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 333-57103-01
Mack-Cali Realty, L.P.
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(Exact name of registrant as specified in its charter)
Delaware 22-3315804
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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 / /.
MACK-CALI REALTY, L.P.
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 Partners' Capital
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................................. 26
Item 3. Quantitative and Qualitative Disclosures about Market Risk.. 33
PART II OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings........................................... 34
Item 2. Changes in Securities and Use of Proceeds................... 34
Item 3. Defaults Upon Senior Securities............................. 34
Item 4. Submission of Matters to a Vote of Security Holders......... 34
Item 5. Other Information........................................... 34
Item 6. Exhibits.................................................... 35
Signatures.................................................. 38
2
MACK-CALI REALTY, L.P.
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
The accompanying unaudited consolidated balance sheets, statements of
operations, of changes in partners' capital, 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, L.P.'s Annual Report on Form 10-K and Form 10-K/A 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, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT UNIT AMOUNTS)
===================================================================================================================
(UNAUDITED)
March 31, December 31,
ASSETS 2001 2000
- -------------------------------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------
3,206,201 3,589,877
Less - accumulated depreciation and amortization (294,786) (302,932)
- -----------------------------------------------------------------------------------------------------------------
2,911,415 3,286,945
Rental property held for sale, net 469,320 107,458
- -----------------------------------------------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------
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
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
- -----------------------------------------------------------------------------------------------------------------
Total liabilities 1,803,524 1,774,239
- -----------------------------------------------------------------------------------------------------------------
Minority interest in consolidated partially-owned properties -- 1,925
Commitments and contingencies
PARTNERS' CAPITAL:
Preferred units, 220,304 and 220,304 units outstanding 226,005 226,005
General partner, 56,961,704 and 56,980,893 common units outstanding 1,432,687 1,453,290
Limited partners, 7,957,525 and 7,963,725 common units outstanding 210,319 212,994
Unit warrants, 2,000,000 and 2,000,000 outstanding 8,524 8,524
- -----------------------------------------------------------------------------------------------------------------
Total partners' capital 1,877,535 1,900,813
- -----------------------------------------------------------------------------------------------------------------
Total liabilities and partners' capital $ 3,681,059 $ 3,676,977
=================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
4
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (UNAUDITED)
================================================================================================================
Three Months Ended
March 31,
REVENUES 2001 2000
- ----------------------------------------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------------------------------------
Total revenues 146,506 142,979
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EXPENSES
- -------------------------------------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------------------------------------
Total expenses 102,981 97,546
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Income before realized and unrealized (loss)/gain on disposition of
rental property and minority interest 43,525 45,433
Realized and unrealized (loss)/gain on disposition of rental property (20,563) 2,248
- -------------------------------------------------------------------------------------------------------------
Income before minority interest 22,962 47,681
Minority interest in consolidated partially-owned properties -- 2,090
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Net income 22,962 45,591
Preferred unit distributions (3,879) (3,869)
- -------------------------------------------------------------------------------------------------------------
Net income available to common unitholders $ 19,083 $ 41,722
=============================================================================================================
Basic earnings per unit $ 0.29 $ 0.63
Diluted earnings per unit $ 0.29 $ 0.62
- -------------------------------------------------------------------------------------------------------------
Distributions declared per common unit $ 0.61 $ 0.58
- -------------------------------------------------------------------------------------------------------------
Basic weighted average units outstanding 64,767 66,428
Diluted weighted average units outstanding 64,994 73,191
- -------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
5
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (IN THOUSANDS) (UNAUDITED)
====================================================================================================================================
General Limited
Preferred Partner Partner Unit Preferred General Limited Unit
Units Units Units Warrants Unitholders Partner Partners Warrants Total
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at January 1, 2001 220 56,981 7,964 2,000 $226,005 $1,453,290 $212,994 $8,524 $1,900,813
Net income -- -- -- -- 3,879 16,738 2,345 -- 22,962
Distributions -- -- -- -- (3,879) (34,750) (4,854) -- (43,483)
Redemption of limited
partner units for
shares of common stock -- 6 (6) -- -- 166 (166) -- --
Contributions - proceeds
from stock
options exercised -- 20 -- -- -- 508 -- -- 508
Deferred compensation
plan for directors -- -- -- -- -- 39 -- -- 39
Issuance of Restricted
Stock Awards -- 94 -- -- -- -- -- -- --
Amortization of stock
compensation -- -- -- -- -- 301 -- -- 301
Cancellation of Restricted
Stock Awards -- (7) -- -- -- -- -- -- --
Repurchase of general
partner units -- (132) -- -- -- (3,605) -- -- (3,605)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 2001 220 56,962 7,958 2,000 $226,005 $1,432,687 $210,319 $8,524 $1,877,535
====================================================================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
6
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
===================================================================================================================
Three Months Ended
March 31,
CASH FLOWS FROM OPERATING ACTIVITIES 2001 2000
- -------------------------------------------------------------------------------------------------------------------
Net income $ 22,962 $ 45,591
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 interest in consolidated partially-owned properties -- 2,090
Changes in operating assets and liabilities:
Increase in unbilled rents receivable, net (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)
- -------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 52,614 $ 39,038
=============================================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES
- -------------------------------------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------------------------------------
Net cash used in investing activities $ (38,461) $ (36,257)
=============================================================================================================
CASH FLOWS FROM FINANCING ACTIVITIES
- -------------------------------------------------------------------------------------------------------------
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 general partner units (3,605) --
Payment of financing costs (2,582) (42)
Proceeds from stock options exercised 508 117
Payment of distributions (43,496) (42,499)
- -------------------------------------------------------------------------------------------------------------
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, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER
UNIT AMOUNTS)
================================================================================
1. ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION
Mack-Cali Realty, L.P., a Delaware limited partnership, and its subsidiaries
(the "Operating Partnership") was formed on May 31, 1994 to conduct the business
of leasing, management, acquisition, development, construction and
tenant-related services for its sole general partner, Mack-Cali Realty
Corporation and its subsidiaries (the "Corporation" or "General Partner"). The
Operating Partnership, through its operating divisions and subsidiaries,
including the Mack-Cali property-owning partnerships and limited liability
companies (collectively, the "Property Partnerships"), as described below, is
the entity through which all of the General Partner's operations are conducted.
The Property Partnerships, not a legal entity, consist of partnerships and
limited liability companies which are engaged in the ownership and operation of
the Properties (as hereinafter defined) of the Operating Partnership.
The General Partner is a fully integrated, self-administered, self-managed real
estate investment trust ("REIT"). The General Partner controls the Operating
Partnership as its sole general partner, and owned an 87.7 percent and 87.7
percent common unit interest in the Operating Partnership as of March 31, 2001
and December 31, 2000, respectively.
The General Partner's business is the ownership of interests in and operation of
the Operating Partnership, and all of the General Partner's expenses are
incurred for the benefit of the Operating Partnership. The General Partner is
reimbursed by the Operating Partnership for all expenses it incurs relating to
the ownership and operation of the Operating Partnership. The Operating
Partnership earns a management fee of between three percent and five percent of
revenues, as defined, for its management of the Property Partnerships.
As of March 31, 2001, the Operating Partnership 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 Operating Partnership 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
Operating Partnership and its controlled subsidiaries, including the Property
Partnerships. See Investments in Unconsolidated Joint Ventures in Note 2 for the
Operating Partnership'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.
8
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
----------------------------------------------------------------
Tenant improvements The shorter of the term of
the related lease or useful life
----------------------------------------------------------------
Furniture, fixtures and equipment 5 to 10 years
----------------------------------------------------------------
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
Operating Partnership 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 Operating Partnership accounts for its investments
in unconsolidated joint ventures under the equity method of
accounting as the Operating Partnership 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 Operating Partnership 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 Operating Partnership 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 Operating Partnership. The
equity interests of the other members are reflected as minority
interest in consolidated partially-owned properties in the
consolidated financial statements of the Operating Partnership.
9
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
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.
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 Operating Partnership,
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 Operating Partnership is a partnership and, as a result, all
income and losses of the partnership are allocated to the
partners for inclusion in their respective income tax returns.
Accordingly, no provision or benefit for income taxes has been
made in the accompanying financial statements.
INTEREST RATE
CONTRACTS Interest rate contracts are utilized by the Operating
Partnership to reduce interest rate risks. The Operating
Partnership 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 Operating Partnership 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.
10
EARNINGS
PER UNIT In accordance with the Statement of Financial Accounting
Standards No. 128 ("FASB No. 128"), the Operating Partnership
presents both basic and diluted earnings per unit ("EPU").
Basic EPU excludes dilution and is computed by dividing net
income available to common unitholders by the weighted average
number of units outstanding for the period. Diluted EPU
reflects the potential dilution that could occur if securities
or other contracts to issue common units were exercised or
converted into common units, where such exercise or conversion
would result in a lower EPU amount.
DISTRIBUTIONS
PAYABLE The distributions payable at March 31, 2001 represents
distributions payable to common unitholders of record as of
April 4, 2001 (64,925,229 common units), and preferred
distributions payable to preferred unitholders (220,340
preferred units) for the first quarter 2001. The first quarter
2001 common unit distribution of $0.61 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 of the General Partner on March 16, 2001 and paid on
April 23, 2001.
The distributions payable at December 31, 2000 represents
distributions payable to common unitholders of record as of
January 4, 2001 (64,946,618 common units), and preferred
distributions payable to preferred unitholders (220,340
preferred units) for the fourth quarter 2000. The fourth
quarter 2000 common unit distribution of $0.61 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 of the General Partner on December 20,
2000 and paid on January 22, 2001.
UNDERWRITING
COMMISSIONS
AND COSTS Underwriting commissions and costs incurred in connection with
the Corporation's stock offerings and subsequent reinvestment
in general partner units are reflected as a reduction of these
unit values.
STOCK OPTIONS The Operating Partnership 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
Corporation'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 Corporation's policy is to grant options with an
exercise price equal to the quoted closing market price of the
Corporation's stock on the business day preceding the grant
date. Accordingly, no compensation cost has been recognized
under the Corporation's stock option plans for the granting of
stock options. See Note 11.
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 Operating Partnership acquired the following operating properties during the
three months ended March 31, 2001:
- ---------------------------------------------------------------------------------------------------------------------
Investment by
Acquisition # of Rentable Operating
Date Property/Portfolio Name Location Bldgs. Square Feet Partnership (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 Operating Partnership'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 Operating Partnership placed in service the following properties through the
completion of development during the three months ended March 31, 2001:
- ---------------------------------------------------------------------------------------------------------------------
Investment by
Date Placed # of Rentable Operating
in Service Property/Portfolio Name Location Bldgs. Square Feet Partnership (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 Operating
Partnership's revolving credit facilities and amounts presented are as of
March 31, 2001.
LAND ACQUISITIONS
On January 5, 2001, the Operating Partnership acquired approximately 7.1 acres
of developable land located in Littleton, Arapahoe County, Colorado. The land
was acquired for approximately $2,711. When the Operating Partnership had
committed itself to acquire the land, the Operating Partnership had intended to
develop the site consistent with its then business strategy. Due to a change in
the Operating Partnership'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 Operating Partnership 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 Operating
Partnership 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.
12
HPMC
On April 23, 1998, the Operating Partnership 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 Operating
Partnership's invested capital in each venture, in addition to 50 percent of
such venture's profit above the preferred returns, as defined in each agreement.
CONTINENTAL GRAND II
Continental Grand II is a 239,085 square-foot office building located in El
Segundo, Los Angeles County, California, which was constructed and placed in
service by the venture.
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 Operating Partnership 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 Operating
Partnership's credit facilities. Subsequently, on June 4, 1999, the Operating
Partnership acquired an additional 0.1 percent interest in G&G Martco through
the issuance of common units. The Operating Partnership 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 Operating Partnership 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 Operating Partnership's Harborside Financial
Center office complex. The Operating Partnership holds a 50 percent interest in
the joint venture. Among other things, the partnership agreement provides for a
preferred return on the Operating Partnership's invested capital in the venture,
in addition to the Operating Partnership'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 Operating Partnership's Harborside property and Manhattan. In the fourth
quarter 2000, the Operating Partnership 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 the third quarter 2002.
13
RAMLAND REALTY ASSOCIATES L.L.C. (ONE RAMLAND ROAD)
On August 20, 1998, the Operating Partnership 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 Operating Partnership holds a 50 percent interest in the joint
venture. The Operating Partnership performs 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 Operating Partnership 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 Operating Partnership 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 Operating Partnership's share) in accordance with
earn-out provisions in the acquisition contracts. The Operating Partnership
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 Operating Partnership 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 Operating Partnership has invested $20,000 in the venture. William L. Mack,
Chairman of the Board of Directors of the Corporation 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 Operating Partnership entered into an agreement with
Hyatt Corporation to develop a 350-room hotel on the Operating Partnership'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 Operating Partnership 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 Operating Partnership 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 Operating Partnership 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 Operating Partnership had investment interests as of March
31, 2001 and December 31, 2000:
March 31, 2001
-----------------------------------------------------------------------------------------------
American MC-SJP
G&G Financial Ramland Ashford Morris Harborside Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Realty South Pier Total
- ---------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Rental property, net $20,568 $65,607 $ 10,359 $31,724 $18,730 $37,788 $ -- $17,271 $22,270 $224,317
Other assets 1,756 29,266 3,020 3,076 4,513 535 426,230 96 -- 468,492
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $22,324 $94,873 $ 13,379 $34,800 $23,243 $38,323 $426,230 $17,367 $22,270 $692,809
================================================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable $ -- $54,401 $ 50,000 $ -- $16,492 $ -- $210,000 $16,028 $ 7,762 $354,683
Other liabilities 122 2,362 1,691 10,312 213 499 755 -- 4,353 20,307
Partners'/members' capital 22,202 38,110 (38,312) 24,488 6,538 37,824 215,475 1,339 10,155 317,819
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $22,324 $94,873 $ 13,379 $34,800 $23,243 $38,323 $426,230 $17,367 $22,270 $692,809
================================================================================================================================
Operating Partnership's net
investment in unconsolidated
joint ventures $15,502 $36,727 $ 3,809 $25,500 $ 2,841 $ 7,913 $ 19,759 $ 173 $ 5,165 $117,389
- --------------------------------------------------------------------------------------------------------------------------------
December 31, 2000
-----------------------------------------------------------------------------------------------
American MC-SJP
G&G Financial Ramland Ashford Morris Harborside Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Realty South Pier Total
- ---------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Rental property, net $20,810 $ 78,119 $ 10,589 $12,546 $18,947 $37,665 $ -- -- -- $178,676
Other assets 2,737 27,082 2,508 11,851 4,755 849 310,342 -- -- 360,124
- --------------------------------------------------------------------------------------------------------------------------------
Total assets $23,547 $105,201 $ 13,097 $24,397 $23,702 $38,514 $310,342 -- -- $538,800
================================================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable $ -- $ 63,486 $ 50,000 $ -- $16,666 $ -- $129,562 -- -- $259,714
Other liabilities 160 5,035 1,368 9,400 522 1,005 3,750 -- -- 21,240
Partners'/members' capital 23,387 36,680 (38,271) 14,997 6,514 37,509 177,030 -- -- 257,846
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $23,547 $105,201 $ 13,097 $24,397 $23,702 $38,514 $310,342 -- -- $538,800
================================================================================================================================
Operating Partnership's net
investment in unconsolidated
joint ventures $16,110 $ 35,079 $ 3,973 $15,809 $ 2,782 $ 7,874 $ 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 Operating Partnership had investment
interests during the three months ended March 31, 2001 and 2000:
Three Months Ended March 31, 2001
-------------------------------------------------------------------------------------------------
American MC-SJP
G&G Financial Ramland Ashford Morris Harborside Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Realty South Pier Total
- -----------------------------------------------------------------------------------------------------------------------------------
Total revenues $1,254 $ 5,512 $2,722 $221 $ 969 $1,575 $19,354 -- -- $31,607
Operating and other expenses (413) (729) (806) (34) (344) (718) (1,841) -- -- (4,885)
Depreciation and amortization (294) (1,823) (389) (15) (246) (231) -- -- -- (2,998)
Interest expense -- (1,376) (985) -- (355) -- (3,014) -- -- (5,730)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 547 $ 1,584 $ 542 $172 $ 24 $ 626 $14,499 -- -- $17,994
===================================================================================================================================
Operating Partnership's equity in
earnings of unconsolidated
joint ventures $ 258 $ 2,152 $ 171 $172 $ 59 $ 97 $ 500 -- -- $ 3,409
- -----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended March 31, 2000
-----------------------------------------------------------------------------------------------
American MC-SJP
G&G Financial Ramland Ashford Morris Harborside Combined
Pru-Beta 3 HPMC Martco Exchange Realty Loop ARCap Realty South Pier Total
- ---------------------------------------------------------------------------------------------------------------------------------
Total revenues $1,234 $1,056 $2,712 $250 $ 978 $1,363 $6,544 -- -- $14,137
Operating and other expenses (418) (174) (760) (31) (317) (630) (571) -- -- (2,901)
Depreciation and amortization (306) (341) (426) (13) (241) (193) -- -- -- (1,520)
Interest expense -- (327) (875) -- (369) -- (769) -- -- (2,340)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 510 $ 214 $ 651 $206 $ 51 $ 540 $5,204 -- -- $ 7,376
==================================================================================================================================
Operating Partnership's equity in
earnings of unconsolidated
joint ventures $ 216 $ -- $ 169 $206 $ 25 $ 121 $ 400 -- -- $ 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 Operating Partnership'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 Operating Partnership 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 Operating Partnership 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 Operating Partnership's
rental properties held for sale will occur.
17
During the three months ended March 31, 2001, the Operating Partnership
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 Operating Partnership, 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 Operating Partnership 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 Operating Partnership
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 Operating
Partnership's unsecured debt rating, the interest rate and facility fee will be
changed on a sliding scale. Subject to certain conditions, the Operating
Partnership 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 Corporation to
continue to qualify as a REIT under the Code, the Corporation 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 Operating Partnership 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 Operating Partnership'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 Corporation 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 Operating Partnership has
been notified that the Prudential Facility will not be renewed.
SUMMARY
As of March 31, 2001 and December 31, 2000, the Operating Partnership 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 Operating Partnership has mortgages and loans payable which are comprised of
various loans collateralized by certain of the Operating Partnership'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 Operating Partnership'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 Operating Partnership 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 Operating Partnership'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 Operating
Partnership 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 Operating Partnership'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 (weighted average rate of 5.76 percent) and fixed rate debt of
$1,545,006 (weighted average rate of 7.38 percent).
20
As of December 31, 2000, the Operating Partnership'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. PARTNERS' CAPITAL
Partners' capital in the accompanying consolidated financial statements relates
to common units held by the Corporation in the Operating Partnership, common
units held by the limited partners, preferred units ("Preferred Units") held by
the preferred unitholders of the Operating Partnership and warrants to purchase
common units ("Unit Warrants") in the Operating Partnership.
Net income allocated to the preferred unitholders and limited partners reflects
their pro-rata share of net income and distributions.
REPURCHASE OF GENERAL PARTNER UNITS
On September 13, 2000, the Board of Directors of the Corporation authorized the
Corporation to purchase up to $150,000 of the Corporation's outstanding common
stock ("Repurchase Program"). The Corporation purchased for constructive
retirement 2,026,300 shares of its outstanding common stock for an aggregate
cost of approximately $55,514 from September 13, 2000 through December 31, 2000.
Concurrent with these purchases, the Corporation sold to the Operating
Partnership 2,026,300 common units for approximately $55,514.
Under the Repurchase Program, the Corporation 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. Concurrent
with these purchases, the Corporation sold to the Operating Partnership 132,000
common units for approximately $3,605.
STOCK OPTION PLANS
In September 2000, the Corporation 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 Corporation'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 Corporation 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 Corporation '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 Corporation'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
- ---------------------------------------------------------------------------------
21
STOCK WARRANTS
The Corporation 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 Corporation 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 Corporation (collectively, "Restricted Stock Awards"), officers and
certain other employees are to receive up to a total of 198,279 shares of the
Corporation's common stock generally vesting over a three or five-year period.
Certain Restricted Stock Awards are contingent upon the Corporation 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.
EARNINGS PER UNIT
FASB No. 128 requires a dual presentation of basic and diluted EPU 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 EPU excludes dilution
and is computed by dividing net income available to common unitholders by the
weighted average number of units outstanding for the period. Diluted EPU
reflects the potential dilution that could occur if securities or other
contracts to issue common units were exercised or converted into common units.
The following information presents the Operating Partnership'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 EPU Diluted EPU Basic EPU Diluted EPU
- ----------------------------------------------------------------------------------------------------------------------
Net income available to common unitholders $19,083 $19,083 $41,722 $41,722
Add: Net income attributable to
Operating Partnership - preferred units -- -- -- 3,869
- ----------------------------------------------------------------------------------------------------------------------
Adjusted net income $19,083 $19,083 $41,722 $45,591
======================================================================================================================
Weighted average units 64,767 64,994 66,428 73,191
- ----------------------------------------------------------------------------------------------------------------------
Per Unit $ 0.29 $ 0.29 $ 0.63 $ 0.62
======================================================================================================================
The following schedule reconciles the units used in the basic EPU calculation to
the units used in the diluted EPU calculation:
Three Months Ended March 31,
2001 2000
- ------------------------------------------------------------------------ ---------------------- ----------------------
Basic EPU Units 64,767 66,428
Add: Operating Partnership - preferred units
(after conversion to common units) -- 6,618
Stock options 227 145
- ------------------------------------------------------------------------ ---------------------- ----------------------
Diluted EPU Units: 64,994 73,191
======================================================================== ====================== ======================
22
Preferred Units outstanding in 2001 were not included in the 2001 computation of
diluted EPU as such units were anti-dilutive during the period.
Through March 31, 2001, under the Repurchase Program, the Corporation purchased
for constructive retirement, a total of 4,027,500 shares of its outstanding
common stock for an aggregate cost of approximately $111,681. Concurrent with
these purchases, the Corporation sold an equal number of common units to the
Operating Partnership.
12. EMPLOYEE BENEFIT PLAN
All employees of the Corporation 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 Corporation, at management's
discretion, may match employee contributions and/or make discretionary
contributions. Management has approved, for the year ended December 31, 2001, a
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 Operating
Partnership for both the three months ended March 31, 2001 and 2000 was $100.
13. COMMITMENTS AND CONTINGENCIES
GROUND LEASE AGREEMENTS
Future minimum rental payments under the terms of all non-cancelable ground
leases under which the Operating Partnership 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 Operating Partnership 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
Operating Partnership and the Property Partnerships.
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.
23
15. SEGMENT REPORTING
The Operating Partnership operates in one business segment - real estate. The
Operating Partnership provides leasing, management, acquisition, development,
construction and tenant-related services for its portfolio. The Operating
Partnership 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 Operating Partnership evaluates performance based upon net operating income
from the combined properties in the segment.
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 Operating Partnership's operating segment are as follows:
Total
Total Corporate & Operating
Segment Other(e) Partnership
- ----------------------------------------------------------------------------------------------------------------------
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 Operating Partnership's share of net income from unconsolidated joint
ventures), excluding adjustments for straight-lining of rents and the
Operating Partnership'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 Operating Partnership totals.
(f) Excludes $3,770 of adjustments for straight-lining of rents and $35 for the
Operating Partnership'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
Operating Partnership'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.
24
16. 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 Operating Partnership 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 Operating Partnership's financial statements.
25
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, L.P. 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 Operating Partnership 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 Operating Partnership 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 Operating Partnership 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 interest 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 interest 22,962 47,681 (24,719) (51.8)
Minority interest in consolidated
partially-owned properties -- 2,090 (2,090) (100.0)
- ----------------------------------------------------------------------------------------------------------------------
Net income 22,962 45,591 (22,629) (49.6)
Preferred unit distributions (3,879) (3,869) (10) (0.3)
- ----------------------------------------------------------------------------------------------------------------------
Net income available to common unitholders $ 19,083 $ 41,722 $ (22,639) (54.3)%
======================================================================================================================
26
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
Operating Partnership 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 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.
27
Income before realized and unrealized (loss)/gain on disposition of rental
property and minority interest 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 available to common unitholders decreased by $22.6 million, from
$41.7 million in 2000 to $19.1 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 interest 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 interest in consolidated
partially-owned properties of $2.1 million in 2001.
LIQUIDITY AND CAPITAL RESOURCES
STATEMENT OF CASH FLOWS
During the three months ended March 31, 2001, the Operating Partnership
generated $52.6 million in cash flows from operating activities, and together
with $363.8 million in borrowings from the Operating Partnership'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 Operating Partnership'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
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 the
Corporation's outstanding common stock for $3.6 million and add $1.0 million to
restricted cash.
CAPITALIZATION
The Operating Partnership has a focused strategy geared to attractive
opportunities in high-barrier-to-entry markets, primarily predicated on the
Operating Partnership's strong presence in the Northeast region and, to a lesser
extent, certain markets in California. The Operating Partnership 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 Operating
Partnership 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 the third quarter 2002. Additionally, in the fourth quarter 2000, the
Operating Partnership, 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 Operating Partnership's
Harborside complex. The total cost of this project is currently projected to
be approximately $140 million and is anticipated to be completed in the third
quarter 2002. Plaza 10 is 100 percent pre-leased to Charles Schwab for a
15-year term. The lease agreement obligates the Operating Partnership, 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 Operating
Partnership to construct an additional building at Harborside if vacant space
is not available in any of its existing Harborside properties. Should the
Operating Partnership be unable to or choose not to provide such expansion
space, the Operating Partnership could be liable to Schwab for its actual
damages, in no event to exceed $15.0 million. The Operating Partnership
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.
On August 6, 1998, the Board of Directors of the Corporation authorized a
Repurchase Program under which the Corporation was permitted to purchase up to
$100.0 million of the Corporation's outstanding common stock. Under the
Repurchase Program, the Corporation 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.
28
On September 13, 2000, the Board of Directors of the Corporation authorized an
increase to the Repurchase Program under which the Corporation is permitted to
purchase up to an additional $150.0 million of the Corporation's outstanding
common stock above the $52.6 million that had previously been purchased. From
that date through April 30, 2001, the Corporation 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
Corporation 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, 2001, the Operating Partnership'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 Operating Partnership 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 Operating Partnership 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 Operating
Partnership's unsecured debt rating, the interest and facility fee rate will be
changed on a sliding scale. Subject to certain conditions, the Operating
Partnership 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 Operating Partnership 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 Operating Partnership 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 Corporation to
continue to qualify as a REIT under the Code, the Corporation 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.
29
The Operating Partnership 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 Corporation. 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 Corporation.
As of March 31, 2001, the Operating Partnership had 233 unencumbered properties,
totaling 21.0 million square feet, representing 77.0 percent of the Operating
Partnership's total portfolio on a square footage basis.
The Operating Partnership and Corporation 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 Operating
Partnership will have access to the capital resources necessary to expand and
develop its business. To the extent that the Operating Partnership'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 Operating Partnership expects to finance such
activities through borrowings under its revolving credit facilities and other
debt and equity financing.
The Operating Partnership 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 Operating Partnership 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 Operating Partnership's financing
requirements. The Operating Partnership 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
Operating Partnership's revolving credit facilities) and the issuance of
additional debt or equity securities.
As of March 31, 2001, the Operating Partnership's total debt had a weighted
average term to maturity of approximately 5.6 years. The Operating Partnership
does not intend to reserve funds to retire the Operating Partnership's unsecured
corporate debt or its mortgages and loans payable upon maturity. Instead, the
Operating Partnership will seek to refinance such debt at maturity or retire
such debt through the issuance of additional equity or debt securities. The
Operating Partnership 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
Operating Partnership 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 Operating
Partnership's capital and liquidity needs both in the short and long-term.
However, if these sources of funds are insufficient or unavailable, the
Operating Partnership's ability to make the expected distributions discussed
below may be adversely affected.
To maintain its qualification as a REIT, the Corporation 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. The Corporation currently relies on the
distributions it receives from the Operating Partnership to make distributions
to its stockholders. Moreover, the Operating Partnership intends to continue to
make regular quarterly distributions to its unitholders which, based upon
current policy, in the aggregate would equal approximately $158.5 million on an
annualized basis. However, any such distribution, would only be paid out of
available cash after meeting operating requirements, scheduled debt service on
mortgages and loans payable and preferred unit distributions.
30
FUNDS FROM OPERATIONS
The Operating Partnership 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 distribution to preferred 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 Operating
Partnership'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 Operating
Partnership'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 interest $ 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 average units outstanding (3) 64,767 66,428
- ----------------------------------------------------------------------------------------------------------------
Diluted weighted average units outstanding (3) 71,353 73,191
- ----------------------------------------------------------------------------------------------------------------
(1) Includes the Operating Partnership's share from unconsolidated joint
ventures of $721 and $734 for the three months ended March 31, 2001 and
2000, respectively.
(2) Includes the Operating Partnership'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.
31
The following schedule reconciles the Operating Partnership's basic weighted
average units to the basic and diluted weighted average units presented above:
Three Months Ended March 31,
2001 2000
- --------------------------------------------------------------------------------
Basic weighted average 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 units: 71,353 73,191
================================================================================
INFLATION
The Operating Partnership'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 Operating Partnership's exposure to increases in operating costs
resulting from inflation.
32
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 Operating Partnership 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 Operating
Partnership'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 Operating Partnership'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 Operating Partnership 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 Operating
Partnership which adversely affect its operating results and liquidity.
33
MACK-CALI REALTY, L.P.
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.
34
MACK-CALI REALTY, L.P.
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 Corporation's Form 8-K dated June 10, 1999
and as Exhibit 4.2 to the Operating Partnership'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 Corporation'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 Corporation'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 Corporation's and Operating Partnership's
Registration Statement on Form S-3, Registration No.
333-57103, and incorporated herein by reference).
3.5 Second Amendment to the Second Amended and Restated Agreement
of Limited Partnership of Mack-Cali Realty, L.P. (filed as
Exhibit 10.2 to the Operating Partnership'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 Operating Partnership'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 Operating Partnership'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 Operating Partnership's Form 8-K dated
March 16, 1999 and incorporated herein by reference).
4.4 Supplemental Indenture No. 1 dated as of March 16, 1999, by
and among Mack-Cali Realty, L.P., as issuer, and Wilmington
Trust Company, as trustee (filed as Exhibit 4.2 to the
Operating Partnership's Form 8-K dated March 16, 1999 and
incorporated herein by reference).
35
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
Operating Partnership's Form 10-Q dated June 30, 1999 and
incorporated herein by reference).
4.6 Supplemental Indenture No. 3 dated as of December 21, 2000, by
and among Mack-Cali Realty, L.P., as issuer, and Wilmington
Trust Company, as trustee (filed as Exhibit 4.2 to the
Operating Partnership's Form 8-K dated December 21, 2000 and
incorporated herein by reference).
4.7 Supplemental Indenture No. 4 dated as of January 29, 2001, by
and among Mack-Cali Realty, L.P., as issuer, and Wilmington
Trust Company, as trustee (filed as Exhibit 4.2 to the
Operating Partnership's Form 8-K dated January 29, 2001 and
incorporated herein by reference).
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 Operating
Partnership'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 Operating
Partnership'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 Operating
Partnership'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 Operating
Partnership's Form 10-Q dated June 30, 1999 and incorporated
herein by reference).
10.5 Employment Agreement dated as of December 5, 2000 between
Michael Grossman and Mack-Cali Realty Corporation (filed as
Exhibit 10.5 to the Operating Partnership'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 Operating Partnership'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 Operating Partnership'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 Operating Partnership'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 Operating Partnership's Form
10-Q dated June 30, 1999 and incorporated herein by
reference).
36
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
Operating Partnership'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 Corporation'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 Cali Realty Corporation
and the Mack Group (filed as Exhibit 10.99 to the
Corporation'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 Corporation'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 Corporation'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
Corporation'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
Corporation'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 Operating Partnership filed with the
SEC a current report on Form 8-K dated January 29, 2001, announcing under
Item 5 that it closed the sale of $300 million of senior unsecured notes.
37
MACK-CALI REALTY, L.P.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MACK-CALI REALTY, L.P.
-----------------------
(Registrant)
By: Mack-Cali Realty Corporation,
its General Partner
Date: May 14, 2001 By: /s/ MITCHELL E. HERSH
-----------------------
Mitchell E. Hersh
Chief Executive Officer
Date: May 14, 2001 /s/ BARRY LEFKOWITZ
-----------------------
Barry Lefkowitz
Executive Vice President &
Chief Financial Officer
38