,882 4,706
6 Skyline DriveOffice/Flex19802001 - 740 2,971 1,498 740 4,469 5,209 2,380
7 Skyline DriveOffice19871998 - 330 13,013 2,564 330 15,577 15,907 6,690
8 Skyline DriveOffice/Flex19851997 - 212 4,410 769 212 5,179 5,391 2,557
10 Skyline DriveOffice/Flex19851997 - 134 2,799 732 134 3,531 3,665 1,903
11 Skyline Drive (c)Office/Flex19891997 - - 4,788 761 - 5,549 5,549 2,409
12 Skyline Drive (c)Office/Flex19991999 - 1,562 3,254 200 1,320 3,696 5,016 1,497
15 Skyline Drive (c)Office/Flex19891997 - - 7,449 1,060 - 8,509 8,509 3,620
17 Skyline Drive (c)Office19891997 - - 7,269 1,484 - 8,753 8,753 3,998
Tarrytown           
230 White Plains RoadRetail19841997 - 124 1,845 107 124 1,952 2,076 919
White Plains           
1 Barker AvenueOffice19751997 - 208 9,629 2,590 207 12,220 12,427 5,489
3 Barker AvenueOffice19831997 - 122 7,864 1,848 122 9,712 9,834 4,473
50 Main StreetOffice19851997 - 564 48,105 14,554 564 62,659 63,223 29,323
11 Martine AvenueOffice19871997 - 127 26,833 8,561 127 35,394 35,521 16,002
1 Water StreetOffice19791997 - 211 5,382 1,341 211 6,723 6,934 3,043
Yonkers           
100 Corporate BoulevardOffice/Flex19871997 - 602 9,910 1,397 602 11,307 11,909 5,342
200 Corporate Boulevard SouthOffice/Flex19901997 - 502 7,575 1,472 502 9,047 9,549 4,473
1 Enterprise BoulevardLand LeaseN/A1997 - 1,379 - 1 1,380 - 1,380 -
1 Executive BoulevardOffice19821997 - 1,104 11,904 2,998 1,105 14,901 16,006 6,732
            



112





            
            
    MACK-CALI REALTY CORPORATION    
  REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION  
     December 31, 2015     
     (dollars in thousands)     
           SCHEDULE III
      Gross Amount at Which  
       CostsCarried at Close of  
     Initial CostsCapitalizedPeriod (a)  
  Year Related Building andSubsequent Building and Accumulated
Property Location BuiltAcquiredEncumbrancesLandImprovementsto AcquisitionLandImprovementsTotalDepreciation (b)
            
2 Executive BoulevardRetail19861997 - 89 2,439 107 89 2,546 2,635 1,182
3 Executive BoulevardOffice19871997 - 385 6,256 1,772 385 8,028 8,413 3,625
4 Executive PlazaOffice/Flex19861997 - 584 6,134 1,142 584 7,276 7,860 3,294
6 Executive PlazaOffice/Flex19871997 - 546 7,246 2,206 546 9,452 9,998 4,218
1 Odell PlazaOffice/Flex19801997 - 1,206 6,815 2,221 1,206 9,036 10,242 4,058
3 Odell PlazaOffice19842003 - 1,322 4,777 2,332 1,322 7,109 8,431 3,259
5 Odell PlazaOffice/Flex19831997 - 331 2,988 535 331 3,523 3,854 1,760
7 Odell PlazaOffice/Flex19841997 - 419 4,418 1,249 419 5,667 6,086 2,482
            
CONNECTICUT           
Fairfield County           
Stamford           
419 West AvenueOffice/Flex19861997 - 4,538 9,246 1,298 4,538 10,544 15,082 5,417
500 West AvenueOffice/Flex19881997 - 415 1,679 654 415 2,333 2,748 899
550 West AvenueOffice/Flex19901997 - 1,975 3,856 185 1,975 4,041 6,016 1,956
600 West AvenueOffice/Flex19991999 - 2,305 2,863 754 2,305 3,617 5,922 1,426
650 West AvenueOffice/Flex19981998 - 1,328 - 3,524 1,328 3,524 4,852 1,601
            
DISTRICT OF COLUMBIA           
Washington,           
1201 Connecticut Avenue, NWOffice19401999 - 14,228 18,571 6,895 14,228 25,466 39,694 11,390
1400 L Street, NWOffice19871998 - 13,054 27,423 7,910 13,054 35,333 48,387 18,841
            
MARYLAND           
Prince George’s County           
Greenbelt           
Capital Office Park Parcel ALandN/A2009 - 840 - 7 847 - 847 -
9200 Edmonston RoadOffice1973/032006 3,793 1,547 4,131 (2,484) 610 2,584 3,194 1,376
6301 Ivy LaneOffice1979/952006 - 5,168 14,706 (9,924) 2,431 7,519 9,950 1,988
6303 Ivy LaneOffice1980/032006 - 5,115 13,860 (10,097) 2,436 6,442 8,878 1,584
6305 Ivy LaneOffice1982/952006 - 5,615 14,420 (10,137) 2,599 7,299 9,898 1,972
6404 Ivy LaneOffice19872006 - 7,578 20,785 (14,343) 3,437 10,583 14,020 3,376
6406 Ivy LaneOffice19912006 - 7,514 21,152 (14,034) 3,158 11,474 14,632 2,570
6411 Ivy LaneOffice1984/052006 - 6,867 17,470 (12,445) 3,216 8,676 11,892 2,452
Lanham           
4200 Parliament PlaceOffice19891998 - 2,114 13,546 (6,173) 774 8,713 9,487 4,258
            
MASSACHUSETTS           
Suffolk County           
Revere           
Alterra at Overlook Ridge IAMulti-Family20042013 - 9,042 50,671 879 9,042 51,550 60,592 3,859
Alterra at Overlook Ridge IIMulti-Family20082013 - 12,055 71,409 250 12,055 71,659 83,714 5,236
Andover PlaceMulti-Family19882014 - 8,535 27,609 2,263 8,534 29,873 38,407 1,623
            
Projects Under Development           
  and Developable Land    45,899 204,041 237,906 - 204,041 237,906 441,947 323
            
Furniture, Fixtures           
  and Equipment    - - - 15,167 - 15,167 15,167 5,418
            
TOTALS    667,076 796,691 3,531,729 479,298 735,696 4,072,022 4,807,718 1,464,482
            



(a)The aggregate cost for federal income tax purposes at December 31, 20152018 was approximately $3.3$5.1 billion.

(b)Depreciation of buildings and improvements are calculated over lives ranging from the life of the lease to 40 years.

(c)This property is located on land leased by the Company.


113





(d)Properties identified as held for sale at December 31, 2018 are excluded.

(e)These costs are net of impairments and valuation allowances recorded, if any.

MACK-CALI REALTY CORPORATION

CORPORATION/MACK-CALI REALTY, L.P. AND SUBSIDIARIES

NOTE TO SCHEDULE III




Changes in rental properties and accumulated depreciation for the periods ended December 31, 2015, 20142018, 2017 and 20132016 are as follows: (dollars in thousands)

 

 

2018

 

2017

 

2016

 

Rental Properties

 

 

 

 

 

 

 

Balance at beginning of year

 

$

5,102,844

 

$

4,804,867

 

$

4,807,718

 

Additions

 

686,452

 

1,179,365

 

819,535

 

Rental property held for sale

 

(184,233

)

(310,089

)

(79,200

)

Properties sold

 

(238,873

)

(538,424

)

(695,837

)

Impairments

 

 

 

 

Retirements/disposals

 

(60,173

)

(32,875

)

(47,349

)

Balance at end of year

 

$

5,306,017

 

$

5,102,844

 

$

4,804,867

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated Depreciation

 

 

 

 

 

 

 

Balance at beginning of year

 

$

1,087,083

 

$

1,332,073

 

$

1,464,482

 

Depreciation expense

 

140,726

 

154,343

 

151,569

 

Rental property held for sale

 

(30,404

)

(126,503

)

(31,792

)

Properties sold

 

(39,364

)

(217,625

)

(204,837

)

Repurposed buildings

 

 

(22,330

)

 

Impairments

 

 

 

 

Retirements/disposals

 

(60,173

)

(32,875

)

(47,349

)

Balance at end of year

 

$

1,097,868

 

$

1,087,083

 

$

1,332,073

 

MACK-CALI REALTY CORPORATION/MACK-CALI REALTY, L.P. AND SUBSIDIARIES

SCHEDULE IV — MORTGAGE LOANS ON REAL ESTATE



         
  2015  2014  2013
Rental Properties        
Balance at beginning of year$ 4,958,179 $ 5,129,933 $ 5,379,436
Additions  219,227   193,005   317,994
Rental property held for sale  -   -   (107,205)
Properties sold  (82,015)   (331,181)   (256,335)
Impairment charge  (255,849)   -   (149,030)
Retirements/disposals  (31,824)   (33,578)   (54,927)
Balance at end of year$ 4,807,718 $ 4,958,179 $ 5,129,933
         
         
Accumulated Depreciation        
Balance at beginning of year$ 1,414,305 $ 1,400,988 $ 1,478,214
Depreciation expense  147,447   143,278   155,846
Rental property held for sale  -   -   (35,594)
Properties sold  (7,517)   (96,383)   (104,196)
Impairment charge  (57,929)   -   (38,353)
Retirements/disposals  (31,824)   (33,578)   (54,929)
Balance at end of year$ 1,464,482 $ 1,414,305 $ 1,400,988



114

As of December 31, 2018

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Face Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of Mortgages or

 

 

 

 

 

 

 

 

 

Interest

 

Interest

 

Final

 

Periodic

 

 

 

Maximum

 

Carrying

 

Type of 

 

 

 

 

 

Accrual

 

Payment

 

Maturity

 

Payment

 

Prior

 

Available

 

Amount of

 

Loan/Borrower

 

Description

 

Location

 

Rate

 

Rate

 

Date

 

Term (a)

 

Liens

 

Credit

 

Mortgages

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Loan:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrower A

 

Land

 

Jersey City, NJ

 

5.85

%

5.85

%

07/21/19

 

P&I

 

 

$

41,695

 

$

45,242

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

41,695

 

$

45,242

 




(a)  P&I = Principal & Interest at maturity

The following table reconciles mortgage loans from January 1, 2017 to December 31, 2018 (in thousands):

 

 

2018

 

2017

 

Balance at January 1

 

$

45,734

 

$

 

Additions/(repayments)

 

 

 

 

 

New mortgage loan/(repayments)

 

(3,000

)

44,695

 

Accrued interest

 

2,508

 

1,039

 

Balance at December 31,

 

$

45,242

 

$

45,734

 

MACK-CALI REALTY CORPORATION


Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MACK-CALI REALTY, L.P.

EXHIBIT INDEX

Exhibit 

Number

Exhibit Title

3.1

Mack-Cali Realty Corporation
(Registrant)
Date:           February 24, 2016By:/s/ Anthony Krug
Anthony Krug
Chief Financial Officer
(principal financial officer
and principal accounting 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. MackChairman of the BoardFebruary 24, 2016
William L. Mack
/s/ Mitchell E. RudinChief Executive OfficerFebruary 24, 2016
Mitchell E. Rudin(principal executive officer)
/s/ Michael J. DeMarcoPresident and Chief Operating OfficerFebruary 24, 2016
Michael J. DeMarco
/s/ Anthony KrugChief Financial OfficerFebruary 24, 2016
Anthony Krug(principal financial officer
and principal accounting officer)
/s/ Alan S. BernikowDirectorFebruary 24, 2016
Alan S. Bernikow
/s/ Kenneth M. DubersteinDirectorFebruary 24, 2016
Kenneth M. Duberstein
/s/ Nathan GantcherDirectorFebruary 24, 2016
Nathan Gantcher
/s/ Jonathan LittDirectorFebruary 24, 2016
Jonathan Litt

115



/s/ David S. MackDirectorFebruary 24, 2016
David S. Mack
/s/ Alan G. PhilibosianDirectorFebruary 24, 2016
Alan G. Philibosian
/s/ Irvin D. ReidDirectorFebruary 24, 2016
Irvin D. Reid
/s/ Vincent TeseDirectorFebruary 24, 2016
Vincent Tese
/s/ Roy J. ZuckerbergDirectorFebruary 24, 2016
Roy J. Zuckerberg







116


MACK-CALI REALTY CORPORATION

EXHIBIT INDEX



Exhibit 
Number                                                                 Exhibit Title
3.1

Articles of Restatement of Mack-Cali Realty Corporation dated September 18, 2009 (filed as Exhibit 3.2 to the Company’s Form 8-K dated September 17, 2009 and incorporated herein by reference).

3.2

Articles of Amendment to the Articles of Restatement of Mack-Cali Realty Corporation as filed with the State Department of Assessments and Taxation of Maryland on May 14, 2014 (filed as Exhibit 3.1 to the Company’s Form 8-K dated May 12, 2014 and incorporated herein by reference).

3.3

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).
3.4Amendment No. 1 to the

Second 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).

3.5Amendment No. 2 to the Mack-Cali Realty Corporation Amended and Restated Bylaws dated May 24, 200614, 2018 (filed as Exhibit 3.1 to the Company’s Form 8-K dated May 24, 2006March 14, 2018 and incorporated herein by reference).

3.6

3.4

Amendment No. 3 to the Mack-Cali Realty Corporation Amended and Restated Bylaws dated May 14, 2014 (filed as Exhibit 3.2 to the Company’s Form 8-K dated 12, 2014 and incorporated herein by reference).
3.7

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).

3.8

3.5

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).

3.9

3.6

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).

3.10

3.7

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).

4.1

3.8

Fourth Amendment dated as of March 8, 2016 to Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. dated as of December 11, 1997 (Filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated March 8, 2016 and incorporated herein by reference).

3.9

Fifth Amendment dated as of April 4, 2017 to Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. dated as of December 11, 1997 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated April 4, 2017 and incorporated herein by reference).

3.10

Sixth Amendment dated as of April 20, 2018 to Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P., dated as of December 11, 1997 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated April 20, 2018 and incorporated herein by reference).

3.11

Certificate of Designation of 3.5% Series A Preferred Limited Partnership Units of Mack-Cali Realty, L.P. dated February 3, 2017 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated February 3, 2017 and incorporated herein by reference).

3.12

Certificate of Designation of 3.5% Series A-1 Preferred Limited Partnership Units of Mack-Cali Realty, L.P. dated February 28, 2017 (filed as Exhibit 3.13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated herein by reference).

3.13

Amendment No. 1 to the Second Amended and Restated Bylaws of Mack-Cali Realty Corporation (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated April 30, 2018 and incorporated herein by reference).

4.1

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).

4.2

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).

Exhibit 

Number

Exhibit Title

4.3

4.3

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).

4.4

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).

4.5

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).

4.6

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).


117


Exhibit 

4.7

Number                                                                 Exhibit Title
4.7

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 4.24.3 to the Company’s Form 8-K dated March 14, 2003 and incorporated herein by reference).

4.8

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).

4.9

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).

4.10

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).

4.11

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).

4.12

Supplemental Indenture No. 11 dated as of April 15, 2005, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company’s Form 8-K dated April 15, 2005 and incorporated herein by reference).

4.13

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).

4.14

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).

4.15

Supplemental Indenture No. 14 dated as of August 14, 2009, 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 August 14, 2009 and incorporated herein by reference).

4.16

Supplemental Indenture No. 15 dated as of April 19, 2012, 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 19, 2012 and incorporated herein by reference).

4.17

Supplemental Indenture No. 16 dated as of November 20, 2012, 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 20, 2012 and incorporated herein by reference).

4.18

Supplemental Indenture No. 17 dates as of May 8, 2013, 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 May 8, 2013 and incorporated herein by reference).

Exhibit 

Number

Exhibit Title

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).

10.1

10.2 Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.4 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).






118







Exhibit 
Number                                                                 Exhibit Title
10.3Second 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).
10.4Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).
10.5Second 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).
10.6Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.8 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).
10.7

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).

10.8

10.2

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).

10.9

10.3#

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).

10.10

10.4#

Director Stock Option Plan of Mack-Cali Realty Corporation (filed as Exhibit 10.2 to the Company’s Post-Effective Amendment No. 1 to Form S-8, Registration No. 333-44443, and incorporated herein by reference).

10.11

10.5#

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 .

10.6#

First Amendment to the 2000 Employee Stock Option Plan (filed as Exhibit 10.17 to the Company’s Form 10-Q dated June 30, 2002 and incorporated herein by reference).

10.12

10.7#

Amended and Restated 2000 Director Stock Option Plan (filed as Exhibit 10.2 to the Company’s Post-Effective Amendment No. 1 to Registration Statement on Form S-8, Registration No. 333-100244, and incorporated herein by reference).

10.13

10.8#

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).

10.14

10.9#

Amended and Restated Mack-Cali Realty Corporation Deferred Compensation Plan for Directors (filed as Exhibit 10.3 to the Company'sCompany’s Form 8-K dated December 9, 2008 and incorporated herein by reference).

10.15

10.10#

Mack-Cali Realty Corporation 2013 Incentive Stock Plan (filed as Exhibit 10.1 to the Company'sCompany’s Registration Statement on Form S-8 Registration No. 333-188729, and incorporated herein by reference).

10.16

10.11#

Indemnification Agreement by and between Mack-Cali Realty Corporation and William L. Mack dated October 22, 2002 (filed as Exhibit 10.101 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).

10.17

10.12#

Indemnification Agreement by and between Mack-Cali Realty Corporation and Mitchell E. Hersh dated October 22, 2002 (filed as Exhibit 10.102 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.18

Indemnification Agreement by and between Mack-Cali Realty Corporation and Alan S. Bernikow dated May 20, 2004 (filed as Exhibit 10.104 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).

10.19

10.13#

Indemnification Agreement by and between Mack-Cali Realty Corporation and Kenneth M. Duberstein dated September 13, 2005 (filed as Exhibit 10.106 to the Company'sCompany’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).

10.20

10.14#

Indemnification Agreement by and between Mack-Cali Realty Corporation and Nathan Gantcher dated October 22, 2002 (filed as Exhibit 10.107 to the Company'sCompany’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).



119




Exhibit 

10.15#

Number                                                                 Exhibit Title
10.21

Indemnification Agreement by and between Mack-Cali Realty Corporation and David S. Mack dated December 11, 1997 (filed as Exhibit 10.108 to the Company'sCompany’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).

10.22

10.16#

Indemnification Agreement by and between Mack-Cali Realty Corporation and Alan G. Philibosian dated October 22, 2002 (filed as Exhibit 10.109 to the Company'sCompany’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).

10.23

10.17#

Indemnification Agreement by and between Mack-Cali Realty Corporation and Irvin D. Reid dated October 22, 2002 (filed as Exhibit 10.110 to the Company'sCompany’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).

10.24

10.18#

Indemnification Agreement by and between Mack-Cali Realty Corporation and Vincent Tese dated October 22, 2002 (filed as Exhibit 10.111 to the Company'sCompany’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).

10.25

10.19#

Indemnification Agreement by and between Mack-Cali Realty Corporation and Roy J. Zuckerberg dated October 22, 2002 (filed as Exhibit 10.113 to the Company'sCompany’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).

Exhibit

Number

Exhibit Title

10.26

10.20#

Indemnification Agreement by and between Mack-Cali Realty Corporation and Barry LefkowitzRebecca Robertson dated October 22, 2002September 27, 2016 (filed as Exhibit 10.11410.19 to the Company'sCompany’s Annual Report on Form 10-Q dated September 30, 201010-K for the year ended December 31, 2016 and incorporated herein by reference).

10.27

10.21#

Indemnification Agreement by and between Mack-Cali Realty Corporation and Roger W. Thomas dated October 22, 2002 (filed as Exhibit 10.116 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.28

Indemnification Agreement by and between Mack-Cali Realty Corporation and Anthony Krug dated October 22, 2002 (filed as Exhibit 10.32 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 and incorporated herein by reference).

10.29

10.22#

Indemnification Agreement by and between Mack-Cali Realty Corporation and Jonathan Litt dated March 3, 2014 (filed as Exhibit 10.33 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 and incorporated herein by reference).

10.30

10.23#

Indemnification Agreement by and between Mack-Cali Realty Corporation and Gary T. Wagner dated November 11, 2011 (filed as Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and incorporated herein by reference).

10.31

10.24

Indemnification Agreement dated October 22, 2002 by and between Mack-Cali Realty Corporation and John Crandall (filed as Exhibit 10.29 to the Company's Form 10-Q dated September 30, 2002 and incorporated herein by reference).
10.32

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'sCompany’s Form 10-K dated December 31, 2002 and incorporated herein by reference).

10.33

10.25

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'sCompany’s Form 10-K dated December 31, 2005 and incorporated herein by reference).

10.34

10.26

Term Loan Agreement among Mack-Cali Realty, L.P. and JPMorgan Chase Bank, N.A. as Administrative Agent, J.P. Morgan Securities Inc. as Arranger, and other lender which may become parties to this Agreement dated November 29, 2006 (filed as Exhibit 10.120 to the Company's Form 10-K dated December 31, 2006 and incorporated herein by reference).
10.35Agreement of Purchase and Sale among SLG Broad Street A LLC and SLG Broad Street C LLC, as Sellers, and M-C Broad 125 A L.L.C. and M-C Broad 125 C L.L.C., as Purchasers, dated as of March 15, 2007 (filed as Exhibit 10.121 to the Company's Form 10-Q dated March 31, 2007 and incorporated herein by reference).



120




Exhibit 
Number                                                                 Exhibit Title
10.36

Mortgage and Security Agreement and Financing Statement dated October 28, 2008 between M-C Plaza V L.L.C., Cal-Harbor V Urban Renewal Associates, L.P., Cal-Harbor V Leasing Associates L.L.C., as Mortgagors and The Northwestern Mutual Life Insurance Company and New York Life Insurance Company as Mortgagees (filed as Exhibit 10.131 to the Company'sCompany’s Form 10-Q dated September 30, 2008 and incorporated herein by reference).

10.37

10.27

Promissory Note of M-C Plaza V L.L.C., Cal-Harbor V Urban Renewal Associates, L.P., Cal-Harbor V Leasing Associates L.L.C., as Borrowers, in favor of The Northwestern Mutual Life Insurance Company, as Lender, in the principal amount of $120,000,000, dated October 28, 2008. (filed as Exhibit 10.132 to the Company'sCompany’s Form 10-Q dated September 30, 2008 and incorporated herein by reference).

10.38

10.28

Promissory Note of M-C Plaza V L.L.C., Cal-Harbor V Urban Renewal Associates, L.P., Cal-Harbor V Leasing Associates L.L.C., as Borrowers, in favor of New York Mutual Life Insurance Company, as Lender, in the principal amount of $120,000,000, dated October 28, 20082008. (filed as Exhibit 10.133 to the Company'sCompany’s Form 10-Q dated September 30, 2008 and incorporated herein by reference).

10.39

10.29

Guarantee of Recourse Obligations of Mack-Cali Realty, L.P. in favor of The Northwestern Mutual Life Insurance Company and New York Life Insurance Company dated October 28, 2008 (filed as Exhibit 10.134 to the Company'sCompany’s Form 10-Q dated September 30, 2008 and incorporated herein by reference).

10.40

10.30

Amended and Restated Loan Agreement by and among 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, collectively, as Borrowers and Gramercy Warehouse Funding I LLC, as Lender, dated April 29, 2009 (filed as Exhibit 10.144 to the Company's Form 10-Q dated March 31, 2009 and incorporated herein by reference).
10.41Amended and Restated 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, dated April 29, 2009 (filed as Exhibit 10.145 to the Company's Form 10-Q dated March 31, 2009 and incorporated herein by reference).
10.42Limited Liability Company Membership Interest Purchase and Sale Agreement dated April 29, 2009 by and among Gale SLG NJ LLC, Mack-Cali Ventures L.L.C., SLG Gale 55 Corporation LLC and 55 Corporate Partners L.L.C.  (filed as Exhibit 10.146 to the Company's Form 10-Q dated March 31, 2009 and incorporated herein by reference).
10.43Amended and Restated Master Loan Agreement dated as of January 15, 2010 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 and VPCM, LLC, as Lenders (filed as Exhibit 10.1 to the Company's Form 8-K dated January 15, 2010 and incorporated herein by reference).
10.44Partial Recourse Guaranty of Mack-Cali Realty, L.P. dated as of January 15, 2010 to The Prudential Insurance Company of America and VPCM, LLC (filed as Exhibit 10.2 to the Company's Form 8-K dated January 15, 2010 and incorporated herein by reference).
10.45Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali Realty, L.P., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Centre I in Bergen County, New Jersey (filed as Exhibit 10.165 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.46Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali Realty, L.P., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Centre II in Bergen County, New Jersey (filed as Exhibit 10.166 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.47Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali Realty, L.P., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Centre III in Bergen County, New Jersey (filed as Exhibit 10.167 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).



121





Exhibit 
Number                                                                 Exhibit Title
10.48Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali Realty, L.P., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Centre IV in Bergen County, New Jersey filed as Exhibit 10.168 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.49Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali F Properties, L.P., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Centre VII in Bergen County, New Jersey (filed as Exhibit 10.169 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.50Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali Chestnut Ridge, L.L.C., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Corp. Center in Bergen County, New Jersey (filed as Exhibit 10.170 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.51Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali Realty, L.P., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.171 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.52Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Centre I in Bergen County, New Jersey  (filed as Exhibit 10.172 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.53Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to Mack-Cali Centre I in Bergen County, New Jersey (filed as Exhibit 10.173 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.54Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Centre II in Bergen County, New Jersey (filed as Exhibit 10.174 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.55Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to Mack-Cali Centre II in Bergen County, New Jersey (filed as Exhibit 10.175 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.56Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Centre III in Bergen County, New Jersey (filed as Exhibit 10.176 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.57Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to Mack-Cali Centre III in Bergen County, New Jersey (filed as Exhibit 10.177 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.58Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Centre IV in Bergen County, New Jersey (filed as Exhibit 10.178 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.59Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to Mack-Cali Centre IV in Bergen County, New Jersey (filed as Exhibit 10.179 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.60Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali F Properties, L.P. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Centre VII in Bergen County, New Jersey  (filed as Exhibit 10.180 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.61Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali F Properties, L.P. in favor of VPCM, LLC with respect to Mack-Cali Centre VII in Bergen County, New Jersey (filed as Exhibit 10.181 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).



122





Exhibit 
Number                                                                 Exhibit Title
10.62Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Chestnut Ridge, L.L.C. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Corp. Center in Bergen County, New Jersey  (filed as Exhibit 10.182 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.63Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Chestnut Ridge, L.L.C. in favor of VPCM, LLC with respect to Mack-Cali Corp. Center in Bergen County, New Jersey (filed as Exhibit 10.183 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.64Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.184 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.65Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.185 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.66Recourse Liabilities Guaranty dated January 15, 2010 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to certain liabilities of Mack-Cali Realty, L.P. with respect to Mack-Cali Centre I in Bergen County, New Jersey (filed as Exhibit 10.186 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.67Recourse Liabilities Guaranty dated January 15, 2010 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to certain liabilities of Mack-Cali Realty, L.P. with respect to Mack-Cali Centre II in Bergen County, New Jersey (filed as Exhibit 10.187 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.68Recourse Liabilities Guaranty dated January 15, 2010 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to certain liabilities of Mack-Cali Realty, L.P. with respect to Mack-Cali Centre III in Bergen County, New Jersey (filed as Exhibit 10.188 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.69Recourse Liabilities Guaranty dated January 15, 2010 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to certain liabilities of Mack-Cali Realty, L.P. with respect to Mack-Cali Centre IV in Bergen County, New Jersey (filed as Exhibit 10.189 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.70Recourse Liabilities Guaranty dated January 15, 2010 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to certain liabilities of Mack-Cali F Properties, L.P. with respect to Mack-Cali Centre VII in Bergen County, New Jersey (filed as Exhibit 10.190 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.71Recourse Liabilities Guaranty dated January 15, 2010 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to certain liabilities of Mack-Cali Chestnut Ridge, L.L.C. with respect to Mack-Cali Corp. Center in Bergen County, New Jersey (filed as Exhibit 10.191 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.72Recourse Liabilities Guaranty dated January 15, 2010 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to certain liabilities of Mack-Cali Realty, L.P. with respect to Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.192 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.73Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Centre I in Bergen County, New Jersey (filed as Exhibit 10.193 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).






123





Exhibit 
Number                                                                 Exhibit Title
10.74Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Centre II in Bergen County, New Jersey (filed as Exhibit 10.194 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.75Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Centre III in Bergen County, New Jersey (filed as Exhibit 10.195 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.76Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Centre IV in Bergen County, New Jersey (filed as Exhibit 10.196 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.77Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali F Properties, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Centre VII in Bergen County, New Jersey (filed as Exhibit 10.197 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.78Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Chestnut Ridge, L.L.C. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Corp. Center in Bergen County, New Jersey (filed as Exhibit 10.198 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.79Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.199 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
10.80

Development Agreement dated December 5, 2011 by and between M-C Plaza VI & VII L.L.C. and Ironstate Development LLC (filed as Exhibit 10.1 to the Company'sCompany’s Form 8-K dated December 5, 2011 and incorporated herein by reference).

10.81

10.31

Form of Amended and Restated Limited Liability Company Agreement (filed as Exhibit 10.2 to the Company'sCompany’s Form 8-K dated December 5, 2011 and incorporated herein by reference).

Exhibit 

Number

Exhibit Title

10.82

Third Amended and Restated Revolving Credit Agreement among Mack-Cali Realty, L.P., as borrower, and JPMorgan Chase Bank, N.A., as the administrative agent, the other agents listed therein and the lending institutions party thereto and referred to therein dated as of October 21, 2011 (filed as Exhibit 10.134 to the Company's Form 10-Q dated September 30, 2011 and incorporated herein by reference).

10.32

10.83

Fourth Amended and Restated Revolving Credit Agreement dated as of July 16, 2013 among Mack Cali Realty, L.P., as borrower, Mack-Cali Realty Corporation, as guarantor, and JPMorgan Chase Bank, N.A., as administrative agent and the several Lenders party thereto, as lenders (filed as Exhibit 10.1 to the Company'sCompany’s Form 8-K dated July 16, 2013 and incorporated herein by reference).

10.84

10.33#

Multi-Year Restricted Stock Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to the Company's Form 8-K dated September 12, 2012 and incorporated herein by reference).





124




Exhibit 
Number                                                                 Exhibit Title
10.85Multi-Year Restricted Stock Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.2 to the Company's Form 8-K dated September 12, 2012 and incorporated herein by reference).
10.86Multi-Year Restricted Stock Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.3 to the Company's Form 8-K dated September 12, 2012 and incorporated herein by reference).
10.87Amended and Restated TSR-Based Performance Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to the Company's Form 8-K dated June 12, 2013 and incorporated herein by reference).
10.88Amended and Restated TSR-Based Performance Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.2 to the Company's Form 8-K dated June 12, 2013 and incorporated herein by reference).
10.89Amended and Restated TSR-Based Performance Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.3 to the Company's Form 8-K dated June 12, 2013 and incorporated herein by reference).
10.90Deferred Retirement Compensation Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.7 to the Company's Form 8-K dated September 12, 2012 and incorporated herein by reference).
10.91Deferred Retirement Compensation Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.8 to the Company's Form 8-K dated September 12, 2012 and incorporated herein by reference).
10.92Deferred Retirement Compensation Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.9 to the Company's Form 8-K dated September 12, 2012 and incorporated herein by reference).
10.93

Form of Restricted shareShare Award Agreement effective December 10, 2013 by and between Mack-Cali Realty Corporation and each of Mitchell E. Hersh, Barry Lefkowitz, Roger W. Thomas and Anthony Krug (filed as Exhibit 10.1 to the Company'sCompany’s Form 8-K dated December 10, 2013 and incorporated herein by reference).

10.94

10.34#

Form of Restricted Share Award Agreement effective December 10, 2013 by and between Mack-Cali Realty Corporation and each of William L. Mack, Alan S. Bernikow, Kenneth M. Duberstein, Nathan Gantcher, David S. Mack, Alan G. Philibosian, Dr. Irvin D. Reid, Vincent Tese and Roy J. Zuckerberg (filed as Exhibit 10.2 to the Company'sCompany’s Form 8-K dated December 10, 2013 and incorporated herein by reference).

10.95

10.35#

Form of Restricted Share Award Agreement effective December 9, 2014 by and between Mack-Cali Realty Corporation and each of William L. Mack, Alan S. Bernikow, Kenneth M. Duberstein, Nathan Gantcher, Jonathan Litt, David S. Mack, Alan G. Philibosian, Dr. Irvin D. Reid, Vincent Tese and Roy J. Zuckerberg (filed as Exhibit 10.1 to the Company’s Form 8-K dated December 9, 2014 and incorporated herein by reference).

10.96

10.36

Membership Interest and Asset Purchase Agreement, dated as of October 8, 2012 (the "Purchase Agreement"“Purchase Agreement”), by and among Mack-Cali Realty, L.P., Mack-Cali Realty Corporation, Mack-Cali Realty Acquisition Corp., Roseland Partners, L.L.C., and, for the limited purposes stated in the Purchase Agreement, each of Marshall B. Tycher, Bradford R. Klatt and Carl Goldberg (filed as Exhibit 10.1 to the Company'sCompany’s Form 8-K dated October 8, 2012 and incorporated herein by reference).

10.97

10.37

Purchase and Sale Agreement, dated as of January 17, 2013 by and between Overlook Ridge Phase I, L.L.C., Overlook Ridge Phase IB, L.L.C. and Mack-Cali Realty Acquisition Corp. (filed as Exhibit 10.1 to the Company's Form 8-K dated January 17, 2012 and incorporated herein by reference)




125




Exhibit 
Number                                                                 Exhibit Title
10.98Agreement of Sale and Purchase dated as of July 15, 2013 by and between Mack-Cali Pennsylvania Realty Associates, L.P., as seller, and Westlakes KPG III, LLC and Westlakes Land KPG III, LLC, as purchasers (filed as Exhibit 10.1 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
10.99Agreement of Sale and Purchase dated as of July 15, 2013 by and between M-C Rosetree Associates, L.P., as seller, and Rosetree KPG III, LLC and Rosetree Land KPG III, LLC, as purchasers (filed as Exhibit 10.2 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
10.100Agreement of Sale and Purchase dated as of July 15, 2013 by and between Mack-Cali-R Company No. 1 L.P., as seller, and Plymouth Meeting KPG III, LLC, as purchaser (filed as Exhibit 10.3 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
10.101Agreement of Sale and Purchase dated as of July 15, 2013 by and between Stevens Airport Realty Associates L.P., as seller, and Airport Land KPG III, LLC, as purchaser (filed as Exhibit 10.4 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
10.102Agreement of Sale and Purchase dated as of July 15, 2013 by and between Mack-Cali Airport Realty Associates L.P., as seller, and 100 Airport KPG III, LLC, 200 Airport KPG III, LLC and 300 Airport KPG III, LLC, as purchasers (filed as Exhibit 10.5 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
10.103Agreement of Sale and Purchase dated as of July 15, 2013 by and between Mack-Cali Property Trust, as seller, and 1000 Madison KPG III, LLC, as purchaser (filed as Exhibit 10.6 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
10.104Agreement of Sale and Purchase dated as of July 15, 2013 by and between Monument 150 Realty L.L.C., as seller, and Monument KPG III, LLC, as purchaser (filed as Exhibit 10.7 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
10.105Agreement of Sale and Purchase dated as of July 15, 2013 by and between 4 Sentry Realty L.L.C. and Five Sentry Realty Associates L.P., as sellers, and Four Sentry KPG, LLC and Five Sentry KPG III, LLC, as purchasers (filed as Exhibit 10.8 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
10.106Agreement of Sale and Purchase dated as of February 24, 2014 by and between Talleyrand Realty Associates, L.L.C., as seller, and H'Y2 Talleyrand, LLC, as purchaser (filed as Exhibit 10.1 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
10.107Agreement of Sale and Purchase dated as of February 24, 2014 by and between 400 Chestnut Realty L.L.C., as seller, and H'Y2 400 Chestnut Ridge, LLC, as purchaser (filed as Exhibit 10.2 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
10.108Agreement of Sale and Purchase dated as of February 24, 2014 by and between 470 Chestnut Realty L.L.C., as seller, and H'Y2 470 Chestnut Ridge, LLC, as purchaser (filed as Exhibit 10.3 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
10.109Agreement of Sale and Purchase dated as of February 24, 2014 by and between 530 Chestnut Realty L.L.C., as seller, and H'Y2 530 Chestnut Ridge, LLC, as purchaser (filed as Exhibit 10.4 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).






126






Exhibit 
Number                                                                 Exhibit Title
10.110Agreement of Sale and Purchase dated as of February 24, 2014 by and between Mack-Cali Taxter Associates, L.L.C., as seller, and H'Y2 Taxter, LLC, as purchaser (filed as Exhibit 10.5 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
10.111Agreement of Sale and Purchase dated as of February 24, 2014 by and between Mack-Cali CW Realty Associates, L.L.C., as seller, and H'Y2 570 Taxter, LLC, as purchaser (filed as Exhibit 10.6 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
10.112Agreement of Sale and Purchase dated as of February 24, 2014 by and between 1717 Realty Associates L.L.C., as seller, and H'Y2 Ruote 208, LLC, as purchaser (filed as Exhibit 10.7 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
10.113Agreement of Sale and Purchase dated as of February 24, 2014 by and between Knightsbridge Realty L.L.C., as seller, and H'Y2 400 Knightsbridge, LLC, as purchaser (filed as Exhibit 10.8 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
10.114Agreement of Sale and Purchase dated as of February 24, 2014 by and between Kemble Plaza II Realty L.L.C., as seller, and H'Y2 400 Mt Kemble, LLC, as purchaser (filed as Exhibit 10.9 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
10.115Agreement of Sale and Purchase dated as of February 24, 2014 by and between 1266 Soundview Realty L.L.C., as seller, and H'Y2 Stamford, LLC, as purchaser (filed as Exhibit 10.10 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
10.116

Agreement dated February 28, 2014 by and among Mack-Cali Realty Corporation, Land & Buildings Capital Growth Fund, L.P., Land & Buildings Investment Management,LLC and Jonathan Litt (filed as Exhibit 10.116 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and incorporated herein by reference).

10.117

10.38#

Settlement and General Release Agreement dated March 1, 2014 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.117 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and incorporated herein by reference).
10.118Settlement and General Release Agreement dated March 1, 2014 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.118 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and incorporated herein by reference).
10.119

Restricted shareShare Award Agreement effective March 19, 2014 by and between Mack-Cali Realty Corporation and Anthony Krug (filed as Exhibit 10.1 to the Company'sCompany’s Form 8-K dated March 21, 2014 and incorporated herein by reference).

10.120

10.39

Separation Agreement dated July 18, 2014 by and between Roseland Management Services, L.P. and Bradford R. Klatt (filed as Exhibit 10.122 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and incorporated herein by reference).
10.121Separation Agreement dated July 18, 2014 by and between Roseland Management Services, L.P. and Carl Goldberg (filed as Exhibit 10.123 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and incorporated herein by reference).
10.122

Amendment to Membership Interest and Asset Purchase Agreement, dated as of July 18, 2014, by and among Mack-Cali Realty, L.P., Mack-Cali Realty Corporation, Mack-Cali Realty Acquisition Corp., Canoe Brook Investors, L.L.C. (formerly known as Roseland Partners, L.L.C.), Marshall B. Tycher, Bradford R. Klatt and Carl Goldberg (filed as Exhibit 10.124 to the Company'sCompany’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and incorporated herein by reference).





127




Exhibit 

10.40#

Number                     ��                                           Exhibit Title
10.123Consulting Agreement dated July 18, 2014 by and between Roseland Management Services, L.P. and Carl Goldberg and Devra Goldberg (filed as Exhibit 10.125 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and incorporated herein by reference).
10.124Separation Agreement dated November 4, 2014 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November 4, 2014 and incorporated herein by reference).
10.125

Severance Agreement dated March 4, 2015 by and between Anthony Krug and Mack-Cali Realty Corporation (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 4, 2015 and incorporated herein by reference).

10.126

10.41#

Severance Agreement dated March 4, 2015 by and between Gary T. Wagner and Mack-Cali Realty Corporation (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated March 4, 2015 and incorporated herein by reference).

10.127

10.42#

Employment Agreement dated June 3, 2015 by and between Mitchell E. Rudin and Mack-Cali Realty Corporation (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 3, 2015 and incorporated herein by reference).

Exhibit 

Number

Exhibit Title

10.128

10.43#

Employment Agreement dated June 3, 2015 by and between Michael J. DeMarco and Mack-Cali Realty Corporation (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated June 3, 2015 and incorporated herein by reference).

10.129

10.44#

Indemnification Agreement dated June 3, 2015 by and between Mitchell E. Rudin and Mack-Cali Realty Corporation (filed as Exhibit 10.129 to the Company'sCompany’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 and incorporated herein by reference).

10.130

10.45#

Indemnification Agreement dated June 3, 2015 by and between Michael J. DeMarco and Mack-Cali Realty Corporation (filed as Exhibit 10.130 to the Company'sCompany’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 and incorporated herein by reference).

10.131

10.46#

Indemnification Agreement dated September 22, 2015 by and between Marshall B. Tycher and Mack-Cali Realty Corporation (filed as Exhibit 10.131 to the Company'sCompany’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 and incorporated herein by reference).

10.132

10.47#

Employment Agreement dated October 23, 2012 by and between Marshall B. Tycher and Mack-Cali Realty Corporation (filed as Exhibit 10.132 to the Company'sCompany’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 and incorporated herein by reference).

10.133

10.48#

Indemnification Agreement dated June 10, 2013 by and between Ricardo Cardoso and Mack-Cali Realty Corporation (filed as Exhibit 10.133 to the Company'sCompany’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 and incorporated herein by reference).

10.134

10.49

Term Loan Agreement dated as of January 7, 2016 among Mack Cali Realty, L.P., as borrower, Mack-Cali Realty Corporation, as guarantor, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and Wells Fargo Securities LLC as joint lead arrangers and joint bookrunners, Bank of American, N.A., as administrative agent, JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A. and Capital One, National Association, as syndication agents, U.S. Bank National Association, as documentation agent, and the several Lenders party thereto, as lenders (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 6, 2016 and incorporated herein by reference).

10.50


128



Exhibit 
Number                                                                 Exhibit Title
10.135

International Swaps and Derivatives Association, Inc. 2002 Master Agreement dated as of December 30, 2015 by and between Capital One, National Association and Mack-Cali Realty, L.P. (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated January 6, 2016 and incorporated herein by reference).

10.136

10.51

International Swaps

Amended, Restated and Derivatives Association, Inc. 2002 Master AgreementConsolidated Promissory Note dated asJanuary 15, 2010 of January 4, 2016 by and between Citibank, N.A. and Mack-Cali Realty, L.P.Chestnut Ridge, L.L.C. in favor of VPCM, LLC with respect to Mack-Cali Corp. Center in Bergen County, New Jersey (filed as Exhibit 10.310.183 to the Company’s Current Report on Form 8-K10-Q dated January 6, 2016September 30, 2010 and incorporated herein by reference).

10.137

10.52

International Swaps

Amended, Restated and Derivatives Association, Inc. 2002 Master AgreementConsolidated Promissory Note dated asJanuary 15, 2010 of January 6, 2016 by and between Comerica Bank and Mack-Cali Realty, L.P. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.410.184 to the Company’s Current Report on Form 8-K10-Q dated January 6, 2016September 30, 2010 and incorporated herein by reference).

10.138

10.53

International Swaps and Derivatives Association, Inc. 2002 Master Agreement dated as of January 5, 2016 by and between PNC Bank, National Association and Mack-Cali Realty, L.P. (filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K dated January 6, 2016 and incorporated herein by reference).

10.139

10.54

International Swaps and Derivatives Association, Inc. 2002 Master Agreement dated as of December 21,30, 2015 by and between U.S. Bank National Association and Mack-Cali Realty, L.P. (filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K dated January 6, 2016 and incorporated herein by reference).

12.1*

10.55#

Form of 2016 Time-Based Long-Term Incentive Plan Award Agreement (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 8, 2016 and incorporated herein by reference).

10.56#

Form of 2016 Performance-Based Long-Term Incentive Plan Award Agreement (Filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated March 8, 2016 and incorporated herein by reference).

Exhibit 

Number

Exhibit Title

10.57#

Form of Restricted Share Award Agreement effective March 8, 2016 by and between Mack-Cali Realty Corporation and each of William L. Mack, Alan S. Bernikow, Kenneth M. Duberstein, Nathan Gantcher, Jonathan Litt, David S. Mack, Alan G. Philibosian, Dr. Irvin D. Reid, Vincent Tese and Roy J. Zuckerberg (Filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K dated March 8, 2016 and incorporated herein by reference).

10.58#

Employment Agreement dated April 15, 2016 by and between Robert Andrew Marshall and Roseland Residential Trust (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 15, 2016 and incorporated herein by reference).

10.59

Amended and Restated Revolving Credit and Term Loan Agreement dated as of January 25, 2017 among Mack-Cali Realty, L.P., as borrower, JPMorgan Chase Bank, N.A., as the administrative agent and fronting bank, Wells Fargo Bank, N.A. and Bank of America, N.A. as syndication agents and fronting banks, and the other agents listed therein and the lending institutions party thereto and referred to therein (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 25, 2017 and incorporated herein by reference).

10.60

Preferred Equity Investment Agreement Among Mack-Cali Realty Corporation, Mack-Cali Realty, L.P., Mack-Cali Property Trust, Mack-Cali Test Property, L.P., Roseland Residential Trust, Roseland Residential Holding L.L.C., Roseland Residential L.P., RPIIA-RLA, L.L.C. and RPIIA-RLB, L.L.C. dated as of February 27, 2017 (filed as Exhibit 10.125 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and incorporated herein by reference).

10.61

Second Amended and Restated Limited Partnership Agreement of Roseland Residential, L.P. dated March 10, 2017 (filed as Exhibit 10.126 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 and incorporated herein by reference).

10.62

Shareholders Agreement of Roseland Residential Trust dated March 10, 2017 (filed as Exhibit 10.127 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 and incorporated herein by reference).

10.63

Discretionary Demand Promissory Note dated March 10, 2017 (filed as Exhibit 10.128 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 and incorporated herein by reference).

10.64

Shared Services Agreement by and between Mack-Cali Realty, L.P. and Roseland Residential, L.P. dated March 10, 2017 (filed as Exhibit 10.129 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 and incorporated herein by reference).

10.65

Recourse Agreement by and between Mack-Cali Realty Corporation, Mack-Cali Realty, L.P., Roseland Residential Trust, RP-RLA, LLC and RP-RLB, LLC dated March 10, 2017 (filed as Exhibit 10.130 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 and incorporated herein by reference).

10.66

Registration Rights Agreement dated March 10, 2017 (filed as Exhibit 10.131 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 and incorporated herein by reference).

10.67

Indemnity Agreement dated March 10, 2017 (filed as Exhibit 10.132 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 and incorporated herein by reference).

10.68

International Swaps and Derivatives Association, Inc. 2002 Master Agreement, and its schedule thereto, dated as of February 7, 2017 by and between Bank of America, N.A. and Mack-Cali Realty, L.P. (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated March 29, 2017 and incorporated herein by reference).

10.69

International Swaps and Derivatives Association, Inc. 2002 Master Agreement, and its schedule thereto, dated as of March 6, 2017 by and between Fifth Third Bank and Mack-Cali Realty, L.P. (filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K dated March 29, 2017 and incorporated herein by reference).

Exhibit 

Number

Exhibit Title

10.70

International Swaps and Derivatives Association, Inc. 2002 Master Agreement, and its schedule thereto, dated as of March 15, 2017 by and between The Bank of New York Mellon and Mack-Cali Realty, L.P. (filed as Exhibit 10.7 to the Company’s Current Report on Form 8-K dated March 29, 2017 and incorporated herein by reference).

10.71#

Amendment, dated as of April 4, 2017, to Executive Employment Agreement, dated as of June 3, 2015, by and between Mitchell E. Rudin and Mack-Cali Realty Corporation (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 4, 2017 and incorporated herein by reference).

10.72#

Employment Agreement dated April 26, 2017 by and between Marshall B. Tycher and Roseland Residential Trust (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 26, 2017 and incorporated herein by reference).

10.73#

Employment Agreement dated January 26, 2018 between Mack-Cali Realty Corporation and David Smetana (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 26, 2018 and incorporated herein by reference).

10.74#

Employment Agreement dated January 26, 2018 between Mack-Cali Realty Corporation and Nicholas Hilton (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated January 26, 2018 and incorporated herein by reference).

10.75#

Employment Agreement dated January 26, 2018 between Mack-Cali Realty Corporation and Gary T. Wagner (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K dated January 26, 2018 and incorporated herein by reference).

10.76#

Employment Agreement dated January 26, 2018 between Mack-Cali Realty Corporation and Ricardo Cardoso (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K dated January 26, 2018 and incorporated herein by reference).

10.77#

Separation Agreement and Release dated January 26, 2018 between Mack-Cali Realty Corporation and Anthony Krug (filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K dated January 26, 2018 and incorporated herein by reference).

10.78#

Separation Agreement and Release dated January 26, 2018 between Mack-Cali Realty Corporation and Christopher DeLorenzo (filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K dated January 26, 2018 and incorporated herein by reference).

10.79#

Indemnification Agreement by and between Mack-Cali Realty Corporation and David Smetana dated January 29, 2018 (filed as Exhibit 10.145 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 and incorporated herein by reference).

10.80#

Indemnification Agreement by and between Mack-Cali Realty Corporation and Nicholas Hilton dated February 12, 2018 (filed as Exhibit 10.146 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 and incorporated herein by reference).

10.81#

Separation and General Release Agreement, dated as of June 14, 2018, by and between Mack-Cali Realty Corporation and Mitchell E. Rudin (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 14, 2018 and incorporated herein by reference).

10.82

Amendment No. 1 dated as of August 30, 2018 but effective as of June 30, 2018 to Amended and Restated Revolving Credit and Term Loan Agreement dated as of January 25, 2017 among Mack-Cali Realty, L.P., as borrower, JPMorgan Chase Bank, N.A., as the administrative agent and fronting bank, Wells Fargo Bank, N.A. and Bank of America, N.A. as syndication agents and fronting banks, and the other agents listed therein and the lending institutions party thereto and referred to therein (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 31, 2018 and incorporated herein by reference).

10.83

Amendment No. 2 dated as of August 30, 2018 but effective as of June 30, 2018 to Term Loan Agreement dated as of January 7, 2016 among Mack-Cali Realty, L.P., as borrower, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and Wells Fargo Securities LLC as joint lead arrangers, Bank of American, N.A., as administrative agent, JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A. and Capital One, National Association, as syndication agents, U.S. Bank National Association, as documentation agent, and PNC Bank, National Association, and Citibank, N.A. as other lenders (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated August 31, 2018 and incorporated herein by reference).

10.84#

Separation and Consulting Agreement, dated as of October 31, 2018, by and among Robert Andrew Marshall, Roseland Residential Trust and, solely for purposes of Sections 3 and 9 thereof, Mack-Cali Realty Corporation (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November 2, 2018 and incorporated herein by reference).

Exhibit 

Number

Exhibit Title

12.1*

Calculation of Ratios of Earnings to Fixed Charges.

12.2*Calculation of RatiosCharges and of Earnings to Combined Fixed Charges and Preferred Security Dividends.Dividends for the General Partner.

21.1*

12.2*

Calculation of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed Charges and Preferred Security Dividends for the Operating Partnership.

21.1*

Subsidiaries of the Company.General Partner.

23.1*

21.2*

Subsidiaries of the Operating Partnership.

23.1*

Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm.firm, with respect to the General Partner.

31.1*

23.2*

Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm, with respect to the Operating Partnership.

31.1*

Certification of the Company’sGeneral Partner’s Chief Executive Officer, Mitchell E. Rudin, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*Certification of the Company’s President and Chief Operating Officer, Michael J. DeMarco, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002, with respect to the General Partner.

31.3*

31.2*

Certification of the Company’sGeneral Partner’s Chief Financial Officer, Anthony Krug,David J. Smetana, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002, with respect to the General Partner.

32.1*

31.3*

Certification of the Company’sGeneral Partner’s Chief Executive Officer, Mitchell E. Rudin,Michael J. DeMarco, pursuant to Section 302 of the Company’s President andSarbanes-Oxley Act of 2002, with respect to the Operating Partnership.

31.4*

Certification of the General Partner’s Chief Financial Officer, David J. Smetana, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the Operating Partnership.

32.1*

Certification of the General Partner’s Chief Executive Officer, Michael J. DeMarco and the Company’sGeneral Partner’s Chief Financial Officer, Anthony Krug,David J. Smetana, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.2002, with respect to the General Partner.

101.1*

32.2*

101.1*

The following financial statements from Mack-Cali Realty Corporation’s AnnualCorporation and Mack-Cali Realty, L.P. from their combined Report on Form 10-K for the year ended December 31, 20152018 formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated StatementStatements of Comprehensive Income, (iv) Consolidated Statements of Changes in Equity, (iv)(v) Consolidated Statements of Cash Flows and (v)(vi) Notes to Consolidated Financial Statements. 


* filed herewith

# management contract or compensatory plan or arrangement

MACK-CALI REALTY CORPORATION

MACK-CALI REALTY, L.P.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Mack-Cali Realty Corporation

(Registrant)

* filed herewith

Date: February 20, 2019

By:

/s/ Michael J. DeMarco

Michael J. DeMarco

Chief Executive Officer

(principal executive officer)

Date: February 20, 2019

By:

/s/ David J. Smetana

David J. Smetana

Chief Financial Officer

(principal financial officer and principal accounting officer)

Mack-Cali Realty, L.P.

(Registrant)

By:

Mack-Cali Realty Corporation

its General Partner

Date: February 20, 2019

By:

/s/ Michael J. DeMarco

Michael J. DeMarco

Chief Executive Officer

(principal executive officer)

Date: February 20, 2019

By:

/s/ David J. Smetana

David J. Smetana

Chief Financial Officer

(principal financial officer and principal accounting officer)



129

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Name

Title

Date

/s/ WILLIAM L. MACK

Chairman of the Board

February 20, 2019

William L. Mack

/s/ MICHAEL J. DEMARCO

Chief Executive Officer and Director

February 20, 2019

Michael J. DeMarco

(principal executive officer)

/s/ DAVID J. SMETANA

Chief Financial Officer

February 20, 2019

David J. Smetana

(principal financial officer and principal accounting officer)

/s/ ALAN S. BERNIKOW

Director

February 20, 2019

Alan S. Bernikow

/s/ KENNETH M. DUBERSTEIN

Director

February 20, 2019

Kenneth M. Duberstein

/s/ NATHAN GANTCHER

Director

February 20, 2019

Nathan Gantcher

/s/ DAVID S. MACK

Director

February 20, 2019

David S. Mack

/s/ ALAN G. PHILIBOSIAN

Director

February 20, 2019

Alan G. Philibosian

/s/ IRVIN D. REID

Director

February 20, 2019

Irvin D. Reid

/s/ REBECCA ROBERTSON

Director

February 20, 2019

Rebecca Robertson

/s/ VINCENT TESE

Director

February 20, 2019

Vincent Tese

139