UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-13274
Mack-Cali Realty Corporation
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(Exact name of registrant as specified in its charter)
Maryland 22-3305147
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11 Commerce Drive, Cranford, New Jersey 07016-3501
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(Address or principal executive office)
(Zip Code)
(908) 272-8000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed since
last report)
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 twelve (12) months (or such shorter period that the
Registrant was required to file such report) YES X NO and (2) has been subject
to such filing requirements for the past ninety (90) days YES X NO .
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of April 30, 2001, there were 56,993,884 shares of $0.01 par value common
stock outstanding.
1
MACK-CALI REALTY CORPORATION
FORM 10-Q
INDEX
PART I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 2001
and December 31, 2000 4
Consolidated Statements of Operations for the three months
ended March 31, 2001 and 2000 5
Consolidated Statement of Changes in Stockholders' Equity
for the three months ended March 31, 2001 6
Consolidated Statements of Cash Flows for the three months
ended March 31, 2001 and 2000 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 27
Item 3. Quantitative and Qualitative Disclosures about Market Risk 34
PART II OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings 35
Item 2. Changes in Securities and Use of Proceeds 35
Item 3. Defaults Upon Senior Securities 35
Item 4. Submission of Matters to a Vote of Security Holders 35
Item 5. Other Information 35
Item 6. Exhibits 36
Signatures 39
2
MACK-CALI REALTY CORPORATION
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
The accompanying unaudited consolidated balance sheets, statements of
operations, of changes in stockholders' equity, and of cash flows and
related notes, have been prepared in accordance with generally
accepted accounting principles ("GAAP") for interim financial
information and in conjunction with the rules and regulations of the
Securities and Exchange Commission ("SEC"). Accordingly, they do not
include all of the disclosures required by GAAP for complete
financial statements. The financial statements reflect all
adjustments consisting only of normal, recurring adjustments, which
are in the opinion of management, necessary for a fair presentation
for the interim periods.
The aforementioned financial statements should be read in conjunction
with the notes to the aforementioned financial statements and
Management's Discussion and Analysis of Financial Condition and
Results of Operations and the financial statements and notes thereto
included in Mack-Cali Realty Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 2000.
The results of operations for the three months ended March 31, 2001
are not necessarily indicative of the results to be expected for the
entire fiscal year or any other period.
3
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
======================================================================================================================
(UNAUDITED)
March 31, December 31,
ASSETS 2001 2000
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Rental property
Land and leasehold interests $ 475,923 $ 542,841
Buildings and improvements 2,615,080 2,934,383
Tenant improvements 108,466 106,208
Furniture, fixtures and equipment 6,732 6,445
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3,206,201 3,589,877
Less - accumulated depreciation and amortization (294,786) (302,932)
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2,911,415 3,286,945
Rental property held for sale, net 469,320 107,458
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Net investment in rental property 3,380,735 3,394,403
Cash and cash equivalents 11,720 13,179
Investments in unconsolidated joint ventures 117,389 101,438
Unbilled rents receivable, net 54,274 50,499
Deferred charges and other assets, net 100,197 102,655
Restricted cash 7,521 6,557
Accounts receivable, net of allowance for doubtful accounts
of $838 and $552 9,223 8,246
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Total assets $3,681,059 $3,676,977
=====================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------------------
Senior unsecured notes $1,096,477 $ 798,099
Revolving credit facilities 85,000 348,840
Mortgages and loans payable 480,707 481,573
Dividends and distributions payable 43,483 43,496
Accounts payable and accrued expenses 52,392 53,608
Rents received in advance and security deposits 35,347 31,146
Accrued interest payable 10,118 17,477
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Total liabilities 1,803,524 1,774,239
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MINORITY INTERESTS:
Operating Partnership 444,848 447,523
Partially-owned properties -- 1,925
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Total minority interests 444,848 449,448
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Commitments and contingencies
STOCKHOLDERS' EQUITY:
Preferred stock, 5,000,000 shares authorized, none issued -- --
Common stock, $0.01 par value, 190,000,000 shares authorized,
56,961,704 and 56,980,893 shares outstanding 570 570
Additional paid-in capital 1,512,330 1,513,037
Dividends in excess of net earnings (75,161) (57,149)
Unamortized stock compensation (5,052) (3,168)
- ---------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,432,687 1,453,290
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Total liabilities and stockholders' equity $3,681,059 $3,676,977
=====================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
4
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
=====================================================================================================================
Three Months Ended
March 31,
REVENUES 2001 2000
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Base rents $125,376 $121,598
Escalations and recoveries from tenants 14,762 16,668
Parking and other 2,346 3,322
Equity in earnings of unconsolidated joint ventures 3,409 1,137
Interest income 613 254
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Total revenues 146,506 142,979
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EXPENSES
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Real estate taxes 15,287 14,704
Utilities 11,956 10,379
Operating services 17,879 17,742
General and administrative 6,010 6,113
Depreciation and amortization 23,484 22,182
Interest expense 28,365 26,426
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Total expenses 102,981 97,546
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Income before realized and unrealized (loss)/gain on disposition of
rental property and minority interests 43,525 45,433
Realized and unrealized (loss)/gain on disposition of rental property (20,563) 2,248
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Income before minority interests 22,962 47,681
MINORITY INTERESTS:
Operating partnership 6,224 8,976
Partially-owned properties -- 2,090
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Net income $ 16,738 $ 36,615
=====================================================================================================================
Basic earnings per share $ 0.29 $ 0.63
Diluted earnings per share $ 0.29 $ 0.62
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Dividends declared per common share $ 0.61 $ 0.58
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Basic weighted average shares outstanding 56,807 58,295
Diluted weighted average shares outstanding 64,994 73,191
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
5
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (IN THOUSANDS) (UNAUDITED)
====================================================================================================================================
Additional Dividends in Unamortized Total
Common Stock Paid-In Excess of Stock Stockholders'
Shares Par Value Capital Net Earnings Compensation Equity
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at January 1, 2001 56,981 $570 $1,513,037 $(57,149) $(3,168) $1,453,290
Net income -- -- -- 16,738 -- 16,738
Dividends -- -- -- (34,750) -- (34,750)
Redemption of common units for
shares of common stock 6 -- 166 -- -- 166
Proceeds from stock options exercised 20 -- 508 -- -- 508
Deferred compensation plan for directors -- -- 39 -- -- 39
Issuance of Restricted Stock Awards 94 1 2,526 -- (2,527) --
Amortization of stock compensation -- -- -- -- 301 301
Adjustment to fair value of restricted stock -- -- (142) -- 142 --
Cancellation of Restricted Stock Awards (7) -- (200) -- 200 --
Repurchase of common stock (132) (1) (3,604) -- -- (3,605)
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Balance at March 31, 2001 56,962 $570 $1,512,330 $(75,161) $(5,052) $1,432,687
====================================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
6
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
=====================================================================================================================
Three Months Ended
March 31,
CASH FLOWS FROM OPERATING ACTIVITIES 2001 2000
- ---------------------------------------------------------------------------------------------------------------------
Net income $ 16,738 $ 36,615
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 23,484 22,182
Amortization of stock compensation 301 165
Amortization of deferred financing costs and debt discount 1,230 901
Equity in earnings of unconsolidated joint ventures (3,409) (1,137)
Realized and unrealized loss/(gain) on disposition of rental property 20,563 (2,248)
Minority interests 6,224 11,066
Changes in operating assets and liabilities:
Increase in unbilled rents receivable (3,775) (2,133)
Increase in deferred charges and other assets, net (3,582) (2,857)
Increase in accounts receivable, net (977) (2,045)
Decrease in accounts payable and accrued expenses (1,216) (12,720)
Increase in rents received in advance and security deposits 4,392 2,245
Decrease in accrued interest payable (7,359) (10,996)
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Net cash provided by operating activities $ 52,614 $ 39,038
=====================================================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES
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Additions to rental property $(49,382) $(39,801)
Repayment of mortgage note receivable 5,983 --
Investments in unconsolidated joint ventures (11,244) (2,625)
Distributions from unconsolidated joint ventures 17,146 1,299
Proceeds from sales of rental property -- 4,179
(Increase) decrease in restricted cash (964) 691
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Net cash used in investing activities $(38,461) $(36,257)
=====================================================================================================================
CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from senior unsecured notes $ 298,269 $ --
Proceeds from revolving credit facilities 65,497 67,876
Repayments of revolving credit facilities (329,337) (28,668)
Repayments of mortgages and loans payable (866) (869)
Distributions to minority interest in partially-owned properties -- (1,193)
Repurchase of common stock (3,605) --
Payment of financing costs (2,582) (42)
Proceeds from stock options exercised 508 117
Payment of dividends and distributions (43,496) (42,499)
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Net cash used in financing activities $(15,612) $ (5,278)
=====================================================================================================================
Net decrease in cash and cash equivalents $ (1,459) $ (2,497)
Cash and cash equivalents, beginning of period 13,179 8,671
- ---------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 11,720 $ 6,174
=====================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
7
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE/UNIT AMOUNTS)
================================================================================
1. ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION
Mack-Cali Realty Corporation, a Maryland corporation, and subsidiaries (the
"Company") is a fully-integrated, self-administered, self-managed real estate
investment trust ("REIT") providing leasing, management, acquisition,
development, construction and tenant-related services for its properties. As of
March 31, 2001, the Company owned or had interests in 268 properties plus
developable land (collectively, the "Properties"). The Properties aggregate
approximately 28.6 million square feet, and are comprised of 165 office
buildings and 90 office/flex buildings totaling approximately 28.2 million
square feet (which includes eight office buildings and one office/flex building
aggregating 1.4 million square feet, owned by unconsolidated joint ventures in
which the Company has investment interests), six industrial/warehouse buildings
totaling approximately 387,400 square feet, two multi-family residential
complexes consisting of 451 units, two stand-alone retail properties and three
land leases. The Properties are located in 11 states, primarily in the
Northeast, plus the District of Columbia.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include all accounts of the
Company, its majority-owned and/or controlled subsidiaries, which consist
principally of Mack-Cali Realty, L.P. ("Operating Partnership"). See Investments
in Unconsolidated Joint Ventures in Note 2 for the Company's treatment of
unconsolidated joint venture interests. All significant intercompany accounts
and transactions have been eliminated.
The preparation of financial statements in conformity with generally accepted
accounting principles ("GAAP") requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. SIGNIFICANT ACCOUNTING POLICIES
RENTAL
PROPERTY Rental properties are stated at cost less accumulated
depreciation and amortization. Costs directly related to
the acquisition and development of rental properties are
capitalized. Capitalized development costs include
interest, property taxes, insurance and other project
costs incurred during the period of development.
Included in total rental property is
construction-in-progress of $119,173 and $188,077 as of
March 31, 2001 and December 31, 2000, respectively.
Ordinary repairs and maintenance are expensed as
incurred; major replacements and betterments, which
improve or extend the life of the asset, are capitalized
and depreciated over their estimated useful lives.
Fully-depreciated assets are removed from the accounts.
Properties are depreciated using the straight-line
method over the estimated useful lives of the assets.
The estimated useful lives are as follows:
Leasehold interests Remaining lease term
--------------------------------------------------------------------------------------------
Buildings and improvements 5 to 40 years
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Tenant improvements The shorter of the term of
the related lease or useful life
--------------------------------------------------------------------------------------------
Furniture, fixtures and equipment 5 to 10 years
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8
On a periodic basis, management assesses whether there
are any indicators that the value of the real estate
properties may be impaired. A property's value is
impaired only if management's estimate of the aggregate
future cash flows (undiscounted and without interest
charges) to be generated by the property are less than
the carrying value of the property. To the extent
impairment has occurred, the loss shall be measured as
the excess of the carrying amount of the property over
the fair value of the property. Management does not
believe that the value of any of its rental properties
is impaired.
When assets are identified by management as held for
sale, the Company discontinues depreciating the assets
and estimates the sales price, net of selling costs, of
such assets. If, in management's opinion, the net sales
price of the assets which have been identified for sale
is less than the net book value of the assets, a
valuation allowance is established. See Note 7.
INVESTMENTS IN
UNCONSOLIDATED
JOINT VENTURES The Company accounts for its investments in
unconsolidated joint ventures under the equity method of
accounting as the Company exercises significant
influence, but does not control these entities. These
investments are recorded initially at cost, as
Investments in Unconsolidated Joint Ventures, and
subsequently adjusted for equity in earnings and cash
contributions and distributions. Any difference between
the carrying amount of these investments on the balance
sheet of the Company and the underlying equity in net
assets is amortized as an adjustment to equity in
earnings of unconsolidated joint ventures over 40 years.
See Note 4.
PARTIALLY-OWNED
PROPERTIES The Company controlled operations of the partially-owned
properties and has consolidated the financial position
and results of operations of partially-owned properties
in the financial statements of the Company. The equity
interests of the other members are reflected as minority
interests: partially-owned properties in the
consolidated financial statements of the Company.
CASH AND CASH
EQUIVALENTS All highly liquid investments with a maturity of three
months or less when purchased are considered to be cash
equivalents.
DEFERRED
FINANCING
COSTS Costs incurred in obtaining financing are capitalized
and amortized on a straight-line basis, which
approximates the effective interest method, over the
term of the related indebtedness. Amortization of such
costs is included in interest expense and was $1,121 and
$901 for the three months ended March 31, 2001 and 2000,
respectively.
DEFERRED
LEASING COSTS Costs incurred in connection with leases are
capitalized and amortized on a straight-line basis over
the terms of the related leases and included in
depreciation and amortization. Unamortized deferred
leasing costs are charged to amortization expense upon
early termination of the lease. Certain employees of the
Company provide leasing services to the Properties and
receive compensation based on space leased. The portion
of such compensation, which is capitalized and
amortized, approximated $740 and $693 for the three
months ended March 31, 2001 and 2000, respectively.
9
REVENUE
RECOGNITION Base rental revenue is recognized on a straight-line
basis over the terms of the respective leases. Unbilled
rents receivable represents the amount by which
straight-line rental revenue exceeds rents currently
billed in accordance with the lease agreements. Parking
and other revenue includes income from parking spaces
leased to tenants, income from tenants for additional
services provided by the Company, income from tenants
for early lease terminations and income from managing
properties for third parties. Rental income on
residential property under operating leases having terms
generally of one year or less is recognized when earned.
Reimbursements are received from tenants for certain
costs as provided in the lease agreements. These costs
generally include real estate taxes, utilities,
insurance, common area maintenance and other recoverable
costs. See Note 14.
INCOME AND
OTHER TAXES The Company has elected to be taxed as a REIT under
Sections 856 through 860 of the Internal Revenue Code of
1986, as amended (the "Code"). As a REIT, the Company
generally will not be subject to corporate federal
income tax on net income that it currently distributes
to its shareholders, provided that the Company, for its
taxable years beginning prior to January 1, 2001,
satisfies certain organizational and operational
requirements including the requirement to distribute at
least 95 percent of its REIT taxable income to its
shareholders. For its taxable years beginning after
December 31, 2000, as a result of recent amendments to
the Code, the Company is required to distribute at least
90 percent of its REIT taxable income to its
shareholders. Effective January 1, 2001, the Company has
elected to treat certain of its corporate subsidiaries
as taxable REIT subsidiaries ("TRS"). In general, a TRS
of the Company may perform additional services for
tenants of the Company and generally may engage in any
real estate or non-real estate related business (except
for the operation or management of health care
facilities or lodging facilities or the providing to any
person, under a franchise, license or otherwise, rights
to any brand name under which any lodging facility or
health care facility is operated). A TRS is subject to
corporate federal income tax. If the Company fails to
qualify as a REIT in any taxable year, the Company will
be subject to federal income tax (including any
applicable alternative minimum tax) on its taxable
income at regular corporate tax rates. The Company is
subject to certain state and local taxes.
INTEREST RATE
CONTRACTS Interest rate contracts are utilized by the Company to
reduce interest rate risks. The Company does not hold or
issue derivative financial instruments for trading
purposes. The differentials to be received or paid under
contracts designated as hedges are recognized over the
life of the contracts as adjustments to interest
expense.
In certain situations, the Company uses forward treasury
lock agreements to mitigate the potential effects of
changes in interest rates for prospective transactions.
Gains and losses are deferred and amortized as
adjustments to interest expense over the remaining life
of the associated debt to the extent that such debt
remains outstanding.
EARNINGS
PER SHARE In accordance with the Statement of Financial
Accounting Standards No. 128 ("FASB No. 128"), the
Company presents both basic and diluted earnings per
share ("EPS"). Basic EPS excludes dilution and is
computed by dividing net income available to common
stockholders by the weighted average number of shares
outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or
other contracts to issue common stock were exercised or
converted into common stock, where such exercise or
conversion would result in a lower EPS amount.
10
DIVIDENDS AND
DISTRIBUTIONS
PAYABLE The dividends and distributions payable at March
31, 2001 represents dividends payable to shareholders of
record as of April 4, 2001 (56,967,704 shares),
distributions payable to minority interest common
unitholders (7,957,525 common units) on that same date
and preferred distributions payable to preferred
unitholders (220,340 preferred units) for the first
quarter 2001. The first quarter 2001 dividends and
common unit distributions of $0.61 per share and per
common unit, as well as the first quarter preferred unit
distribution of $17.6046 per preferred unit, were
approved by the Board of Directors on March 16, 2001 and
paid on April 23, 2001.
The dividends and distributions payable at December 31,
2000 represents dividends payable to shareholders of
record as of January 4, 2001 (56,982,893 shares),
distributions payable to minority interest common
unitholders (7,963,725 common units) on that same date
and preferred distributions payable to preferred
unitholders (220,340 preferred units) for the fourth
quarter 2000. The fourth quarter 2000 dividends and
common unit distributions of $0.61 per share and per
common unit, as well as the fourth quarter preferred
unit distribution of $17.6046 per preferred unit, were
approved by the Board of Directors on December 20, 2000
and paid on January 22, 2001.
UNDERWRITING
COMMISSIONS
AND COSTS Underwriting commissions and costs incurred in
connection with the Company's stock offerings are
reflected as a reduction of additional paid-in capital.
STOCK
OPTIONS The Company accounts for stock-based compensation using
the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," and related Interpretations ("APB
No. 25"). Under APB No. 25, compensation cost is
measured as the excess, if any, of the quoted market
price of the Company's stock at the date of grant over
the exercise price of the option granted. Compensation
cost for stock options, if any, is recognized ratably
over the vesting period. The Company's policy is to
grant options with an exercise price equal to the quoted
closing market price of the Company's stock on the
business day preceding the grant date. Accordingly, no
compensation cost has been recognized under the
Company's stock option plans for the granting of stock
options. See Note 15.
RECLASSIFICATIONS Certain reclassifications have been made to prior period
amounts in order to conform with current period
presentation.
11
3. ACQUISITIONS AND OTHER TRANSACTIONS
OPERATING PROPERTY ACQUISITIONS
The Company acquired the following operating properties during the three months
ended March 31, 2001:
- ---------------------------------------------------------------------------------------------------------------------
Acquisition # of Rentable Investment by
Date Property/Portfolio Name Location Bldgs. Square Feet Company (a)
- ---------------------------------------------------------------------------------------------------------------------
OFFICE/FLEX
2/14/01 31 & 41 Twosome Drive (b) Moorestown, Burlington County, NJ 2 127,250 $7,155
- ---------------------------------------------------------------------------------------------------------------------
Total Operating Property Acquisitions: 2 127,250 $7,155
=====================================================================================================================
(a) Transactions were funded primarily from net proceeds received in the sale
of a rental property as well as the Company's cash reserves.
(b) The properties were acquired through the exercise of a purchase option
obtained in the initial acquisition of the McGarvey portfolio in January
1998.
PROPERTIES PLACED IN SERVICE
The Company placed in service the following properties through the completion of
development during the three months ended March 31, 2001:
- ---------------------------------------------------------------------------------------------------------------------
Date Placed # of Rentable Investment by
in Service Property/Portfolio Name Location Bldgs. Square Feet Company (a)
- ---------------------------------------------------------------------------------------------------------------------
OFFICE
1/15/01 105 Eisenhower Parkway Roseland, Essex County, NJ 1 220,000 $41,781
3/01/01 8181 East Tufts Avenue Denver, Denver County, CO 1 185,254 33,381
- ---------------------------------------------------------------------------------------------------------------------
Total Properties Placed in Service 2 405,254 $75,162
=====================================================================================================================
(a) Transactions were funded primarily through draws on the Company's
revolving credit facilities and amounts presented are as of March 31,
2001.
LAND ACQUISITIONS
On January 5, 2001, the Company acquired approximately 7.1 acres of developable
land located in Littleton, Arapahoe County, Colorado. The land was acquired for
approximately $2,711. When the Company committed itself to acquire the land,
the Company had intended to develop the site consistent with its then
business strategy. Due to a change in the Company's strategy, this land is
now being held for sale (see Note 7).
4. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
PRU-BETA 3 (NINE CAMPUS DRIVE) On March 27, 1998, the Company acquired a 50
percent interest in an existing joint venture with The Prudential Insurance
Company of America ("Prudential"), known as Pru-Beta 3, which owns and
operates Nine Campus Drive, a 156,495 square-foot office building, located in
the Mack-Cali Business Campus office complex in Parsippany, Morris County,
New Jersey. The Company performs management and leasing services for the
property owned by the joint venture and recognized $37 and $37 in fees for
such services in the three months ended March 31, 2001 and 2000, respectively.
HPMC
On April 23, 1998, the Company entered into a joint venture agreement with HCG
Development, L.L.C. and Summit Partners I, L.L.C. to form HPMC Development
Partners, L.P. and, on July 21, 1998, entered into a second joint venture, HPMC
Development Partners II, L.P. (formerly known as HPMC Lava Ridge Partners,
L.P.), with these same parties. HPMC Development Partners, L.P.'s efforts have
focused on two development projects, commonly referred to as Continental Grand
II and Summit Ridge. HPMC Development Partners II, L.P.'s efforts have focused
on three development projects, commonly referred to as Lava Ridge, Peninsula
Gateway and Stadium Gateway. Among other things, the partnership agreements
provide for a preferred return on the Company's
12
invested capital in each venture, in addition to 50 percent of such venture's
profit above the preferred returns, as defined in each agreement.
CONTINENTAL GRAND II
Continental Grand II is a 239,085 square-foot office building located in El
Segundo, Los Angeles County, California, which was constructed and placed in
service by the venture.
SUMMIT RIDGE
Summit Ridge is an office complex of three one-story buildings aggregating
133,841 square feet located in San Diego, San Diego County, California, which
was constructed and placed in service by the venture. On January 29, 2001,
the venture sold the office complex for approximately $17,450.
LAVA RIDGE
Lava Ridge is an office complex of three two-story buildings aggregating
183,200 square feet located in Roseville, Placer County, California, which
was constructed and placed in service by the venture.
PENINSULA GATEWAY
Peninsula Gateway is a parcel of land purchased from the city of Daly City,
located in San Mateo County, California, upon which the venture has commenced
construction of an office building and theater and retail complex aggregating
471,379 square feet.
STADIUM GATEWAY
Stadium Gateway is a 1.5 acre site located in Anaheim, Orange County,
California, acquired by the venture upon which it has commenced construction
of a six-story 261,554 square-foot office building.
G&G MARTCO (CONVENTION PLAZA)
On April 30, 1998, the Company acquired a 49.9 percent interest in an existing
joint venture, known as G&G Martco, which owns Convention Plaza, a 305,618
square-foot office building, located in San Francisco, San Francisco County,
California. A portion of its initial investment was financed through the
issuance of common units, as well as funds drawn from the Company's credit
facilities. Subsequently, on June 4, 1999, the Company acquired an additional
0.1 percent interest in G&G Martco through the issuance of common units. The
Company performs management and leasing services for the property owned by the
joint venture and recognized $54 and $52 in fees for such services in the three
months ended March 31, 2001 and 2000, respectively.
AMERICAN FINANCIAL EXCHANGE L.L.C.
On May 20, 1998, the Company entered into a joint venture agreement with
Columbia Development Company, L.L.C. to form American Financial Exchange L.L.C.
The venture was initially formed to acquire land for future development, located
on the Hudson River waterfront in Jersey City, Hudson County, New Jersey,
adjacent to the Company's Harborside Financial Center office complex. The
Company holds a 50 percent interest in the joint venture. Among other things,
the partnership agreement provides for a preferred return on the Company's
invested capital in the venture, in addition to the Company's proportionate
share of the venture's profit, as defined in the agreement. The joint venture
acquired land on which it constructed a parking facility, which is currently
leased to a parking operator under a 10-year agreement. Such parking facility
serves a ferry service between the Company's Harborside property and Manhattan.
In the fourth quarter 2000, the Company started construction of a 575,000
square-foot office building and terminated the parking agreement on certain of
the land owned by the venture. The total costs of the project are currently
projected to be approximately $140,000. The project, which is currently 100
percent pre-leased, is anticipated to be completed in third quarter 2002.
RAMLAND REALTY ASSOCIATES L.L.C. (ONE RAMLAND ROAD)
On August 20, 1998, the Company entered into a joint venture agreement with S.B.
New York Realty Corp. to form Ramland Realty Associates L.L.C. The venture was
formed to own, manage and operate One Ramland Road, a 232,000 square-foot
office/flex building plus adjacent developable land, located in Orangeburg,
Rockland County, New York. In August 1999, the joint venture completed
redevelopment of the property and placed the office/flex building in service.
The Company holds a 50 percent interest in the joint venture. The Company
performs
13
management, leasing and other services for the property owned by the joint
venture and recognized $18 and $123 in fees for such services in the three
months ended March 31, 2001 and 2000, respectively.
ASHFORD LOOP ASSOCIATES L.P. (1001 SOUTH DAIRY ASHFORD/2100 WEST LOOP SOUTH)
On September 18, 1998, the Company entered into a joint venture agreement with
Prudential to form Ashford Loop Associates L.P. The venture was formed to own,
manage and operate 1001 South Dairy Ashford, a 130,000 square-foot office
building acquired on September 18, 1998 and 2100 West Loop South, a 168,000
square-foot office building acquired on November 25, 1998, both located in
Houston, Harris County, Texas. The Company holds a 20 percent interest in the
joint venture. The joint venture may be required to pay additional consideration
due to earn-out provisions in the acquisition contracts. Subsequently, through
March 31, 2001, the venture paid $19,907 ($3,943 representing the Company's
share) in accordance with earn-out provisions in the acquisition contracts. The
Company performs management and leasing services for the properties owned by the
joint venture and recognized $47 and $30 in fees for such services in the three
months ended March 31, 2001 and 2000, respectively.
ARCAP INVESTORS, L.L.C.
On March 18, 1999, the Company invested in ARCap Investors, L.L.C., a joint
venture with several participants, which was formed to invest in sub-investment
grade tranches of commercial mortgage-backed securities ("CMBS"). The Company
has invested $20,000 in the venture. William L. Mack, Chairman of the Board of
Directors of the Company and an equity holder in the Operating Partnership, is a
principal of the managing member of the venture. At March 31, 2001, the venture
held approximately $754,819 face value of CMBS bonds at an aggregate cost of
$390,680.
SOUTH PIER AT HARBORSIDE HOTEL DEVELOPMENT
On November 17, 1999, the Company entered into an agreement with Hyatt
Corporation to develop a 350-room hotel on the Company's South Pier at
Harborside Financial Center, Jersey City, Hudson County, New Jersey. In July
2000, the joint venture began development of the hotel project.
NORTH PIER AT HARBORSIDE RESIDENTIAL DEVELOPMENT
On August 5, 1999, the Company entered into an agreement which provided for the
contribution of its North Pier at Harborside Financial Center, Jersey City,
Hudson County, New Jersey to a joint venture with Lincoln Property Company
Southwest, Inc., in exchange for cash and an equity interest in the venture. In
April 2001, the Company sold the North Pier to the joint venture and retained an
equity interest. The venture intends to develop residential housing on the
property for rental.
MC-SJP MORRIS V REALTY, LLC AND MC-SJP MORRIS VI REALTY, LLC
On August 24, 2000, the Company entered into a joint venture with SJP Properties
Company ("SJP Properties") to form MC-SJP Morris V Realty, LLC and MC-SJP Morris
VI Realty, LLC, which acquired approximately 47.5 acres of developable land
located in Parsippany, Morris County, New Jersey. The land was acquired for
approximately $16,193.
14
SUMMARIES OF UNCONSOLIDATED JOINT VENTURES
The following is a summary of the financial position of the unconsolidated joint
ventures in which the Company had investment interests as of March 31, 2001 and
December 31, 2000:
March 31, 2001
-------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford
Pru-Beta 3 HPMC Martco Exchange Realty Loop
- ---------------------------------------------------------------------------------------------------------------------
ASSETS:
Rental property, net $20,568 $65,607 $ 10,359 $31,724 $18,730 $37,788
Other assets 1,756 29,266 3,020 3,076 4,513 535
- ---------------------------------------------------------------------------------------------------------------------
Total assets $22,324 $94,873 $ 13,379 $34,800 $23,243 $38,323
=====================================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable $ -- $54,401 $ 50,000 $ -- $16,492 $ --
Other liabilities 122 2,362 1,691 10,312 213 499
Partners'/members' capital 22,202 38,110 (38,312) 24,488 6,538 37,824
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $22,324 $94,873 $ 13,379 $34,800 $23,243 $38,323
=====================================================================================================================
Company's net investment
in unconsolidated
joint ventures $15,502 $36,727 $ 3,809 $25,500 $ 2,841 $ 7,913
- ---------------------------------------------------------------------------------------------------------------------
December 31, 2000
- ---------------------------------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford
Pru-Beta 3 HPMC Martco Exchange Realty Loop
- ---------------------------------------------------------------------------------------------------------------------
ASSETS:
Rental property, net $20,810 $ 78,119 $ 10,589 $12,546 $18,947 $37,665
Other assets 2,737 27,082 2,508 11,851 4,755 849
- ---------------------------------------------------------------------------------------------------------------------
Total assets $23,547 $105,201 $ 13,097 $24,397 $23,702 $38,514
=====================================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable $ -- $ 63,486 $ 50,000 $ -- $16,666 $ --
Other liabilities 160 5,035 1,368 9,400 522 1,005
Partners'/members' capital 23,387 36,680 (38,271) 14,997 6,514 37,509
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $23,547 $105,201 $ 13,097 $24,397 $23,702 $38,514
=====================================================================================================================
Company's net investment
in unconsolidated
joint ventures $16,110 $ 35,079 $ 3,973 $15,809 $ 2,782 $ 7,874
- ---------------------------------------------------------------------------------------------------------------------
March 31, 2001
- ------------------------------------------------------------------------------------------------
MC-SJP Morris Harborside Combined
ARCap Realty South Pier Total
- ------------------------------------------------------------------------------------------------
ASSETS:
Rental property, net $ -- $17,271 $22,270 $224,317
Other assets 426,230 96 -- 468,492
- ------------------------------------------------------------------------------------------------
Total assets $426,230 $17,367 $22,270 $692,809
================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable $210,000 $16,028 $ 7,762 $354,683
Other liabilities 755 -- 4,353 20,307
Partners'/members' capital 215,475 1,339 10,155 317,819
- ------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $426,230 $17,367 $22,270 $692,809
================================================================================================
Company's net investment
in unconsolidated
joint ventures $ 19,759 $ 173 $ 5,165 $117,389
- ------------------------------------------------------------------------------------------------
December 31, 2000
- ------------------------------------------------------------------------------------------------
MC-SJP Morris Harborside Combined
ARCap Realty South Pier Total
- ------------------------------------------------------------------------------------------------
ASSETS:
Rental property, net $ -- -- -- $178,676
Other assets 310,342 -- -- 360,124
- ------------------------------------------------------------------------------------------------
Total assets $310,342 -- -- $538,800
================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable $129,562 -- -- $259,714
Other liabilities 3,750 -- -- 21,240
Partners'/members' capital 177,030 -- -- 257,846
- ------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $310,342 -- -- $538,800
================================================================================================
Company's net investment
in unconsolidated
joint ventures $ 19,811 -- -- $101,438
- ------------------------------------------------------------------------------------------------
15
The following is a summary of the results of operations of the unconsolidated
joint ventures for the period in which the Company had investment interests
during the three months ended March 31, 2001 and 2000:
Three Months Ended March 31, 2001
- ----------------------------------------------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap
- ----------------------------------------------------------------------------------------------------------------------------------
Total revenues $1,254 $ 5,512 $ 2,722 $221 $ 969 $ 1,575 $19,354
Operating and other expenses (413) (729) (806) (34) (344) (718) (1,841)
Depreciation and amortization (294) (1,823) (389) (15) (246) (231) --
Interest expense -- (1,376) (985) -- (355) -- (3,014)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 547 $ 1,584 $ 542 $172 $ 24 $ 626 $14,499
==================================================================================================================================
Company's equity in earnings
of unconsolidated
joint ventures $ 258 $ 2,152 $ 171 $172 $ 59 $ 97 $ 500
- ----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended March 31, 2000
- ----------------------------------------------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap
- ----------------------------------------------------------------------------------------------------------------------------------
Total revenues $1,234 $1,056 $2,712 $250 $ 978 $1,363 $6,544
Operating and other expenses (418) (174) (760) (31) (317) (630) (571)
Depreciation and amortization (306) (341) (426) (13) (241) (193) --
Interest expense -- (327) (875) -- (369) -- (769)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 510 $ 214 $ 651 $206 $ 51 $ 540 $5,204
==================================================================================================================================
Company's equity in earnings
of unconsolidated
joint ventures $ 216 $ -- $ 169 $206 $ 25 $ 121 $ 400
- ----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended March 31, 2001
- -------------------------------------------------------------------------------
MC-SJP Morris Harborside Combined
Realty South Pier Total
- ------------------------------------------------------------------------------
Total revenues -- -- $31,607
Operating and other expenses -- -- (4,885)
Depreciation and amortization -- -- (2,998)
Interest expense -- -- (5,730)
- ------------------------------------------------------------------------------
Net income -- -- $17,994
==============================================================================
Company's equity in earnings
of unconsolidated
joint ventures -- -- $3,409
- ------------------------------------------------------------------------------
Three Months Ended March 31, 2000
- -------------------------------------------------------------------------------
MC-SJP Morris Harborside Combined
Realty South Pier Total
- ------------------------------------------------------------------------------
Total revenues -- -- $14,137
Operating and other expenses -- -- (2,901)
Depreciation and amortization -- -- (1,520)
Interest expense -- -- (2,340)
- ------------------------------------------------------------------------------
Net income -- -- $7,376
==============================================================================
Company's equity in earnings
of unconsolidated
joint ventures -- -- $1,137
- ------------------------------------------------------------------------------
16
5. DEFERRED CHARGES AND OTHER ASSETS
March 31, December 31,
2001 2000
- ----------------------------------------------------------------------------
Deferred leasing costs $ 82,968 $ 80,667
Deferred financing costs 25,864 23,085
- ----------------------------------------------------------------------------
108,832 103,752
Accumulated amortization (29,757) (26,303)
- ----------------------------------------------------------------------------
Deferred charges, net 79,075 77,449
Prepaid expenses and other assets 21,122 25,206
- ----------------------------------------------------------------------------
Total deferred charges and other assets, net $100,197 $102,655
============================================================================
6. RESTRICTED CASH
Restricted cash includes security deposits for the Company's residential
properties and certain commercial properties, and escrow and reserve funds for
debt service, real estate taxes, property insurance, capital improvements,
tenant improvements, and leasing costs established pursuant to certain mortgage
financing arrangements, and is comprised of the following:
March 31, December 31,
2001 2000
- ----------------------------------------------------------------------------
Security deposits $7,436 $6,477
Escrow and other reserve funds 85 80
- ----------------------------------------------------------------------------
Total restricted cash $7,521 $6,557
============================================================================
7. RENTAL PROPERTY HELD FOR SALE
As of March 31, 2001, the Company has identified 43 office properties,
aggregating approximately 5.1 million square feet, a multi-family residential
property and two land parcels as held for sale. These properties are located in
Texas, Arizona, Colorado, Iowa, Florida and southern New Jersey. Such properties
carried an aggregate book value of $469,320, net of accumulated depreciation of
$36,110 and a valuation allowance of $20,563.
As of December 31, 2000, the Company had identified 10 office properties,
aggregating approximately 1.6 million square feet, and a land parcel as held for
sale. These properties are located in San Antonio, Texas or Houston, Texas. Such
properties carried an aggregate book value of $107,458, net of accumulated
depreciation of $7,019.
The following is a summary of the condensed results of operations of the rental
properties held for sale at March 31, 2001 for the three months ended March 31,
2001 and 2000:
Three Months Ended March 31,
2001 2000
- ------------------------------------------------------------------------------
Total revenues $22,149 $21,720
Operating and other expenses (9,591) (8,716)
Depreciation (2,468) (2,948)
- ------------------------------------------------------------------------------
Net income $10,090 $10,056
==============================================================================
There can be no assurance if and when sales of the Company's rental properties
held for sale will occur.
17
During the three months ended March 31, 2001, the Company determined that the
carrying amounts of certain properties identified as held for sale are not
expected to be recovered from estimated net sale proceeds from these property
sales and, accordingly, recognized a valuation allowance of $20,563.
The following table summarizes realized and unrealized (loss)/gain on
disposition of rental property:
Three Months Ended March 31,
2001 2000
- -----------------------------------------------------------------------------------------
Realized gain on sale of land $ -- $2,248
Valuation allowance on rental property held for sale (20,563) --
- -----------------------------------------------------------------------------------------
Total $(20,563) $2,248
=========================================================================================
8. SENIOR UNSECURED NOTES
On January 29, 2001, the Operating Partnership issued $300,000 face amount of
7.75 percent senior unsecured notes with interest payable semi-annually in
arrears. The total proceeds from the issuance (net of selling commissions and
discount) of approximately $296,300 were used primarily to pay down outstanding
borrowings under the 2000 Unsecured Facility, as defined in Note 9. The senior
unsecured notes were issued at a discount of approximately $1,731, which is
being amortized over the term as an adjustment to interest expense.
The Operating Partnership's senior unsecured notes are redeemable at any time at
the option of the Company, subject to certain conditions including yield
maintenance.
A summary of the terms of the senior unsecured notes (collectively, "Senior
Unsecured Notes") outstanding as of March 31, 2001 and December 31, 2000 is as
follows:
March 31 December 31, Effective
2001 2000 Rate (1)
- ---------------------------------------------------------------------------------------------------
7.180% Senior Unsecured Notes, due December 31, 2003 $ 185,283 $185,283 7.23%
7.000% Senior Unsecured Notes, due March 15, 2004 299,764 299,744 7.27%
7.250% Senior Unsecured Notes, due March 15, 2009 298,131 298,072 7.49%
7.835% Senior Unsecured Notes, due December 15, 2010 15,000 15,000 7.95%
7.750% Senior Unsecured Notes, due February 15, 2011 298,299 -- 7.93%
- ---------------------------------------------------------------------------------------------------
Total Senior Unsecured Notes $1,096,477 $798,099 7.51%
===================================================================================================
(1) Includes the cost of terminated treasury lock agreements (if any),
offering and other transaction costs and the discount on the notes, as
applicable.
The terms of the Senior Unsecured Notes include certain restrictions and
covenants which require compliance with financial ratios relating to the maximum
amount of debt leverage, the maximum amount of secured indebtedness, the minimum
amount of debt service coverage and the maximum amount of unsecured debt as a
percent of unsecured assets.
18
9. REVOLVING CREDIT FACILITIES
2000 UNSECURED FACILITY
On June 22, 2000, the Company obtained an unsecured revolving credit facility
("2000 Unsecured Facility") with a current borrowing capacity of $800,000 from a
group of 24 lenders. The interest rate on outstanding borrowings under the
credit line is currently the London Inter-Bank Offered Rate ("LIBOR") (5.08
percent at March 31, 2001) plus 80 basis points. The Company may instead elect
an interest rate representing the higher of the lender's prime rate or the
Federal Funds rate plus 50 basis points. The 2000 Unsecured Facility also
requires a 20 basis point facility fee on the current borrowing capacity payable
quarterly in arrears. In the event of a change in the Company's unsecured debt
rating, the interest rate and facility fee will be changed on a sliding scale.
Subject to certain conditions, the Company has the ability to increase the
borrowing capacity of the credit line up to $1,000,000. The 2000 Unsecured
Facility matures in June 2003, with an extension option of one year, which would
require a payment of 25 basis points of the then borrowing capacity of the
credit line upon exercise.
The terms of the 2000 Unsecured Facility include certain restrictions and
covenants which limit, among other things, the payment of dividends (as
discussed below), the incurrence of additional indebtedness, the incurrence of
liens and the disposition of assets, and which require compliance with financial
ratios relating to the maximum leverage ratio, the maximum amount of secured
indebtedness, the minimum amount of tangible net worth, the minimum amount of
debt service coverage, the minimum amount of fixed charge coverage, the maximum
amount of unsecured indebtedness, the minimum amount of unencumbered property
debt service coverage and certain investment limitations. The dividend
restriction referred to above provides that, except to enable the Company to
continue to qualify as a REIT under the Code, the Company will not during any
four consecutive fiscal quarters make distributions with respect to common stock
or other equity interests in an aggregate amount in excess of 90 percent of
funds from operations (as defined) for such period, subject to certain other
adjustments.
PRUDENTIAL FACILITY
The Company has a revolving credit facility ("Prudential Facility") with
Prudential Securities Corp. ("PSC") in the amount of $100,000, which currently
bears interest at 110 basis points over one-month LIBOR, with a maturity date of
June 29, 2001. The Prudential Facility is a recourse liability of the Operating
Partnership and is secured by the Company's equity interest in Harborside Plazas
2 and 3. The Prudential Facility limits the ability of the Operating Partnership
to make any distributions during any fiscal quarter in an amount in excess of
100 percent of the Operating Partnership's available funds from operations (as
defined) for the immediately preceding fiscal quarter (except to the extent such
excess distributions or dividends are attributable to gains from the sale of the
Operating Partnership's assets or are required for the Company to maintain its
status as a REIT under the Code); provided, however, that the Operating
Partnership may make distributions and pay dividends in excess of 100 percent of
available funds from operations (as defined) for the preceding fiscal quarter
for not more than three consecutive quarters. In addition to the foregoing, the
Prudential Facility limits the liens placed upon the subject property and
certain collateral, the use of proceeds from the Prudential Facility, and the
maintenance of ownership of the subject property and assets derived from said
ownership. The Company has been notified that the Prudential Facility will not
be renewed.
SUMMARY
As of March 31, 2001 and December 31, 2000, the Company had outstanding
borrowings of $85,000 and $348,840, respectively, under its revolving credit
facilities. The total outstanding borrowings were from the 2000 Unsecured
Facility, with no outstanding borrowings under the Prudential Facility.
10. MORTGAGES AND LOANS PAYABLE
The Company has mortgages and loans payable which are comprised of various loans
collateralized by certain of the Company's rental properties. Payments on
mortgages and loans payable are generally due in monthly installments of
principal and interest, or interest only.
19
A summary of the Company's mortgages and loans payable as of March 31, 2001 and
December 31, 2000 is as follows:
EFFECTIVE PRINCIPAL BALANCE AT
INTEREST MARCH 31, DECEMBER 31,
PROPERTY NAME LENDER RATE 2001 2000 MATURITY
- ------------------------------------------------------------------------------------------------------------------------
101 & 225 Executive Drive Sun Life Assurance Co. 6.27% $ 2,148 $ 2,198 06/01/01
Mack-Cali Morris Plains Corestates Bank 7.51% 2,151 2,169 12/31/01
Mack-Cali Willowbrook CIGNA 8.67% 9,251 9,460 10/01/03
400 Chestnut Ridge Prudential Insurance Co. 9.44% 13,361 13,588 07/01/04
Mack-Cali Centre VI Principal Life Insurance Co. 6.87% 35,000 35,000 04/01/05
Various (a) Prudential Insurance Co. 7.10% 150,000 150,000 05/15/05
Mack-Cali Bridgewater I New York Life Ins. Co. 7.00% 23,000 23,000 09/10/05
Mack-Cali Woodbridge II New York Life Ins. Co. 7.50% 17,500 17,500 09/10/05
Mack-Cali Short Hills Prudential Insurance Co. 7.74% 25,743 25,911 10/01/05
500 West Putnam Avenue New York Life Ins. Co. 6.52% 9,875 10,069 10/10/05
Harborside - Plaza 1 U.S. West Pension Trust 5.61% 55,247 54,370 01/01/06
Harborside - Plazas 2 and 3 Northwestern/Principal 7.32% 94,753 95,630 01/01/06
Mack-Cali Airport Allstate Life Insurance Co. 7.05% 10,500 10,500 04/01/07
Kemble Plaza I Mitsubishi Tr & Bk Co. LIBOR+0.65% 32,178 32,178 01/31/09
- ------------------------------------------------------------------------------------------------------------------------
Total Property Mortgages $480,707 $481,573
========================================================================================================================
(a) The Company has the option to convert the mortgage loan, which is secured
by 11 properties, to unsecured debt.
SCHEDULED PRINCIPAL PAYMENTS
Scheduled principal payments and related weighted average annual interest rates
for the Company's Senior Unsecured Notes, revolving credit facilities and
mortgages and loans payable as of March 31, 2001 are as follows:
WEIGHTED AVG.
SCHEDULED PRINCIPAL INTEREST RATE OF
PERIOD AMORTIZATION MATURITIES TOTAL FUTURE REPAYMENTS (A)
- -------------------------------------------------------------------------------------------------------
April through December 2001 $ 2,323 $ 4,211 $ 6,534 8.28%
2002 3,260 -- 3,260 10.27%
2003 3,407 277,094 280,501 6.85%
2004 2,247 309,863 312,110 7.34%
2005 1,420 253,178 254,598 7.14%
Thereafter (1,361) 806,542 805,181 7.51%
- -------------------------------------------------------------------------------------------------------
Totals/Weighted Average $11,296 $1,650,888 $1,662,184 7.32%
=======================================================================================================
(a) Assumes weighted average LIBOR at March 31, 2001 of 5.01 percent in
calculating revolving credit facility and other variable rate debt
interest rates.
CASH PAID FOR INTEREST AND INTEREST CAPITALIZED
Cash paid for interest for the three months ended March 31, 2001 and 2000 was
$37,917 and $38,387, respectively. Interest capitalized by the Company for the
three months ended March 31, 2001 and 2000 was $3,350 and $1,854, respectively.
SUMMARY OF INDEBTEDNESS
As of March 31, 2001, the Company's total indebtedness of $1,662,184 (weighted
average interest rate of 7.32 percent) was comprised of $117,178 of revolving
credit facility borrowings and other variable rate mortgage debt
20
(weighted average rate of 5.76 percent) and fixed rate debt of $1,545,006
(weighted average rate of 7.38 percent).
As of December 31, 2000, the Company's total indebtedness of $1,628,512
(weighted average interest rate of 7.29 percent) was comprised of $381,018 of
revolving credit facility borrowings and other variable rate mortgage debt
(weighted average rate of 7.53 percent) and fixed rate debt of $1,247,494
(weighted average rate of 7.25 percent).
11. MINORITY INTERESTS
Minority interests in the accompanying consolidated financial statements relate
to (i) preferred units in the Operating Partnership ("Preferred Units"), common
units in the Operating Partnership and warrants to purchase common units ("Unit
Warrants"), held by parties other than the Company, and (ii) interests in
consolidated partially-owned properties for the portion of such properties not
owned by the Company.
The following table sets forth the changes in minority interests which relate to
Preferred Units, common units and Unit Warrants in the Operating Partnership for
the three months ended March 31, 2001:
Preferred Common Unit Preferred Common Unit
Units Units Warrants Unitholders Unitholders Warrants Total
- --------------------------------------------------------------------------------------------------------------------
Balance at January 1, 2001 220,340 7,963,725 2,000,000 $226,005 $212,994 $8,524 $447,523
Net income -- -- -- 3,879 2,345 -- 6,224
Distributions -- -- -- (3,879) (4,854) -- (8,733)
Redemption of common
units for shares of
common stock -- (6,200) -- -- (166) -- (166)
- --------------------------------------------------------------------------------------------------------------------
Balance at March 31, 2001 220,340 7,957,525 2,000,000 $226,005 $210,319 $8,524 $444,848
====================================================================================================================
MINORITY INTEREST OWNERSHIP
As of March 31, 2001 and December 31, 2000, the minority interest common
unitholders owned 12.3 percent (20.1 percent, including the effect of the
conversion of Preferred Units into common units) and 12.3 percent (20.1 percent
including the effect of the conversion of Preferred Units into common units) of
the Operating Partnership, respectively (excluding any effect for the exercise
of Unit Warrants).
12. EMPLOYEE BENEFIT PLAN
All employees of the Company who meet certain minimum age and period of service
requirements are eligible to participate in a 401(k) defined contribution plan
(the "401(k) Plan"). The 401(k) Plan allows eligible employees to defer up to 15
percent of their annual compensation, subject to certain limitations imposed by
federal law. The amounts contributed by employees are immediately vested and
non-forfeitable. The Company, at management's discretion, may match employee
contributions and/or make discretionary contributions. Management has approved,
for the year ended December 31, 2001, a Company matching contribution to be paid
under the 401(k) Plan equal to 50 percent of the first 3.5 percent of annual
salary, as defined in the 401(k) Plan, contributed to the plan for 2001. Total
expense recognized by the Company for both the three months ended March 31, 2001
and 2000 was $100.
21
13. COMMITMENTS AND CONTINGENCIES
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 March 31, 2001, are as
follows:
Period Amount
- --------------------------------------------------------------------
April through December 2001 $ 398
2002 531
2003 531
2004 534
2005 534
Thereafter 21,997
- --------------------------------------------------------------------
Total $24,525
====================================================================
Ground lease expense incurred during both the three months ended March 31, 2001
and 2000 amounted to $142.
OTHER
The Company is a defendant in certain litigation arising in the normal course of
business activities. Management does not believe that the resolution of these
matters will have a materially adverse effect upon the Company.
14. TENANT LEASES
The Properties are leased to tenants under operating leases with various
expiration dates through 2016. Substantially all of the leases provide for
annual base rents plus recoveries and escalation charges based upon the tenant's
proportionate share of and/or increases in real estate taxes and certain
operating costs, as defined, and the pass through of charges for electrical
usage.
15. STOCKHOLDERS' EQUITY
To maintain its qualification as a REIT, not more than 50 percent in value of
the outstanding shares of the Company may be owned, directly or indirectly, by
five or fewer individuals at any time during the last half of any taxable year
of the Company, other than its initial taxable year (defined to include certain
entities), applying certain constructive ownership rules. To help ensure that
the Company will not fail this test, the Company's Articles of Incorporation
provide for, among other things, certain restrictions on the transfer of the
common stock to prevent further concentration of stock ownership. Moreover, to
evidence compliance with these requirements, the Company must maintain records
that disclose the actual ownership of its outstanding common stock and will
demand written statements each year from the holders of record of designated
percentages of its common stock requesting the disclosure of the beneficial
owners of such common stock.
COMMON STOCK REPURCHASES
On September 13, 2000, the Board of Directors authorized the Company to purchase
up to $150,000 of the Company's outstanding common stock ("Repurchase Program").
The Company purchased for constructive retirement 2,026,300 shares of its
outstanding common stock for an aggregate cost of approximately $55,514 from
September 30, 2000 through December 31, 2000.
Under the Repurchase Program, the Company purchased for constructive retirement
132,000 shares of its outstanding common stock for an aggregate cost of
approximately $3,605 for the three months ended March 31, 2001.
22
STOCK OPTION PLANS
In September 2000, the Company established the 2000 Employee Stock Option Plan
("2000 Employee Plan") and the 2000 Director Stock Option Plan ("2000 Director
Plan") under which a total of 2,700,000 shares (subject to adjustment) of the
Company's common stock have been reserved for issuance (2,500,000 shares under
the 2000 Employee Plan and 200,000 shares under the 2000 Director Plan). In
1994, and as subsequently amended, the Company established the Mack-Cali
Employee Stock Option Plan ("Employee Plan") and the Mack-Cali Director Stock
Option Plan ("Director Plan") under which a total of 5,380,188 shares (subject
to adjustment) of the Company's common stock have been reserved for issuance
(4,980,188 shares under the Employee Plan and 400,000 shares under the Director
Plan). Stock options granted under the Employee Plan in 1994 and 1995 have
become exercisable over a three-year period and those options granted under both
the 2000 Employee Plan and Employee Plan in 1996, 1997, 1998, 1999 and 2000
become exercisable over a five-year period. All stock options granted under both
the 2000 Director Plan and Director Plan become exercisable in one year. All
options were granted at the fair market value at the dates of grant and have
terms of ten years. There were no stock options granted for the three months
ended March 31, 2001. As of March 31, 2001, stock options outstanding had a
weighted average remaining contractual life of approximately 7.1 years.
Information regarding the Company's stock option plans is summarized below:
Weighted
Shares Average
Under Exercise
Options Price
- ------------------------------------------------------------------------
Outstanding at January 1, 2001 4,633,319 $30.14
Exercised (20,420) $25.13
Lapsed or canceled (64,565) $28.44
- ------------------------------------------------------------------------
Outstanding at March 31, 2001 4,548,334 $30.19
========================================================================
Options exercisable at March 31, 2001 2,740,163 $31.02
Available for grant at March 31, 2001 2,323,131
- ------------------------------------------------------------------------
STOCK WARRANTS
The Company has 360,000 warrants outstanding which enable the holders to
purchase an equal number of shares of its common stock ("Stock Warrants") at $33
per share (the market price at date of grant). Such warrants are all currently
exercisable and expire on January 31, 2007.
The Company also has 389,976 Stock Warrants outstanding which enable the holders
to purchase an equal number of its shares of common stock at $38.75 per share
(the market price at date of grant). Such warrants vest equally over a five-year
period through December 31, 2001 and expire on December 12, 2007.
As of March 31, 2001, there were a total of 749,976 Stock Warrants outstanding.
As of March 31, 2001, there were 671,980 Stock Warrants exercisable. For the
three months ended March 31, 2001, no Stock Warrants were canceled. No Stock
Warrants have been exercised through March 31, 2001.
STOCK COMPENSATION
In connection with stock awards granted to officers and certain other employees
of the Company (collectively, "Restricted Stock Awards"), officers and certain
other employees are to receive up to a total of 198,279 shares of the Company's
common stock generally vesting over a three or five-year period. Certain
Restricted Stock Awards are contingent upon the Company meeting certain
performance and/or stock price appreciation objectives. The Restricted Stock
Awards provided to the officers and certain other employees were granted under
the 2000 Employee Plan and Employee Plan.
Effective January 1, 2001, 24,019 Restricted Stock Awards vested and therefore
were released to the officers and certain other employees. For the three months
ended March 31, 2001, 7,408 unvested Restricted Stock Awards were canceled.
23
EARNINGS PER SHARE
FASB No. 128 requires a dual presentation of basic and diluted EPS on the face
of the income statement for all companies with complex capital structures even
where the effect of such dilution is not material. Basic EPS excludes dilution
and is computed by dividing net income available to common stockholders by the
weighted average number of shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
The following information presents the Company's results for the three months
ended March 31, 2001 and 2000 in accordance with FASB No. 128:
Three Months Ended March 31,
2001 2000
------------------------------------------------------
Basic EPS Diluted EPS Basic EPS Diluted EPS
- ----------------------------------------------------------------------------------------------------------
Net income $16,738 $16,738 $36,615 $36,615
Add: Net income attributable to
Operating Partnership - common units -- 2,345 -- 5,107
Net income attributable to
Operating Partnership - preferred units -- -- -- 3,869
- ----------------------------------------------------------------------------------------------------------
Adjusted net income $16,738 $19,083 $36,615 $45,591
==========================================================================================================
Weighted average shares 56,807 64,994 58,295 73,191
- ----------------------------------------------------------------------------------------------------------
Per Share $ 0.29 $ 0.29 $ 0.63 $ 0.62
==========================================================================================================
The following schedule reconciles the shares used in the basic EPS calculation
to the shares used in the diluted EPS calculation:
Three Months Ended March 31,
2001 2000
- ------------------------------------------------------------------------------------------
Basic EPS Shares: 56,807 58,295
Add: Operating Partnership - common units 7,960 8,133
Operating Partnership - preferred units
(after conversion to common units) -- 6,618
Stock options 227 145
- ------------------------------------------------------------------------------------------
Diluted EPS Shares: 64,994 73,191
==========================================================================================
Preferred Units outstanding in 2001 were not included in the 2001 computations
of diluted EPS as such units were anti-dilutive during the period.
Through March 31, 2001, under the Repurchase Program, the Company purchased for
constructive retirement, a total of 4,027,500 shares of its outstanding common
stock for an aggregate cost of approximately $111,681.
16. SEGMENT REPORTING
The Company operates in one business segment - real estate. The Company provides
leasing, management, acquisition, development, construction and tenant-related
services for its portfolio. The Company does not have any foreign operations.
The accounting policies of the segments are the same as those described in Note
2, excluding straight-line rent adjustments, depreciation and amortization and
non-recurring charges.
The Company evaluates performance based upon net operating income from the
combined properties in the segment.
24
Selected results of operations for the three months ended March 31, 2001 and
2000 and selected asset information as of March 31, 2001 and December 31, 2000
regarding the Company's operating segment are as follows:
Total Corporate & Total
Segment Other (e) Company
- -----------------------------------------------------------------------------------------------------------------------
TOTAL CONTRACT REVENUES (a):
Three months ended:
March 31, 2001 $ 141,805 $ 896 $ 142,701 (f)
March 31, 2000 140,141 648 140,789 (g)
TOTAL OPERATING AND INTEREST EXPENSES (b):
Three months ended:
March 31, 2001 $ 45,276 $ 34,221 $ 79,497 (h)
March 31, 2000 42,764 32,600 75,364 (i)
NET OPERATING INCOME (c):
Three months ended:
March 31, 2001 $ 96,529 $(33,325) $ 63,204 (f) (h)
March 31, 2000 97,377 (31,952) 65,425 (g) (i)
TOTAL ASSETS:
March 31, 2001 $ 3,632,374 $ 48,685 $ 3,681,059
December 31, 2000 3,623,107 53,870 3,676,977
TOTAL LONG-LIVED ASSETS (d):
March 31, 2001 $ 3,526,423 $ 25,975 $ 3,552,398
December 31, 2000 3,522,766 23,574 3,546,340
=======================================================================================================================
(a) Total contract revenues represent all revenues during the period
(including the Company's share of net income from unconsolidated joint
ventures), excluding adjustments for straight-lining of rents and the
Company's share of straight-line rent adjustments from unconsolidated
joint ventures. All interest income is excluded from segment amounts and
is classified in Corporate and Other for all periods.
(b) Total operating and interest expenses represent the sum of real estate
taxes, utilities, operating services, general and administrative and
interest expense. All interest expense (including for property-level
mortgages) is excluded from segment amounts and classified in Corporate
and Other for all periods.
(c) Net operating income represents total contract revenues [as defined in
Note (a)] less total operating and interest expenses [as defined in Note
(b)] for the period.
(d) Long-lived assets are comprised of total rental property, unbilled rents
receivable and investments in unconsolidated joint ventures.
(e) Corporate & Other represents all corporate-level items (including interest
and other investment income, interest expense and non-property general and
administrative expense) as well as intercompany eliminations necessary to
reconcile to consolidated Company totals.
(f) Excludes $3,770 of adjustments for straight-lining of rents and $35 for
the Company's share of straight-line rent adjustments from unconsolidated
joint ventures
(g) Excludes $2,133 of adjustments for straight-lining of rents and $57 for
the Company's share of straight-line rent adjustments from unconsolidated
joint ventures.
(h) Excludes $23,484 of depreciation and amortization.
(i) Excludes $22,182 of depreciation and amortization.
25
17. IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS
In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities ("FASB No.
133"). FASB No. 133 requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. The Company has adopted this
statement as of January 1, 2001. Due to its limited use of derivative
instruments, adoption of FASB No. 133 did not have a material impact on the
Company's financial statements.
26
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated
Financial Statements of Mack-Cali Realty Corporation and the notes thereto.
Certain defined terms used herein have the meaning ascribed to them in the
Consolidated Financial Statements.
The following comparisons for the three months ended March 31, 2001 ("2001"), as
compared to the three months ended March 31, 2000 ("2000"), make reference to
the following: (i) the effect of the "Same-Store Properties," which represents
all in-service properties owned by the Company at December 31, 1999, excluding
Dispositions as defined below, (ii) the effect of the "Acquired Properties,"
which represents all properties acquired or placed in service by the Company
from January 1, 2000 through March 31, 2001, and (iii) the effect of the
"Dispositions", which represents results for each period for those rental
properties sold by the Company during the same periods.
THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000
Quarter Ended
March 31, Dollar Percent
(DOLLARS IN THOUSANDS) 2001 2000 Change Change
- ---------------------------------------------------------------------------------------------------------------------
REVENUE FROM RENTAL OPERATIONS:
Base rents $125,376 $121,598 $ 3,778 3.1%
Escalations and recoveries from tenants 14,762 16,668 (1,906) (11.4)
Parking and other 2,346 3,322 (976) (29.4)
- ---------------------------------------------------------------------------------------------------------------------
Sub-total 142,484 141,588 896 0.6
Equity in earnings of unconsolidated joint ventures 3,409 1,137 2,272 199.8
Interest income 613 254 359 141.3
- ---------------------------------------------------------------------------------------------------------------------
Total revenues 146,506 142,979 3,527 2.5
- ---------------------------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes 15,287 14,704 583 4.0
Utilities 11,956 10,379 1,577 15.2
Operating services 17,879 17,742 137 0.8
- ---------------------------------------------------------------------------------------------------------------------
Sub-total 45,122 42,825 2,297 5.4
General and administrative 6,010 6,113 (103) (1.7)
Depreciation and amortization 23,484 22,182 1,302 5.9
Interest expense 28,365 26,426 1,939 7.3
- ---------------------------------------------------------------------------------------------------------------------
Total expenses 102,981 97,546 5,435 5.6
- ---------------------------------------------------------------------------------------------------------------------
Income before realized and unrealized (loss)/gain
on disposition of rental property and
minority interests 43,525 45,433 (1,908) (4.2)
Realized and unrealized (loss)/gain on disposition
of rental property (20,563) 2,248 (22,811) (1,014.7)
- ---------------------------------------------------------------------------------------------------------------------
Income before minority interests 22,962 47,681 (24,719) (51.8)
MINORITY INTERESTS:
Operating partnership 6,224 8,976 (2,752) (30.7)
Partially-owned properties -- 2,090 (2,090) (100.0)
- ---------------------------------------------------------------------------------------------------------------------
Net income $ 16,738 $ 36,615 $ (19,877) (54.3)%
======================================================================================================================
27
The following is a summary of the changes in revenue from rental operations and
property expenses divided into Same-Store Properties, Acquired Properties and
Dispositions (dollars in thousands):
TOTAL COMPANY SAME-STORE PROPERTIES ACQUIRED PROPERTIES DISPOSITIONS
Dollar Percent Dollar Percent Dollar Percent Dollar Percent
Change Change Change Change Change Change Change Change
- --------------------------------------------------------------------------------------------------------------------
REVENUE FROM RENTAL OPERATIONS:
Base rents $ 3,778 3.1% $5,108 4.2% $6,014 4.9% $(7,344) (6.0)%
Escalations and recoveries from
from tenants (1,906) (11.4) (724) (4.3) 504 3.0 (1,686) (10.1)
Parking and other (976) (29.4) (673) (20.3) 29 0.9 (332) (10.0)
- --------------------------------------------------------------------------------------------------------------------
Total $ 896 0.6% $3,711 2.6% $6,547 4.6% $(9,362) (6.6)%
====================================================================================================================
PROPERTY EXPENSES:
Real estate taxes $ 583 4.0% $ 341 2.3% $ 923 6.3% $ (681) (4.6)%
Utilities 1,577 15.2 1,445 13.9 769 7.4 (637) (6.1)
Operating services 137 0.8 444 2.5 1,067 6.0 (1,374) (7.7)
- --------------------------------------------------------------------------------------------------------------------
Total $ 2,297 5.4% $2,230 5.2% $2,759 6.5% $(2,692) (6.3)%
====================================================================================================================
OTHER DATA:
Number of Consolidated Properties 259 248 11 7
Square feet (in thousands) 27,230 25,624 1,606 1,949
Base rents for the Same-Store Properties increased $5.1 million, or 4.2 percent,
for 2001 as compared to 2000, due primarily to rental rate increases in 2001.
Escalations and recoveries from tenants for the Same-Store Properties decreased
$0.7 million, or 4.3 percent, for 2001 over 2000, due to the recovery of a
decreased amount of total property expenses, as well as increased settle-up
billings in 2000. Parking and other income for the Same-Store Properties
decreased $0.7 million, or 20.3 percent, due primarily to fewer lease
termination fees in 2001.
Real estate taxes on the Same-Store Properties increased $0.3 million, or 2.3
percent, for 2001 as compared to 2000, due primarily to property tax rate
increases in certain municipalities in 2001. Utilities for the Same-Store
Properties increased $1.4 million, or 13.9 percent, for 2001 as compared to
2000, due primarily to increased rates. Operating services for the Same-Store
Properties increased $0.4 million, or 2.5 percent, due primarily to an increase
in snow removal costs in 2001.
Equity in earnings of unconsolidated joint ventures increased $2.3 million, or
199.8 percent, for 2001 as compared to 2000. This is due primarily to properties
developed by joint ventures being placed in service during 2000 and higher
occupancies at certain properties (see Note 4 to the Financial Statements).
Interest income increased $0.4 million, or 141.3 percent, for 2001 as compared
to 2000. This increase was due primarily to the effect of net proceeds from
certain property sales being invested in cash and cash equivalents for the
period of time prior to which such proceeds were reinvested.
General and administrative decreased by $0.1 million, or 1.7 percent, for 2001
as compared to 2000. This decrease is due primarily to decreased salaries in
2001.
Depreciation and amortization increased by $1.3 million, or 5.9 percent, for
2001 over 2000. Of this increase, $0.7 million, or 3.2 percent, is attributable
to the Same-Store Properties, and $1.2 million, or 5.5 percent, is due to the
Acquired Properties, partially offset by a decrease of $0.6 million, or 2.8
percent, due to the Dispositions.
Interest expense increased $1.9 million, or 7.3 percent, for 2001 as compared to
2000. This increase is due primarily to the replacement in 2001 of short-term
credit facility borrowings with long-term fixed rate unsecured debt.
28
Income before realized and unrealized (loss)/gain on disposition of rental
property and minority interests decreased to $43.5 million in 2001 from $45.4
million in 2000. The decrease of approximately $1.9 million is due to the
factors discussed above.
Net income decreased by $19.9 million, from $36.6 million in 2000 to $16.7
million in 2001. This decrease was a result of a valuation allowance on rental
property held for sale of $20.6 million in 2001, a decrease in income before
realized and unrealized (loss)/gain on disposition of rental property and
minority interests of $1.9 million in 2001 as compared to 2000, and a realized
gain on sale of land of $2.2 million in 2000. This was partially offset by a
decrease in minority interests of $4.8 million in 2001.
LIQUIDITY AND CAPITAL RESOURCES
STATEMENT OF CASH FLOWS
During the three months ended March 31, 2001, the Company generated $52.6
million in cash flows from operating activities, and together with $363.8
million in borrowings from the Company's senior unsecured notes and revolving
credit facilities, $17.1 million in distributions received from unconsolidated
joint ventures, $6.0 million in proceeds from repayment of mortgage note
receivable, $0.5 million in proceeds from stock options exercised and $1.4
million from the Company's cash reserves, used an aggregate of approximately
$441.4 million to acquire properties and land parcels and pay for other tenant
and building improvements totaling $49.4 million, repay outstanding borrowings
on its revolving credit facilities and other mortgage debt of $330.2 million,
pay quarterly dividends and distributions of $43.5 million, invest $11.2 million
in unconsolidated joint ventures, pay financing costs of $2.5 million,
repurchase 132,000 shares of its outstanding common stock for $3.6 million and
add $1.0 million to restricted cash.
CAPITALIZATION
The Company has a focused strategy geared to attractive opportunities in
high-barrier-to-entry markets, primarily predicated on the Company's strong
presence in the Northeast region and, to a lesser extent, certain markets in
California. The Company plans to sell substantially all of its properties
located in the Southwestern and Western regions, using such proceeds to invest
in property acquisitions and development projects in its core Northeast markets,
as well as to repay debt and fund stock repurchases.
Consistent with its strategy, in the fourth quarter 2000, the Company started
construction of a 980,000 square-foot office property, to be known as Plaza 5,
at its Harborside Financial Center office complex in Jersey City, Hudson County,
New Jersey. The total cost of the project is currently projected to be
approximately $260 million and is anticipated to be completed in third quarter
2002. Additionally, in the fourth quarter 2000, the Company, through a joint
venture, started construction of a 575,000 square-foot office property, to be
known as Plaza 10, on land owned by the joint venture located adjacent to the
Company's Harborside complex. The total cost of this project is currently
projected to be approximately $140 million and is anticipated to be completed in
third quarter 2002. Plaza 10 is 100 percent pre-leased to Charles Schwab for a
15-year term. The lease agreement obligates the Company, among other things, to
deliver space to the tenant by required timelines and offers expansion options,
at the tenant's election, to additional space in any adjacent Harborside
projects. Such options may obligate the Company to construct an additional
building at Harborside if vacant space is not available in any of its existing
Harborside properties. Should the Company be unable to or choose not to provide
such expansion space, the Company could be liable to Schwab for its actual
damages, in no event to exceed $15.0 million. The Company expects to finance its
funding requirements under both Plazas 5 and 10 projects through drawing on its
revolving credit facilities, construction financing, or through joint venture
arrangements.
29
On August 6, 1998, the Board of Directors of the Company authorized a Repurchase
Program under which the Company was permitted to purchase up to $100.0 million
of the Company's outstanding common stock. Under the Repurchase Program, the
Company purchased for constructive retirement 1,869,200 shares of its
outstanding common stock for an aggregate cost of approximately $52.6 million
through September 12, 2000.
On September 13, 2000, the Board of Directors authorized an increase to the
Repurchase Program under which the Company is permitted to purchase up to an
additional $150.0 million of the Company's outstanding common stock above the
$52.6 million that had previously been purchased. From that date through April
30, 2001, the Company purchased for constructive retirement 2,158,300 shares of
its outstanding common stock for an aggregate cost of approximately $59.1
million under the Repurchase Program. The Company has authorization to
repurchase up to an additional $90.9 million of its outstanding common stock
which it may repurchase from time to time in open market transactions at
prevailing prices or through privately negotiated transactions.
As of March 31, 2000, the Company's total indebtedness of $1.7 billion (weighted
average interest rate of 7.32 percent) was comprised of $117.2 million of
revolving credit facility borrowings and other variable rate mortgage debt
(weighted average rate of 5.76 percent) and fixed rate debt of $1.5 billion
(weighted average rate of 7.38 percent).
As of March 31, 2001, the Company had outstanding borrowings of $85.0 million
under its revolving credit facilities (with aggregate borrowing capacity of
$900.0 million). The total outstanding borrowings were from the 2000 Unsecured
Facility, with no outstanding borrowings under the Prudential Facility. The
interest rate on outstanding borrowings under the 2000 Unsecured Facility is
currently LIBOR plus 80 basis points. The Company may instead elect an interest
rate representing the higher of the lender's prime rate or the Federal Funds
rate plus 50 basis points. The 2000 Unsecured Facility also requires a 20 basis
point facility fee on the current borrowing capacity payable quarterly in
arrears. In the event of a change in the Company's unsecured debt rating, the
interest and facility fee rate will be changed on a sliding scale. Subject to
certain conditions, the Company has the ability to increase the borrowing
capacity of the 2000 Unsecured Facility up to $1.0 billion. The 2000 Unsecured
Facility matures in June 2003, with an extension option of one year, which would
require a payment of 25 basis points of the then borrowing capacity of the
credit line upon exercise. The Company has been notified that the Prudential
Facility, which carries an interest rate of 110 basis points over LIBOR and
matures in June 2001, will not be renewed. The Company believes that the 2000
Unsecured Facility is sufficient to meet its revolving credit facility needs.
The terms of the 2000 Unsecured Facility include certain restrictions and
covenants which limit, among other things, the payment of dividends (as
discussed below), the incurrence of additional indebtedness, the incurrence of
liens and the disposition of assets, and which require compliance with financial
ratios relating to the maximum leverage ratio, the maximum amount of secured
indebtedness, the minimum amount of tangible net worth, the minimum amount of
debt service coverage, the minimum amount of fixed charge coverage, the maximum
amount of unsecured indebtedness, the minimum amount of unencumbered property
debt service coverage and certain investment limitations. The dividend
restriction referred to above provides that, except to enable the Company to
continue to qualify as a REIT under the Code, the Company will not during any
four consecutive fiscal quarters make distributions with respect to common stock
or other equity interests in an aggregate amount in excess of 90 percent of
funds from operations (as defined) for such period, subject to certain other
adjustments.
On January 29, 2001, the Operating Partnership issued $300.0 million face amount
of 7.75 percent senior unsecured notes due February 15, 2011 with interest
payable semi-annually in arrears. The total proceeds from the issuance (net of
selling commissions and discount) of approximately $296.3 million were used to
pay down outstanding borrowings under the 2000 Unsecured Facility, as defined in
Note 9 to the Financial Statements. The senior unsecured notes were issued at a
discount of approximately $1.7 million.
The terms of the Operating Partnership's unsecured corporate debt 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.
30
The Company has three investment grade credit ratings. Standard & Poor's Rating
Services ("S&P") and Fitch, Inc. ("Fitch") have each assigned their BBB rating
to existing and prospective senior unsecured debt of the Operating Partnership.
S&P and Fitch have also assigned their BBB- rating to prospective preferred
stock offerings of the Company. Moody's Investors Service has assigned its Baa3
rating to the existing and prospective senior unsecured debt of the Operating
Partnership and its Ba1 rating to prospective preferred stock offerings of the
Company.
As of March 31, 2001, the Company had 233 unencumbered properties, totaling 21.0
million square feet, representing 77.0 percent of the Company's total portfolio
on a square footage basis.
The Company has an effective shelf registration statement with the SEC for an
aggregate amount of $2.0 billion in equity securities of the Company. The
Company and Operating Partnership also have an effective shelf registration
statement with the SEC for an aggregate of $2.0 billion in debt securities,
preferred stock and preferred stock represented by depositary shares, under
which the Operating Partnership has issued an aggregate of $1.1 billion of
unsecured corporate debt.
Historically, rental revenue has been the principal source of funds to pay
operating expenses, debt service and capital expenditures, excluding
non-recurring capital expenditures. Management believes that the Company will
have access to the capital resources necessary to expand and develop its
business. To the extent that the Company's cash flow from operating activities
is insufficient to finance its non-recurring capital expenditures such as
property acquisition and construction project costs and other capital
expenditures, the Company expects to finance such activities through borrowings
under its revolving credit facilities and other debt and equity financing.
The Company expects to meet its short-term liquidity requirements generally
through its working capital, net cash provided by operating activities and from
the 2000 Unsecured Facility. The Company is frequently examining potential
property acquisitions and construction projects and, at any given time, one or
more of such acquisitions or construction projects may be under consideration.
Accordingly, the ability to fund property acquisitions and construction projects
is a major part of the Company's financing requirements. The Company expects to
meet its financing requirements through funds generated from operating
activities, proceeds from property sales, long-term or short-term borrowings
(including draws on the Company's revolving credit facilities) and the issuance
of additional debt or equity securities.
As of March 31, 2001, the Company's total debt had a weighted average term to
maturity of approximately 5.6 years. The Company does not intend to reserve
funds to retire the Company's unsecured corporate debt or its mortgages and
loans payable upon maturity. Instead, the Company will seek to refinance such
debt at maturity or retire such debt through the issuance of additional equity
or debt securities. The Company is reviewing various refinancing options,
including the issuance of additional unsecured debt, preferred stock, and/or
obtaining additional mortgage debt, some or all of which may be completed during
2001. The Company anticipates that its available cash and cash equivalents and
cash flows from operating activities, together with cash available from
borrowings and other sources, will be adequate to meet the Company's capital and
liquidity needs both in the short and long-term. However, if these sources of
funds are insufficient or unavailable, the Company's ability to make the
expected distributions discussed below may be adversely affected.
To maintain its qualification as a REIT, the Company must make annual
distributions to its stockholders of at least 90 percent of its REIT taxable
income, determined without regard to the dividends paid deduction and by
excluding net capital gains. Moreover, the Company intends to continue to make
regular quarterly distributions to its stockholders which, based upon current
policy, in the aggregate would equal approximately $139.1 million on an
annualized basis. However, any such distribution, whether for federal income tax
purposes or otherwise, would only be paid out of available cash after meeting
both operating requirements and scheduled debt service on mortgages and loans
payable.
31
FUNDS FROM OPERATIONS
The Company considers funds from operations ("FFO"), after adjustment for
straight-lining of rents and non-recurring charges, one measure of REIT
performance. Funds from operations is defined as net income (loss) before
minority interest of unitholders, computed in accordance with generally accepted
accounting principles ("GAAP"), excluding gains (or losses) from debt
restructuring, other extraordinary items, and realized and unrealized
(loss)/gain on disposition of depreciable rental property, plus real
estate-related depreciation and amortization. Funds from operations should not
be considered as an alternative to net income as an indication of the Company's
performance or to cash flows as a measure of liquidity. Funds from operations
presented herein is not necessarily comparable to funds from operations
presented by other real estate companies due to the fact that not all real
estate companies use the same definition. However, the Company's funds from
operations is comparable to the funds from operations of real estate companies
that use the current definition of the National Association of Real Estate
Investment Trusts ("NAREIT"), after the adjustment for straight-lining of rents
and non-recurring charges.
Funds from operations for the three months ended March 31, 2001 and 2000, as
calculated in accordance with NAREIT's definition as published in October 1999,
after adjustment for straight-lining of rents and non-recurring charges, are
summarized in the following table (IN THOUSANDS):
Three Months Ended March 31,
2001 2000
- ---------------------------------------------------------------------------------------------------------
Income before realized and unrealized (loss)/gain on disposition
of rental property and minority interests $ 43,525 $ 45,433
Add: Real estate-related depreciation and amortization (1) 24,003 22,718
Gain on sale of land -- 2,248
Deduct: Rental income adjustment for straight-lining of rents (2) (3,805) (2,190)
Minority interests: partially-owned properties -- (2,090)
- ---------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment for straight-lining
of rents and non-recurring charges $ 63,723 $ 66,119
Deduct: Distributions to preferred unitholders (3,879) (3,869)
- ---------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment for straight-lining
of rents and non-recurring charges, after distributions
to preferred unitholders $ 59,844 $ 62,250
=========================================================================================================
Cash flows provided by operating activities $ 52,614 $ 39,038
Cash flows used in investing activities $(38,461) (36,257)
Cash flows used in financing activities $(15,612) $ (5,278)
- ---------------------------------------------------------------------------------------------------------
Basic weighted averages shares/units outstanding (3) 64,767 66,428
- ---------------------------------------------------------------------------------------------------------
Diluted weighted average shares/units outstanding (3) 71,353 73,191
- ---------------------------------------------------------------------------------------------------------
(1) Includes the Company's share from unconsolidated joint ventures of $721
and $734 for the three months ended March 31, 2001 and 2000, respectively.
(2) Includes the Company's share from unconsolidated joint ventures of $35 and
$57 for the three months ended March 31, 2001 and 2000, respectively.
(3) See calculations for the amounts presented in the following
reconciliation.
32
The following schedule reconciles the Company's basic weighted average shares to
the basic and diluted weighted average shares/units presented above:
Three Months Ended March 31,
2001 2000
- ----------------------------------------------------------------------------
Basic weighted average shares: 56,807 58,295
Add: Weighted average common units 7,960 8,133
- ----------------------------------------------------------------------------
Basic weighted average shares/units: 64,767 66,428
Add: Weighted average preferred units
(after conversion to common units) 6,359 6,618
Stock options 227 145
- ----------------------------------------------------------------------------
Diluted weighted average shares/units: 71,353 73,191
============================================================================
INFLATION
The Company's leases with the majority of its tenants provide for recoveries and
escalation charges based upon the tenant's proportionate share of, and/or
increases in, real estate taxes and certain operating costs, which reduce the
Company's exposure to increases in operating costs resulting from inflation.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
The Company considers portions of this information to be forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Such forward-looking
statements relate to, without limitation, the Company's future economic
performance, plans and objectives for future operations and projections of
revenue and other financial items. Forward-looking statements can be identified
by the use of words such as "may," "will," "should," "expect," "anticipate,"
"estimate" or "continue" or comparable terminology. Forward-looking statements
are inherently subject to risks and uncertainties, many of which the Company
cannot predict with accuracy and some of which the Company might not even
anticipate. Although the Company believes that the expectations reflected in
such forward-looking statements are based upon reasonable assumptions, it can
give no assurance that its expectations will be achieved. Future events and
actual results, financial and otherwise, may differ materially from the results
discussed in the forward-looking statements.
33
ITEM 3. 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, our ability to make
distributions or payments to our investors.
Approximately $1.5 billion of the Company's long-term debt bears interest at
fixed rates and therefore the fair value of these instruments is affected by
changes in market interest rates. The following table presents principal cash
flows (in thousands) based upon maturity dates of the debt obligations and the
related weighted-average interest rates by expected maturity dates for the fixed
rate debt. The interest rate on the variable rate debt as of March 31, 2001
ranged from LIBOR plus 65 basis points to LIBOR plus 80 basis points.
MARCH 31, 2001
DEBT, 4/1/01 -
INCLUDING CURRENT PORTION 12/31/01 2002 2003 2004 2005 THEREAFTER TOTAL FAIR VALUE
- ------------------------- -------- ---- ---- ---- ---- ---------- ----- ----------
Fixed Rate $6,534 $3,260 $195,501 $312,110 $254,598 $773,003 $1,545,006 $1,560,428
Average Interest Rate 8.28% 10.27% 7.31% 7.34% 7.14% 7.59% 7.44%
Variable Rate $ 85,000 $ 32,178 $ 117,178 $ 117,178
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
adversely affect its operating results and liquidity.
34
MACK-CALI REALTY CORPORATION
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to "Other" in Note 13 (Commitments and
Contingencies) to the Consolidated Financial Statements, which is
specifically incorporated by reference herein.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
35
MACK-CALI REALTY CORPORATION
PART II - OTHER INFORMATION (CONTINUED)
ITEM 6 - EXHIBITS
(a) Exhibits
The following exhibits are filed herewith or are incorporated by
reference to exhibits previously filed:
EXHIBIT
NUMBER EXHIBIT TITLE
3.1 Restated Charter of Mack-Cali Realty Corporation dated
June 2, 1999, together with Articles Supplementary
thereto (filed as Exhibit 3.1 to the Company's Form 8-K
dated June 10, 1999 and as Exhibit 4.2 to the Company's
Form 8-K dated July 6, 1999 and each incorporated herein
by reference).
3.2 Amended and Restated Bylaws of Mack-Cali Realty
Corporation dated June 10, 1999 (filed as Exhibit 3.2 to
the Company's Form 8-K dated June 10, 1999 and
incorporated herein by reference).
3.3 Second Amended and Restated Agreement of Limited
Partnership of Mack-Cali Realty, L.P. dated December 11,
1997, (filed as Exhibit 10.110 to the Company's Form 8-K
dated December 11, 1997 and incorporated herein by
reference).
3.4 Amendment No. 1 to the Second Amended and Restated
Agreement of Limited Partnership of Mack-Cali Realty,
L.P. (filed as Exhibit 3.1 to the Company's Registration
Statement on Form S-3, Registration No. 333-57103, and
incorporated herein by reference).
3.5 Second Amendment to the Second Amended and Restated
Agreement of Limited Partnership of Mack-Cali Realty,
L.P. (filed as Exhibit 10.2 to the Company's Form 8-K
dated July 6, 1999 and incorporated herein by
reference).
4.1 Amended and Restated Shareholder Rights Agreement, dated
as of March 7, 2000, between Mack-Cali Realty
Corporation and EquiServe Trust Company, N.A., as Rights
Agent (filed as Exhibit 4.1 to the Company's Form 8-K
dated March 7, 2000 and incorporated herein by
reference).
4.2 Amendment No. 1 to the Amended and Restated Shareholder
Rights Agreement, dated as of June 27, 2000, by and
among Mack-Cali Realty Corporation and EquiServe Trust
Company, N.A. (filed as Exhibit 4.1 to the Company's
Form 8-K dated June 27, 2000).
4.3 Indenture dated as of March 16, 1999, by and among
Mack-Cali Realty, L.P., as issuer, Mack-Cali Realty
Corporation, as guarantor, and Wilmington Trust Company,
as trustee (filed as Exhibit 4.1 to the Company's Form
8-K dated March 16, 1999 and incorporated herein by
reference).
4.4 Supplemental Indenture No. 1 dated as of March 16, 1999,
by and among Mack-Cali Realty, L.P., as issuer, and
Wilmington Trust Company, as trustee (filed as Exhibit
4.2 to the Company's Form 8-K dated March 16, 1999 and
incorporated herein by reference).
36
EXHIBIT
NUMBER EXHIBIT TITLE
4.5 Supplemental Indenture No. 2 dated as of August 2, 1999,
by and among Mack-Cali Realty, L.P., as issuer, and
Wilmington Trust Company, as trustee (filed as Exhibit
4.4 to the Company's Form 10-Q dated June 30, 1999 and
incorporated herein by reference).
4.6 Supplemental Indenture No. 3 dated as of December 21,
2000, by and among Mack-Cali Realty, L.P., as issuer,
and Wilmington Trust Company, as trustee (filed as
Exhibit 4.2 to the Company's Form 8-K dated December 21,
2000 and incorporated herein by reference).
4.7 Supplemental Indenture No. 4 dated as of January 29,
2001, by and among Mack-Cali Realty, L.P., as issuer,
and Wilmington Trust Company, as trustee (filed as
Exhibit 4.2 to the Company's Form 8-K dated January 29,
2001 and incorporated herein by reference).
10.1 Amended and Restated Employment Agreement dated as of
July 1, 1999 between Mitchell E. Hersh and Mack-Cali
Realty Corporation (filed as Exhibit 10.2 to the
Company's Form 10-Q dated June 30, 1999 and incorporated
herein by reference).
10.2 Second Amended and Restated Employment Agreement dated
as of July 1, 1999 between Timothy M. Jones and
Mack-Cali Realty Corporation (filed as Exhibit 10.3 to
the Company's Form 10-Q dated June 30, 1999 and
incorporated herein by reference).
10.3 Second Amended and Restated Employment Agreement dated
as of July 1, 1999 between Barry Lefkowitz and Mack-Cali
Realty Corporation (filed as Exhibit 10.6 to the
Company's Form 10-Q dated June 30, 1999 and incorporated
herein by reference).
10.4 Second Amended and Restated Employment Agreement dated
as of July 1, 1999 between Roger W. Thomas and Mack-Cali
Realty Corporation (filed as Exhibit 10.7 to the
Company's Form 10-Q dated June 30, 1999 and incorporated
herein by reference).
10.5 Employment Agreement dated as of December 5, 2000
between Michael Grossman and Mack-Cali Realty
Corporation (filed as Exhibit 10.8 to the Company's Form
10-K for the year ended December 31, 2000 and
incorporated herein by reference).
10.6 Restricted Share Award Agreement dated as of July 1,
1999 between Mitchell E. Hersh and Mack-Cali Realty
Corporation (filed as Exhibit 10.8 to the Company's Form
10-Q dated June 30, 1999 and incorporated herein by
reference).
10.7 Restricted Share Award Agreement dated as of July 1,
1999 between Timothy M. Jones and Mack-Cali Realty
Corporation (filed as Exhibit 10.9 to the Company's Form
10-Q dated June 30, 1999 and incorporated herein by
reference).
10.8 Restricted Share Award Agreement dated as of July 1,
1999 between Barry Lefkowitz and Mack-Cali Realty
Corporation (filed as Exhibit 10.12 to the Company's
Form 10-Q dated June 30, 1999 and incorporated herein by
reference).
10.9 Restricted Share Award Agreement dated as of July 1,
1999 between Roger W. Thomas and Mack-Cali Realty
Corporation (filed as Exhibit 10.13 to the Company's
Form 10-Q dated June 30, 1999 and incorporated herein by
reference).
37
EXHIBIT
NUMBER EXHIBIT TITLE
10.10* Restricted Share Award Agreement dated as of March
12, 2001 between Roger W. Thomas and Mack-Cali Realty
Corporation.
10.11* Restricted Share Award Agreement dated as of March 12,
2001 between Michael Grossman and Mack-Cali Realty
Corporation.
10.12 Amendment No. 3 to and Restatement of Revolving Credit
Agreement dated as of June 22, 2000, by and among
Mack-Cali Realty, L.P. and The Chase Manhattan Bank,
Fleet National Bank and Other Lenders Which May Become
Parties Thereto with The Chase Manhattan Bank, as
administrative agent, Fleet National Bank, as
syndication agent, Bank of America, N.A., as
documentation agent, Chase Securities Inc. and
FleetBoston Robertson Stephens Inc., as arrangers, Bank
One, N.A., First Union National Bank and Commerzbank
Aktiengesellschaft, as senior managing agents, PNC Bank
National Association, as managing agent, and Societe
Generale, Dresdner Bank AG, Wells Fargo Bank, National
Association, Bank Austria Creditanstalt Corporate
Finance, Inc., Bayerische Hypo-und Vereinsbank and
Summit Bank, as co-agents (filed as Exhibit 10.10 to the
Company's Form 10-K for the year ended December 31, 2000
and incorporated herein by reference).
10.13 Contribution and Exchange Agreement among The MK
Contributors, The MK Entities, The Patriot Contributors,
The Patriot Entities, Patriot American Management and
Leasing Corp., Cali Realty, L.P. and Cali Realty
Corporation, dated September 18, 1997 (filed as Exhibit
10.98 to the Company's Form 8-K dated September 19, 1997
and incorporated herein by reference).
10.14 First Amendment to Contribution and Exchange Agreement,
dated as of December 11, 1997, by and among the Company
and the Mack Group (filed as Exhibit 10.99 to the
Company's Form 8-K dated December 11, 1997 and
incorporated herein by reference).
10.15 Employee Stock Option Plan of Mack-Cali Realty
Corporation (filed as Exhibit 10.1 to the Company's
Post-Effective Amendment No.1 to Form S-8, Registration
No. 333-44443, and incorporated herein by reference).
10.16 Director Stock Option Plan of Mack-Cali Realty
Corporation (filed as Exhibit 10.2 to the Company's
Post-Effective Amendment No.1 to Form S-8, Registration
No. 333-44443, and incorporated herein by reference).
10.17 2000 Employee Stock Option Plan (filed as Exhibit 10.1
to the Company's Registration Statement on Form S-8,
Registration No. 333-52478, and incorporated herein by
reference).
10.18 2000 Director Stock Option Plan (filed as Exhibit 10.2
to the Company's Registration Statement on Form S-8,
Registration No. 333-52478, and incorporated herein by
reference).
* filed herewith
(b) Reports on Form 8-K
During the first quarter of 2001, the Company filed a report on Form 8-K
dated February 22, 2001, furnishing under Item 9 certain supplemental data
regarding its operations.
38
MACK-CALI REALTY CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MACK-CALI REALTY CORPORATION
(Registrant)
Date: May 9, 2001 By: /s/ MITCHELL E. HERSH
--------------------------------
Mitchell E. Hersh
Chief Executive Officer
Date: May 9, 2001 By: /s/ BARRY LEFKOWITZ
--------------------------------
Barry Lefkowitz
Executive Vice President &
Chief Financial Officer
39