<Page>
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 June 30, 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.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-3315804
- -------------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11 Commerce Drive, Cranford, New Jersey 07016-3501
- --------------------------------------------------------------------------------
(Address or principal executive office)
(Zip Code)
(908) 272-8000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(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 .
1
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MACK-CALI REALTY, L.P.
FORM 10-Q
INDEX
<Table>
<Caption>
PART I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 2001
and December 31, 2000 4
Consolidated Statements of Operations for the three and six month
periods ended June 30, 2001 and 2000 5
Consolidated Statement of Changes in Partners' Capital
for the six months ended June 30, 2001 6
Consolidated Statements of Cash Flows for the six months
ended June 30, 2001 and 2000 7
Notes to Consolidated Financial Statements 8-27
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 28-36
Item 3. Quantitative and Qualitative Disclosures about Market Risk 37
PART II OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings 38
Item 2. Changes in Securities and Use of Proceeds 38
Item 3. Defaults Upon Senior Securities 38
Item 4. Submission of Matters to a Vote of Security Holders 38
Item 5. Other Information 38
Item 6. Exhibits 39-42
Signatures 43
</Table>
2
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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 and six month periods ended
June 30, 2001 are not necessarily indicative of the results to be
expected for the entire fiscal year or any other period.
3
<Page>
<Table>
<Caption>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
=====================================================================================================================
June 30,
2001 December 31,
ASSETS (UNAUDITED) 2000
- ---------------------------------------------------------------------------------------------------------------------
Rental property
Land and leasehold interests $ 488,288 $ 542,841
Buildings and improvements 2,679,435 2,934,383
Tenant improvements 120,707 106,208
Furniture, fixtures and equipment 7,046 6,445
- ---------------------------------------------------------------------------------------------------------------------
3,295,476 3,589,877
Less - accumulated depreciation and amortization (314,239) (302,932)
- ---------------------------------------------------------------------------------------------------------------------
2,981,237 3,286,945
Rental property held for sale, net 450,932 107,458
- ---------------------------------------------------------------------------------------------------------------------
Net investment in rental property 3,432,169 3,394,403
Cash and cash equivalents 22,738 13,179
Investments in unconsolidated joint ventures 130,944 101,438
Unbilled rents receivable, net 58,118 50,499
Deferred charges and other assets, net 100,337 102,655
Restricted cash 7,492 6,557
Accounts receivable, net of allowance for doubtful accounts
of $693 and $552 8,121 8,246
- ---------------------------------------------------------------------------------------------------------------------
Total assets $3,759,919 $3,676,977
=====================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------------------
Senior unsecured notes $1,096,599 $ 798,099
Revolving credit facilities 76,500 348,840
Mortgages and loans payable 547,701 481,573
Distributions payable 43,080 43,496
Accounts payable and accrued expenses 51,712 53,608
Rents received in advance and security deposits 31,592 31,146
Accrued interest payable 26,814 17,477
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities 1,873,998 1,774,239
- ---------------------------------------------------------------------------------------------------------------------
Minority interest in consolidated partially-owned properties -- 1,925
Commitments and contingencies
PARTNERS' CAPITAL:
Preferred units, 220,340 and 220,340 units outstanding 226,005 226,005
General partner, 56,299,124 and 56,980,893 common units outstanding 1,437,833 1,453,290
Limited partners, 7,956,525 and 7,963,725 common units outstanding 213,559 212,994
Unit warrants, 2,000,000 and 2,000,000 outstanding 8,524 8,524
- ---------------------------------------------------------------------------------------------------------------------
Total partners' capital 1,885,921 1,900,813
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities and partners' capital $3,759,919 $3,676,977
=====================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
</Table>
4
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<Table>
<Caption>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) (UNAUDITED)
============================================================================================================================
Three Months Ended Six Months Ended
June 30, June 30,
REVENUES 2001 2000 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------
Base rents $129,419 $122,072 $254,795 $243,670
Escalations and recoveries from tenants 13,430 14,627 28,192 31,295
Parking and other 3,060 6,128 5,406 9,450
Equity in earnings of unconsolidated joint ventures 2,037 1,070 5,446 2,207
Interest income 472 1,992 1,085 2,246
- ----------------------------------------------------------------------------------------------------------------------------
Total revenues 148,418 145,889 294,924 288,868
- ----------------------------------------------------------------------------------------------------------------------------
EXPENSES
- ----------------------------------------------------------------------------------------------------------------------------
Real estate taxes 15,510 14,733 30,797 29,437
Utilities 10,699 10,014 22,655 20,393
Operating services 17,686 16,822 35,565 34,564
General and administrative 6,856 5,159 12,866 11,272
Depreciation and amortization 21,951 22,945 45,435 45,127
Interest expense 28,555 26,835 56,920 53,261
Non-recurring charges -- 9,228 -- 9,228
- ----------------------------------------------------------------------------------------------------------------------------
Total expenses 101,257 105,736 204,238 203,282
Income before realized gains and unrealized losses
on disposition of rental property and minority interest 47,161 40,153 90,686 85,586
Realized gains and unrealized losses on disposition of
rental property 22,510 73,921 1,947 76,169
- ----------------------------------------------------------------------------------------------------------------------------
Income before minority interest 69,671 114,074 92,633 161,755
Minority interest in consolidated partially-owned
properties -- 2,982 -- 5,072
- ----------------------------------------------------------------------------------------------------------------------------
Net income 69,671 111,092 92,633 156,683
Preferred unit distributions (3,879) (3,765) (7,758) (7,634)
- ----------------------------------------------------------------------------------------------------------------------------
Net income available to common unitholders $ 65,792 $107,327 $84,875 $149,049
============================================================================================================================
Basic earnings per unit $ 1.02 $ 1.61 $ 1.31 $ 2.24
Diluted earnings per unit $ 0.98 $ 1.52 $ 1.30 $ 2.14
- ----------------------------------------------------------------------------------------------------------------------------
Distributions declared per common unit $ 0.61 $ 0.58 $ 1.22 $ 1.16
- ----------------------------------------------------------------------------------------------------------------------------
Basic weighted average units outstanding 64,476 66,627 64,621 66,527
Diluted weighted average units outstanding 71,044 73,284 71,198 73,237
- ----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
</Table>
5
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<Table>
<Caption>
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
Units Units Units Warrants Unitholders Partner Partners
- ----------------------------------------------------------------------------------------------------------------------
Balance at January 1, 2001 220 56,981 7,964 2,000 $226,005 $1,453,290 $212,994
Net income -- -- -- -- 7,758 74,411 10,464
Distributions -- -- -- -- (7,758) (69,099) (9,707)
Redemption of limited
partner units for
shares of common stock -- 7 (7) -- -- 192 (192)
Contributions - proceeds
from stock
options exercised -- 106 -- -- -- 2,389 --
Deferred compensation
plan for directors -- -- -- -- -- 76 --
Issuance of Restricted
Stock Awards -- 94 -- -- -- -- --
Amortization of stock
compensation -- -- -- -- -- 630 --
Cancellation of Restricted
Stock Awards -- (7) -- -- -- -- --
Repurchase of general
partner units -- (882) -- -- -- (24,056) --
- ----------------------------------------------------------------------------------------------------------------------
Balance at June 30, 2001 220 56,299 7,957 2,000 $226,005 $1,437,833 $213,559
======================================================================================================================
<Caption>
===========================================================
Unit
Warrants Total
- -----------------------------------------------------------
Balance at January 1, 2001 $8,524 $1,900,813
Net income -- 92,633
Distributions -- (86,564)
Redemption of limited
partner units for
shares of common stock -- --
Contributions - proceeds
from stock
options exercised -- 2,389
Deferred compensation
plan for directors -- 76
Issuance of Restricted
Stock Awards -- --
Amortization of stock
compensation -- 630
Cancellation of Restricted
Stock Awards -- --
Repurchase of general
partner units -- (24,056)
- -----------------------------------------------------------
Balance at June 30, 2001 $8,524 $1,885,921
===========================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
</Table>
6
<Page>
<Table>
<Caption>
MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
=====================================================================================================================
Six Months Ended
June 30,
CASH FLOWS FROM OPERATING ACTIVITIES 2001 2000
- --------------------------------------------------------------------------------------------------------------------
Net income $92,633 $ 156,683
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 45,435 45,127
Amortization of stock compensation 630 1,410
Amortization of deferred financing costs and debt discount 2,513 1,802
Stock options charge -- 1,550
Equity in earnings of unconsolidated joint ventures (5,446) (2,207)
Realized gains and unrealized losses on disposition of rental property (1,947) (76,169)
Minority interest in consolidated partially-owned properties -- 5,072
Changes in operating assets and liabilities:
Increase in unbilled rents receivable, net (7,737) (5,537)
Increase in deferred charges and other assets, net (1,454) (15,697)
Decrease (increase) in accounts receivable, net 125 (140)
(Decrease) increase in accounts payable and accrued expenses (1,896) 10,982
Increase (decrease) in rents received in advance and security deposits 829 (1,937)
Increase (decrease) in accrued interest payable 9,337 (363)
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 133,022 $ 120,576
====================================================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES
- --------------------------------------------------------------------------------------------------------------------
Additions to rental property $(148,144) $(170,062)
Repayment of mortgage note receivable 5,983 --
Investments in unconsolidated joint ventures (24,462) (11,081)
Distributions from unconsolidated joint ventures 19,056 7,040
Proceeds from sales of rental property 44,787 235,849
(Increase) decrease in restricted cash (935) 583
- --------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities $(103,715) $62,329
====================================================================================================================
CASH FLOWS FROM FINANCING ACTIVITIES
- --------------------------------------------------------------------------------------------------------------------
Proceeds from senior unsecured notes $ 298,269 $ --
Proceeds from revolving credit facilities 218,484 435,030
Proceeds from mortgages and loans payable 70,000 --
Repayments of revolving credit facilities (490,825) (396,300)
Repayments of mortgages and loans payable (3,871) (41,785)
Distributions to minority interest in partially-owned properties -- (88,672)
Repurchase of common stock (24,055) --
Payment of financing costs (3,159) (5,979)
Proceeds from stock options exercised 2,389 1,665
Payment of dividends and distributions (86,980) (85,000)
- --------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities $ (19,748) $(181,041)
====================================================================================================================
Net increase in cash and cash equivalents $ 9,559 $ 1,864
Cash and cash equivalents, beginning of period 13,179 8,671
- --------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $22,738 $10,535
====================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
</Table>
7
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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 87.6 percent and 87.7
percent common unit interest in the Operating Partnership as of June 30, 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 June 30, 2001, the Operating Partnership owned or had interests in 269
properties plus developable land (collectively, the "Properties"). The
Properties aggregate approximately 28.5 million square feet, and are comprised
of 164 office buildings and 93 office/flex buildings totaling approximately 28.1
million square feet (which includes eight office buildings and one office/flex
building aggregating 1.2 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, one
multi-family residential complex consisting of 124 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
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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 $141,623 and $188,077 as of
June 30, 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:
<Table>
<Caption>
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
-------------------------------------------------------------------------
</Table>
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 interests:
partially-owned properties in the consolidated financial
statements of the Operating Partnership.
9
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CASH AND CASH
EQUIVALENTS All highly liquid investments with a maturity of
three months or less when purchased are considered to
be cash equivalents.
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 $1,161 and
$901 for the three months ended June 30, 2001 and 2000,
respectively, and $2,282 and $1,802 for the six months
ended June 30, 2001 and 2000, respectively.
DEFERRED
LEASING COSTS Costs incurred in connection with leases are
capitalized and amortized on a straight-line basis over
the terms of the related leases and included in
depreciation and amortization. Unamortized deferred
leasing costs are charged to amortization expense upon
early termination of the lease. Certain employees of the
Operating Partnership provide leasing services to the
Properties and receive compensation based on space
leased. The portion of such compensation, which is
capitalized and amortized, approximated $863 and $896
for the three months ended June 30, 2001 and 2000,
respectively, and $1,603 and $1,589 for the six months
ended June 30, 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.
DERIVATIVE
INSTRUMENTS The Operating Partnership has adopted Statement of
Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities ("FASB No.
133") 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.
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
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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
shares 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 June 30, 2001 represents
distributions payable to common unitholders of record as
of July 5, 2001 (64,263,589 common units), and preferred
distributions payable to preferred unitholders (220,340
preferred units) for the second quarter 2001. The second
quarter 2001 common unit distribution of $0.61 per
common unit, as well as the second quarter preferred
unit distribution of $17.6046 per preferred unit, were
approved by the Board of Directors of the General
Partner on June 21, 2001 and paid on July 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.
11
<Page>
3. ACQUISITIONS, PROPERTY SALES AND OTHER TRANSACTIONS
OPERATING PROPERTY ACQUISITIONS
The Operating Partnership acquired the following operating properties during the
six months ended June 30, 2001:
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------------------
INVESTMENT BY
ACQUISITION # OF RENTABLE OPERATING
DATE PROPERTY/PORTFOLIO NAME LOCATION BLDGS. SQUARE FEET PARTNERSHIP
- -----------------------------------------------------------------------------------------------------------------------
OFFICE:
4/6/01 4 & 6 Campus Drive (a) Parsippany, Morris County, NJ 2 295,766 $48,404
- -----------------------------------------------------------------------------------------------------------------------
Total Office Property Acquisitions: 2 295,766 $48,404
=======================================================================================================================
OFFICE/FLEX:
2/14/01 31 & 41 Twosome Drive (b) (c) Moorestown, Burlington County, NJ 2 127,250 $7,155
4/27/01 1245 & 1247 N. Church St,
2 Twosome Drive (b) (c) Moorestown, Burlington County, NJ 3 154,200 11,083
- -----------------------------------------------------------------------------------------------------------------------
Total Office/Flex Property Acquisitions: 5 281,450 $18,238
=======================================================================================================================
Total Operating Property Acquisitions: 7 577,216 $66,642
=======================================================================================================================
</Table>
(a) Transaction was funded primarily through borrowing on the Operating
Partnership's revolving credit facility.
(b) Transactions were funded primarily from net proceeds received in the sale
of a rental property as well as the Operating Partnership's cash reserves.
(c) 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 during the
six months ended June 30, 2001:
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------------------
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 $43,300
3/1/01 8181 East Tufts Avenue Denver, Denver County, CO 1 185,254 34,371
- -----------------------------------------------------------------------------------------------------------------------
Total Properties Placed in Service 2 405,254 $77,671
=======================================================================================================================
</Table>
(a) Transactions were funded primarily through draws on the Operating
Partnership's revolving credit facilities and amounts presented are as of
June 30, 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).
12
<Page>
PROPERTY SALES
The Operating Partnership sold the following properties during the six months
ended June 30, 2001:
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------------
SALE # OF RENTABLE NET SALES NET BOOK REALIZED
DATE PROPERTY NAME LOCATION BLDGS. SQUARE FEET PROCEEDS VALUE GAIN
- ------------------------------------------------------------------------------------------------------------------------------
OFFICE:
6/1/01 1777 N.E. Loop 410 San Antonio, Bexar 1 256,137 $21,313 $16,703 $4,610
County, TX
6/15/01 14511 Falling Creek Houston, Harris County, TX 1 70,999 2,982 2,458 524
RESIDENTIAL:
6/21/01 Tenby Chase Delran, Burlington 1 327 units 19,336 2,399 16,937
Apartments County, NJ
OTHER:
4/3/01 North Pier-Harborside Jersey City, Hudson -- n/a 3,357 2,918 439
County, NJ
- ------------------------------------------------------------------------------------------------------------------------------
Totals: 3 327,136 $46,988 $24,478 $22,510
==============================================================================================================================
</Table>
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 $75 and $75 in fees for such services in the
six months ended June 30, 2001 and 2000, respectively.
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, Pacific Plaza I & II 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. On June 29, 2001, the venture sold the office
property for approximately $67,000.
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.
PACIFIC PLAZA I & II
Pacific Plaza I & II 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.
13
<Page>
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 $110
and $104 in fees for such services in the six months ended June 30, 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 of 2002.
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 $58 and $147
in fees for such services in the six months ended June 30, 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. Subsequently, through June 30, 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 $94 and $59 in fees for such services in the
six months ended June 30, 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 Operating Partnership and an equity
holder in the Operating Partnership, is a principal of the managing member of
the venture. At June 30, 2001, the venture held approximately $859,448 face
value of CMBS bonds at an aggregate cost of approximately $440,951.
14
<Page>
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 sale 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 venture for net
sales proceeds of approximately $3,357 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.
15
<Page>
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 June
30, 2001 and December 31, 2000:
<Table>
<Caption>
June 30, 2001
- -----------------------------------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford
Pru-Beta 3 HPMC Martco Exchange Realty Loop
- -----------------------------------------------------------------------------------------------------------------------
ASSETS:
Rental property, net $20,330 $ 92,224 $ 10,027 $42,446 $18,491 $37,637
Other assets 2,540 33,240 3,098 694 4,686 560
- -----------------------------------------------------------------------------------------------------------------------
Total assets $22,870 $125,464 $ 13,125 $43,140 $23,177 $38,197
=======================================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable $ -- $ 67,782 $ 50,000 $ -- $16,319 $ --
Other liabilities 101 3,124 1,642 10,980 130 538
Partners'/members' capital 22,769 54,558 (38,517) 32,160 6,728 37,659
- -----------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $22,870 $125,464 $ 13,125 $43,140 $23,177 $38,197
=======================================================================================================================
Operating Partnership's net
investment in unconsolidated
joint ventures $15,747 $ 37,647 $ 3,549 $33,405 $ 2,936 $7,880
- -----------------------------------------------------------------------------------------------------------------------
<Caption>
June 30, 2001
- ---------------------------------------------------------------------------------------------------
MC-SJP
Morris Harborside Combined
ARCap Realty South Pier Total
- ---------------------------------------------------------------------------------------------------
ASSETS:
Rental property, net $ -- $17,271 $33,441 $271,867
Other assets 482,329 96 -- 527,243
- ---------------------------------------------------------------------------------------------------
Total assets $482,329 $17,367 $33,441 $799,110
===================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable $266,030 $16,028 $10,000 $426,159
Other liabilities 5,111 -- 4,425 26,051
Partners'/members' capital 211,188 1,339 19,016 346,900
- ---------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $482,329 $17,367 $33,441 $799,110
===================================================================================================
Operating Partnership's net
investment in unconsolidated
joint ventures $ 19,745 $ 176 $ 9,859 $130,944
- ---------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
December 31, 2000
- -------------------------------------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford
Pru-Beta 3 HPMC Martco Exchange Realty Loop
- -------------------------------------------------------------------------------------------------------------------------
ASSETS:
Rental property, net $20,810 $78,119 $ 10,589 $12,546 $18,947 $37,665
Other assets 2,737 27,082 2,508 11,851 4,755 849
- -------------------------------------------------------------------------------------------------------------------------
Total assets $23,547 $105,201 $ 13,097 $24,397 $23,702 $38,514
=========================================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable $ -- $63,486 $ 50,000 $ -- $16,666 $ --
Other liabilities 160 5,035 1,368 9,400 522 1,005
Partners'/members' capital 23,387 36,680 (38,271) 14,997 6,514 37,509
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $23,547 $105,201 $ 13,097 $24,397 $23,702 $38,514
=========================================================================================================================
Operating Partnership's net
investment in unconsolidated
joint ventures $16,110 $35,079 $ 3,973 $15,809 $2,782 $7,874
- -------------------------------------------------------------------------------------------------------------------------
<Caption>
December 31, 2000
- ------------------------------------------------------------------------------------------------
MC-SJP
Morris Harborside Combined
ARCap Realty South Pier Total
- ------------------------------------------------------------------------------------------------
ASSETS:
Rental property, net $ -- -- -- $178,676
Other assets 310,342 -- -- 360,124
- ------------------------------------------------------------------------------------------------
Total assets $310,342 -- -- $538,800
================================================================================================
LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
Mortgages and loans payable $129,562 -- -- $259,714
Other liabilities 3,750 -- -- 21,240
Partners'/members' capital 177,030 -- -- 257,846
- ------------------------------------------------------------------------------------------------
Total liabilities and
partners'/members' capital $310,342 -- -- $538,800
================================================================================================
Operating Partnership's net
investment in unconsolidated
joint ventures $ 19,811 -- -- $101,438
- ------------------------------------------------------------------------------------------------
</Table>
16
<Page>
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 and six month periods ended June 30, 2001 and 2000:
<Table>
<Caption>
Three Months Ended June 30, 2001
- ----------------------------------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford
Pru-Beta 3 HPMC Martco Exchange Realty Loop
- ----------------------------------------------------------------------------------------------------------------------
Total revenues $1,235 $13,936 $ 3,084 $ 158 $ 989 $ 1,491
Operating and other expenses (369) (774) (845) (7) (264) (699)
Depreciation and amortization (299) (592) (387) (5) (236) (232)
Interest expense -- (929) (808) -- (299) --
- ----------------------------------------------------------------------------------------------------------------------
Net income $ 567 $11,641 $ 1,044 $ 146 $ 190 $ 560
======================================================================================================================
Operating Partnership's equity in
earnings of unconsolidated
joint ventures $ 245 $ 1,311 $ 366 $ (617) $ 95 $ 112
- ----------------------------------------------------------------------------------------------------------------------
<Caption>
Three Months Ended June 30, 2001
- ----------------------------------------------------------------------------------------------
MC-SJP
Morris Harborside Combined
ARCap Realty South Pier Total
- ----------------------------------------------------------------------------------------------
Total revenues $ 8,504 -- -- $ 29,397
Operating and other expenses (2,179) -- -- (5,137)
Depreciation and amortization -- -- -- (1,751)
Interest expense (4,903) -- -- (6,939)
- ----------------------------------------------------------------------------------------------
Net income $ 1,422 -- -- $ 15,570
================================================================================ =============
Operating Partnership's equity
in earnings of unconsolidated
joint ventures $ 525 -- -- $ 2,037
- ----------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
Three Months Ended June 30, 2000
- ----------------------------------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford
Pru-Beta 3 HPMC Martco Exchange Realty Loop
- ----------------------------------------------------------------------------------------------------------------------
Total revenues $1,234 $2,504 $ 2,569 $254 $ 969 $1,469
Operating and other expenses (401) (813) (793) (51) (273) (641)
Depreciation and amortization (305) (1,065) (336) (7) (241) (210)
Interest expense -- (793) (1,039) -- (377) --
- ----------------------------------------------------------------------------------------------------------------------
Net income $ 528 $ (167) $ 401 $196 $ 78 $ 618
======================================================================================================================
Operating Partnership's equity in
earnings of unconsolidated
joint ventures $ 225 $ 102 $ 43 $139 $ 37 $ 124
- ----------------------------------------------------------------------------------------------------------------------
<Caption>
Three Months Ended June 30, 2000
- -------------------------------------------------------------------------------------------
MC-SJP
Morris Harborside Combined
ARCap Realty South Pier Total
- -------------------------------------------------------------------------------------------
Total revenues $4,606 -- -- $ 13,605
Operating and other expenses (721) -- -- (3,693)
Depreciation and amortization -- -- -- (2,164)
Interest expense (932) -- -- (3,141)
- -------------------------------------------------------------------------------------------
Net income $2,953 -- -- $ 4,607
=============================================== =============== ============= =============
Operating Partnership's equity in
earnings of unconsolidated
joint ventures $ 400 -- -- $ 1,070
- -------------------------------------------------------------------------------------------
</Table>
17
<Page>
<Table>
<Caption>
Six Months Ended June 30, 2001
- -----------------------------------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford
Pru-Beta 3 HPMC Martco Exchange Realty Loop
- -----------------------------------------------------------------------------------------------------------------------
Total revenues $2,488 $14,992 $ 5,807 $ 379 $1,958 $ 3,064
Operating and other expenses (782) (948) (1,650) (41) (607) (1,416)
Depreciation and amortization (592) (933) (777) (20) (483) (462)
Interest expense -- (1,256) (1,793) -- (654) --
- -----------------------------------------------------------------------------------------------------------------------
Net income $1,114 $11,855 $ 1,587 $ 318 $ 214 $ 1,186
======================================================================================================================
Operating Partnership's equity
in earnings of unconsolidated
joint ventures $ 503 $3,464 $ 536 $(445) $ 154 $ 209
- -----------------------------------------------------------------------------------------------------------------------
<Caption>
Six Months Ended June 30, 2001
- ---------------------------------------------------------------------------------------------
MC-SJP
Morris Harborside Combined
ARCap Realty South Pier Total
- ---------------------------------------------------------------------------------------------
Total revenues $27,830 -- -- $ 56,518
Operating and other expenses (4,003) -- -- (9,447)
Depreciation and amortization -- -- -- (3,267)
Interest expense (7,890) -- -- (11,593)
- ---------------------------------------------------------------------------------------------
Net income $15,937 -- -- $ 32,211
=============================================================================================
Operating Partnership's equity
in earnings of unconsolidated
joint ventures $1,025 -- -- $ 5,446
- ---------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
Six Months Ended June 30, 2000
- -----------------------------------------------------------------------------------------------------------------------
American
G&G Financial Ramland Ashford
Pru-Beta 3 HPMC Martco Exchange Realty Loop
- -----------------------------------------------------------------------------------------------------------------------
Total revenues $2,468 $ 3,560 $ 5,281 $504 $1,947 $ 2,832
Operating and other expenses (819) (987) (1,553) (82) (590) (1,271)
Depreciation and amortization (611) (1,406) (762) (20) (482) (403)
Interest expense -- (1,120) (1,914) -- (746) --
- -----------------------------------------------------------------------------------------------------------------------
Net income $1,038 $ 47 $ 1,052 $402 $ 129 $ 1,158
===================================== ============= ============= ============= ============ ============ ============
Operating Partnership's equity
in earnings of unconsolidated
joint ventures $ 441 $ 102 $ 212 $345 $ 62 $ 245
- -----------------------------------------------------------------------------------------------------------------------
<Caption>
Six Months Ended June 30, 2000
- ---------------------------------------------------------------------------------------------
MC-SJP
Morris Harborside Combined
ARCap Realty South Pier Total
- ---------------------------------------------------------------------------------------------
Total revenues $11,150 -- -- $27,742
Operating and other expenses (1,292) -- -- (6,594)
Depreciation and amortization -- -- -- (3,684)
Interest expense (1,701) -- -- (5,481)
- ---------------------------------------------------------------------------------------------
Net income $ 8,157 -- -- $11,983
================================================= =============== ============= =============
Operating Partnership's equity
in earnings of unconsolidated
joint ventures $ 800 -- -- $ 2,207
- ---------------------------------------------------------------------------------------------
</Table>
18
<Page>
5. DEFERRED CHARGES AND OTHER ASSETS
<Table>
<Caption>
June 30, December 31,
2001 2000
- ----------------------------------------------------------------------------------------------------------------------
Deferred leasing costs $84,963 $ 80,667
Deferred financing costs 26,443 23,085
- ----------------------------------------------------------------------------------------------------------------------
111,406 103,752
Accumulated amortization (29,673) (26,303)
- ----------------------------------------------------------------------------------------------------------------------
Deferred charges, net 81,733 77,449
Prepaid expenses and other assets 18,604 25,206
- ----------------------------------------------------------------------------------------------------------------------
Total deferred charges and other assets, net $100,337 $102,655
======================================================================================================================
</Table>
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:
<Table>
<Caption>
June 30, December 31,
2001 2000
- ----------------------------------------------------------------------------------------------------------------------
Security deposits $7,409 $6,477
Escrow and other reserve funds 83 80
- ----------------------------------------------------------------------------------------------------------------------
Total restricted cash $7,492 $6,557
======================================================================================================================
</Table>
7. RENTAL PROPERTY HELD FOR SALE
As of June 30, 2001, the Operating Partnership has identified 41 office
properties, aggregating approximately 4.8 million square feet, and two land
parcels as held for sale. These properties are located in Texas, Arizona,
Colorado, Iowa and Florida. Such properties carried an aggregate book value of
$450,932, net of accumulated depreciation of $34,926 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, all located in San Antonio and 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 June 30, 2001 for the six month periods ended June
30, 2001 and 2000:
<Table>
<Caption>
Six Months Ended June 30,
2001 2000
- ----------------------------------------------------------------------------------------------------------------------
Total revenues $ 41,528 $ 40,125
Operating and other expenses (16,939) (15,838)
Depreciation (2,474) (5,781)
- ----------------------------------------------------------------------------------------------------------------------
Net income $ 22,115 $ 18,506
======================================================================================================================
</Table>
There can be no assurance if and when sales of the Operating Partnership's
rental properties held for sale will occur.
19
<Page>
During the six months ended June 30, 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 gains and unrealized losses on
disposition of rental property:
<Table>
<Caption>
Six Months Ended June 30,
2001 2000
- ----------------------------------------------------------------------------------------------------------------------
Realized gain on sale of rental property and land $ 22,510 $76,169
Valuation allowance on rental property held for sale (20,563) --
- ----------------------------------------------------------------------------------------------------------------------
Total realized gains and unrealized losses $ 1,947 $76,169
======================================================================================================================
</Table>
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 June 30, 2001 and December 31, 2000 is as
follows:
<Table>
<Caption>
June 30, 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 299,784 299,744 7.27%
7.250% Senior Unsecured Notes, due March 15, 2009 298,189 298,072 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 298,343 -- 7.93%
- ----------------------------------------------------------------------------------------------------------------------
Total Senior Unsecured Notes $1,096,599 $798,099 7.51%
======================================================================================================================
</Table>
(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.
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")
(3.86 percent at June 30, 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.
20
<Page>
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 had a revolving credit facility ("Prudential
Facility") with Prudential Securities Corp. ("PSC") in the amount of $100,000,
which bore interest at 110 basis points over one-month LIBOR, with a maturity
date of June 29, 2001. The Prudential Facility was a recourse liability of the
Operating Partnership and was secured by the Operating Partnership's equity
interest in Harborside Plazas 2 and 3. The Prudential Facility limited 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 limited 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 repaid in full and terminated the Prudential Facility on June 29,
2001.
SUMMARY
As of June 30, 2001 and December 31, 2000, the Operating Partnership had
outstanding borrowings of $76,500 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.
A summary of the Operating Partnership's mortgages and loans payable as of June
30, 2001 and December 31, 2000 is as follows:
<Table>
<Caption>
EFFECTIVE PRINCIPAL BALANCE AT
INTEREST JUNE 30, DECEMBER 31,
PROPERTY NAME LENDER RATE 2001 2000 MATURITY
- -------------------------------------------------------------------------------------------------------------------------
101 & 225 Executive Drive Sun Life Assurance Co. 6.27% $ -- $ 2,198 06/01/01
Mack-Cali Morris Plains Corestates Bank 7.51% 2,133 2,169 12/31/01
Mack-Cali Willowbrook CIGNA 8.67% 9,038 9,460 10/01/03
400 Chestnut Ridge Prudential Insurance Co. 9.44% 13,128 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% 25,571 25,911 10/01/05
500 West Putnam Avenue New York Life Ins. Co. 6.52% 9,679 10,069 10/10/05
Harborside - Plaza 1 U.S. West Pension Trust 5.61% 56,141 54,370 01/01/06
Harborside - Plazas 2 and 3 Northwestern/Principal 7.36% 163,859 95,630 01/01/06
Mack-Cali Airport Allstate Life Insurance Co. 7.05% 10,474 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 $547,701 $481,573
=========================================================================================================================
</Table>
a) The Operating Partnership has the option to convert the mortgage loan,
which is secured by 12 properties, to unsecured debt.
21
<Page>
SCHEDULED PRINCIPAL PAYMENTS
Scheduled principal payments and related weighted average annual interest rates
for the Operating Partnership's Senior Unsecured Notes (see Note 8), revolving
credit facilities (see Note 9) and mortgages and loans payable as of June 30,
2001 are as follows:
<Table>
<Caption>
WEIGHTED AVG.
SCHEDULED PRINCIPAL INTEREST RATE OF
PERIOD AMORTIZATION MATURITIES TOTAL FUTURE REPAYMENTS (A)
- ----------------------------------------------------------------------------------------------------------------------
July through December 2001 $ 1,554 $ 2,096 $ 3,650 9.08%
2002 3,260 -- 3,260 10.25%
2003 3,407 268,594 272,001 6.61%
2004 2,247 309,863 312,110 7.34%
2005 1,420 253,178 254,598 7.14%
Thereafter (1,361) 876,542 875,181 7.46%
- ----------------------------------------------------------------------------------------------------------------------
Totals/Weighted Average $10,527 $1,710,273 $1,720,800 7.27%
======================================================================================================================
</Table>
(a) Assumes weighted average LIBOR at June 30, 2001 of 4.04 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 six months ended June 30, 2001 and 2000 was
$52,530 and $56,035, respectively. Interest capitalized by the Operating
Partnership for the six months ended June 30, 2001 and 2000 was $7,315 and
$4,189, respectively.
SUMMARY OF INDEBTEDNESS
As of June 30, 2001, the Operating Partnership's total indebtedness of
$1,720,800 (weighted average interest rate of 7.27 percent) was comprised of
$108,678 of revolving credit facility borrowings and other variable rate
mortgage debt (weighted average rate of 5.07 percent) and fixed rate debt of
$1,612,122 (weighted average rate of 7.42 percent).
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 881,500 shares of its outstanding common stock for an aggregate cost
of approximately $24,056 for the six months ended June 30, 2001. Concurrent with
these purchases, the Corporation sold to the Operating Partnership 881,500
common units for approximately $24,056.
22
<Page>
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 60,000 stock options
granted for the six months ended June 30, 2001. As of June 30, 2001, stock
options outstanding had a weighted average remaining contractual life of
approximately 6.9 years.
Information regarding the Corporation's stock option plans is summarized below:
<Table>
<Caption>
Weighted
Shares Average
Under Exercise
Options Price
- ----------------------------------------------------------------------------------------------------------------------
Outstanding at January 1, 2001 4,633,319 $30.14
Granted 60,000 $26.31
Exercised (106,340) $22.51
Lapsed or canceled (122,412) $29.81
- ----------------------------------------------------------------------------------------------------------------------
Outstanding at June 30, 2001 4,464,567 $30.28
======================================================================================================================
Options exercisable at June 30, 2001 2,630,748 $31.28
Available for grant at June 30, 2001 2,320,978
- ----------------------------------------------------------------------------------------------------------------------
</Table>
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 June 30, 2001, there were a total of 749,976 Stock Warrants outstanding.
As of June 30, 2001, there were 671,980 Stock Warrants exercisable. For the six
months ended June 30, 2001, no Stock Warrants were canceled. No Stock Warrants
have been exercised through June 30, 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 six months
ended June 30, 2001, 7,408 unvested Restricted Stock Awards were canceled.
23
<Page>
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 and six month periods ended June 30, 2001 and 2000 in accordance with FASB
No. 128:
<Table>
<Caption>
Three Months Ended June 30,
2001 2000
----------------------------- -----------------------------
Basic EPU Diluted EPU Basic EPU Diluted EPU
- ----------------------------------------------------------------------------------------------------------------------
Net income available to common unitholders $65,792 $65,792 $107,327 $107,327
Add: Net income attributable to
Operating Partnership - preferred units -- 3,879 -- 3,765
- ----------------------------------------------------------------------------------------------------------------------
Adjusted net income $65,792 $69,671 $107,327 $111,092
======================================================================================================================
Weighted average units 64,476 71,044 66,627 73,284
- ----------------------------------------------------------------------------------------------------------------------
Per Unit $ 1.02 $ 0.98 $ 1.61 $ 1.52
======================================================================================================================
<Caption>
Six Months Ended June 30,
2001 2000
----------------------------- -----------------------------
Basic EPU Diluted EPU Basic EPU Diluted EPU
- ----------------------------------------------------------------------------------------------------------------------
Net income available to common unitholders $84,875 $84,875 $149,049 $149,049
Add: Net income attributable to
Operating Partnership - preferred units -- 7,758 -- 7,634
- ----------------------------------------------------------------------------------------------------------------------
Adjusted net income $84,875 $92,633 $149,049 $156,683
======================================================================================================================
Weighted average units 64,621 71,198 66,527 73,237
- ----------------------------------------------------------------------------------------------------------------------
Per Unit $ 1.31 $ 1.30 $ 2.24 $ 2.14
======================================================================================================================
</Table>
The following schedule reconciles the units used in the basic EPU calculation to
the units used in the diluted EPU calculation:
<Table>
<Caption>
Three Months Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
- ------------------------------------------------------------------------------------------------------------------
Basic EPU Units: 64,476 66,627 64,621 66,527
Add: Operating Partnership - preferred units 6,359 6,457 6,359 6,537
(after conversion to common units)
Stock options 209 200 218 173
- ------------------------------------------------------------------------------------------------------------------
Diluted EPU Units: 71,044 73,284 71,198 73,237
==================================================================================================================
</Table>
Through June 30, 2001, under the Repurchase Program, the Corporation purchased
for constructive retirement, a total of 4,777,000 shares of its outstanding
common stock for an aggregate cost of approximately $132,131. Concurrent with
these purchases, the Corporation sold an equal numbers of common units to the
Operating Partnership.
24
<Page>
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 six month periods ended June 30, 2001 and 2000 was
$200.
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 June 30, 2001,
are as follows:
<Table>
<Caption>
Period Amount
- ---------------------------------------------------------------------------------------------
July through December 2001 $ 266
2002 531
2003 531
2004 534
2005 534
Thereafter 21,997
- ---------------------------------------------------------------------------------------------
Total $24,393
=============================================================================================
</Table>
Ground lease expense incurred during the six months ended June 30, 2001 and 2000
amounted to $284 and $285, respectively.
OTHER
On June 27, 2000, both Brant Cali and John R. Cali resigned their positions as
officers of the Corporation and Brant Cali resigned as a director of the
Corporation. John R. Cali was appointed to the Board of Directors of the
Corporation to take the seat previously held by Brant Cali. As required by Brant
Cali and John R. Cali's employment agreements with the Corporation: (i) the
Corporation paid $2,820 and $2,806 (less applicable withholding) to Brant Cali
and John R. Cali, respectively; (ii) all options to acquire shares of the
Corporation's common stock and Restricted Stock Awards (as hereinafter defined)
held by Brant Cali and John R. Cali became fully vested on the effective date of
their resignations from the Corporation. All costs associated with Brant Cali
and John R. Cali's resignations, which totaled approximately $9,228, are
included in non-recurring charges for the six months ended June 30, 2000.
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.
25
<Page>
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.
26
<Page>
Selected results of operations for the three and six month periods ended June
30, 2001 and 2000 and selected asset information as of June 30, 2001 and
December 31, 2000 regarding the Operating Partnership's operating segment are as
follows:
<Table>
<Caption>
Total
Total Corporate & Operating
Segment Other (e) Partnership
- -------------------------------------------------------------------------------------------------------------------------
TOTAL CONTRACT REVENUES (A):
Three months ended:
June 30, 2001 $ 143,252 $ 1,109 $ 144,361 (f)
June 30, 2000 140,117 2,372 142,489 (g)
Six months ended:
June 30, 2001 $ 284,556 $ 2,505 $ 287,061 (h)
June 30, 2000 280,258 3,020 283,278 (i)
TOTAL OPERATING AND INTEREST EXPENSES (B):
Three months ended:
June 30, 2001 $ 43,617 $ 35,689 $ 79,306 (j)
June 30, 2000 42,044 31,519 73,563 (k)
Six months ended:
June 30, 2001 $ 88,893 $ 69,910 $ 158,803 (l)
June 30, 2000 84,808 64,119 148,927 (m)
NET OPERATING INCOME (C):
Three months ended:
June 30, 2001 $ 99,635 $(34,580) $ 65,055 (f) (j)
June 30, 2000 98,073 (29,147) 68,926 (g) (k)
Six months ended:
June 30, 2001 $ 195,663 $(67,405) $ 128,258 (h) (l)
June 30, 2000 195,450 (61,099) 134,351 (i) (m)
TOTAL ASSETS:
June 30, 2001 $3,711,992 $ 47,927 $3,759,919
December 31, 2000 3,623,107 53,870 3,676,977
TOTAL LONG-LIVED ASSETS (D):
June 30, 2001 $3,592,243 $ 28,987 $3,621,230
December 31, 2000 3,522,766 23,574 3,546,340
- -------------------------------------------------------------------------------------------------------------------------
</Table>
(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 $3,967 of adjustments for straight-lining of rents and $90 for
the Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
(g) Excludes $3,403 of adjustments for straight-lining of rents and ($3) for
the Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
(h) Excludes $7,737 of adjustments for straight-lining of rents and $126 for
the Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
(i) Excludes $5,536 of adjustments for straight-lining of rents and $54 for
the Operating Partnership's share of straight-line rent adjustments from
unconsolidated joint ventures.
(j) Excludes $21,951 of depreciation and amortization.
(k) Excludes $22,945 of depreciation and amortization and non-recurring
charges of $9,228.
(l) Excludes $45,435 of depreciation and amortization.
(m) Excludes $45,127 of depreciation and amortization and non-recurring
charges of $9,228.
27
<Page>
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 and six month periods ended June 30,
2001 ("2001"), as compared to the three and six month periods ended June 30,
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 March 31, 2000 (for the three-month period
comparisons), and which represent all in-service properties owned by the
Operating Partnership at December 31, 1999 (for the six-month period
comparisons), excluding Dispositions as defined below, (ii) the effect of the
"Acquired Properties," which represent all properties acquired or placed in
service by the Operating Partnership from April 1, 2000 through June 30, 2001
(for the three-month period comparisons), and which represent all properties
acquired or placed in service by the Operating Partnership from January 1, 2000
through June 30, 2001 (for the six-month period comparisons), and (iii) the
effect of the "Dispositions", which represent results for each period for those
rental properties sold by the Operating Partnership during the same periods.
THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000
<Table>
<Caption>
Quarter Ended
June 30, Dollar Percent
(DOLLARS IN THOUSANDS) 2001 2000 Change Change
- ----------------------------------------------------------------------------------------------------------------------
REVENUE FROM RENTAL OPERATIONS:
Base rents $129,419 $122,072 $ 7,347 6.0%
Escalations and recoveries from tenants 13,430 14,627 (1,197) (8.2)
Parking and other 3,060 6,128 (3,068) (50.1)
- ----------------------------------------------------------------------------------------------------------------------
Sub-total 145,909 142,827 3,082 2.2
Equity in earnings of unconsolidated joint ventures 2,037 1,070 967 90.4
Interest income 472 1,992 (1,520) (76.3)
- ----------------------------------------------------------------------------------------------------------------------
Total revenues 148,418 145,889 2,529 1.7
- ----------------------------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes 15,510 14,733 777 5.3
Utilities 10,699 10,014 685 6.8
Operating services 17,686 16,822 864 5.1
- ----------------------------------------------------------------------------------------------------------------------
Sub-total 43,895 41,569 2,326 5.6
General and administrative 6,856 5,159 1,697 32.9
Depreciation and amortization 21,951 22,945 (994) (4.3)
Interest expense 28,555 26,835 1,720 6.4
Non-recurring charges -- 9,228 (9,228) (100.0)
- ----------------------------------------------------------------------------------------------------------------------
Total expenses 101,257 105,736 (4,479) (4.2)
- ----------------------------------------------------------------------------------------------------------------------
Income before realized gains and unrealized losses
on disposition of rental property and
minority interest 47,161 40,153 7,008 17.5
Realized gains and unrealized losses on disposition
of rental property 22,510 73,921 (51,411) (69.5)
- ----------------------------------------------------------------------------------------------------------------------
Income before minority interest 69,671 114,074 (44,403) (38.9)
Minority interest in consolidated
partially-owned properties -- 2,982 (2,982) (100.0)
- ----------------------------------------------------------------------------------------------------------------------
Net income 69,671 111,092 (41,421) (37.3)
Preferred unit distributions (3,879) (3,765) (114) (3.0)
- ----------------------------------------------------------------------------------------------------------------------
Net income available to common unitholders $ 65,792 $107,327 $(41,535) (38.7)%
======================================================================================================================
</Table>
28
<Page>
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):
<Table>
<Caption>
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 $7,347 6.0% $ 3,963 3.2% $8,043 6.6% $(4,659) (3.8)%
Escalations and recoveries
from tenants (1,197) (8.2) (1,141) (7.8) 566 3.9 (622) (4.3)
Parking and other (3,068) (50.1) (3,014) (49.2) 142 2.3 (196) (3.2)
- -------------------------------------------------------------------------------------------------------------------------
Total $3,082 2.2% $ (192) (0.1)% $8,751 6.1% $(5,477) (3.8)%
=========================================================================================================================
PROPERTY EXPENSES:
Real estate taxes $ 777 5.3% $ 149 1.0% $1,029 7.0% $ (401) (2.7)%
Utilities 685 6.8 624 6.2 469 4.7 (408) (4.1)
Operating services 864 5.1 453 2.7 1,282 7.6 (871) (5.2)
- -------------------------------------------------------------------------------------------------------------------------
Total $2,326 5.6% $1,226 2.9% $2,780 6.7% $(1,680) (4.0)%
=========================================================================================================================
OTHER DATA:
Number of Consolidated
Properties 261 246 15 10
Square feet (in thousands) 27,353 25,358 1,995 2,276
</Table>
Base rents for the Same-Store Properties increased $4.0 million, or 3.2 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
$1.1 million, or 7.8 percent, for 2001 over 2000, due to the recovery of a
decreased amount of total property expenses in 2001, as well as increased
settle-up billings during the second quarter 2000. Parking and other income for
the Same-Store Properties decreased $3.0 million, or 49.2 percent, due primarily
to fewer lease termination fees in 2001.
Real estate taxes on the Same-Store Properties increased $0.1 million, or 1.0
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 $0.6 million, or 6.2 percent, for 2001 as compared to 2000,
due primarily to increased gas rates. Operating services for the Same-Store
Properties increased $0.5 million, or 2.7 percent, due primarily to an increase
in maintenance costs in 2001.
Equity in earnings of unconsolidated joint ventures increased $1.0 million, or
90.4 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 in 2001 (see Note 4 to the Financial
Statements).
Interest income decreased $1.5 million, or 76.3 percent, for 2001 as compared to
2000. This decrease was due primarily to additional interest income in 2000 on
investment of proceeds from the Dispositions in cash and cash equivalents.
General and administrative increased by $1.7 million, or 32.9 percent, for 2001
as compared to 2000. This increase is due primarily to increased professional
fees, mostly on account of costs for transactions not consummated, and increased
payroll and related costs in 2001.
Depreciation and amortization decreased by $1.0 million, or 4.3 percent, for
2001 over 2000. Of this decrease, $1.7 million, or 7.4 percent, is attributable
to the Same-Store Properties, and $0.7 million, or 3.1 percent, is due to the
Dispositions, partially offset by an increase of $1.4 million, or 6.2 percent,
due to the Acquired Properties.
Interest expense increased $1.7 million, or 6.4 percent, for 2001 as compared to
2000. This increase is due primarily to the replacement in early 2001 of
short-term credit facility borrowings with higher long-term fixed rate unsecured
debt.
29
<Page>
Income before realized and unrealized gain on disposition of rental property and
minority interest increased to $47.2 million in 2001 from $40.2 million in 2000.
The increase of approximately $7.0 million is due to the factors discussed
above.
Net income available to common unitholders decreased by $41.5 million, from
$107.3 million in 2000 to $65.8 million in 2001. This decrease was a result of a
gain on sale of rental property in 2000 of $73.9 million and an increase in
preferred unit distributions of $0.1 million, which was partially offset by a
gain on sale of rental property in 2001 of $22.5 million, an increase in income
before realized and unrealized gain on disposition of rental property and
minority interest of $7.0 million in 2001 as compared to 2000, and a decrease in
minority interest in consolidated partially-owned properties of $3.0 million in
2001.
SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000
<Table>
<Caption>
Six Months Ended
June 30, Dollar Percent
(DOLLARS IN THOUSANDS) 2001 2000 Change Change
- ----------------------------------------------------------------------------------------------------------------------
REVENUE FROM RENTAL OPERATIONS:
Base rents $254,795 $243,670 $ 11,125 4.6%
Escalations and recoveries from tenants 28,192 31,295 (3,103) (9.9)
Parking and other 5,406 9,450 (4,044) (42.8)
- ----------------------------------------------------------------------------------------------------------------------
Sub-total 288,393 284,415 3,978 1.4
Equity in earnings of unconsolidated joint ventures 5,446 2,207 3,239 146.8
Interest income 1,085 2,246 (1,161) (51.7)
- ----------------------------------------------------------------------------------------------------------------------
Total revenues 294,924 288,868 6,056 2.1
- ----------------------------------------------------------------------------------------------------------------------
PROPERTY EXPENSES:
Real estate taxes 30,797 29,437 1,360 4.6
Utilities 22,655 20,393 2,262 11.1
Operating services 35,565 34,564 1,001 2.9
- ----------------------------------------------------------------------------------------------------------------------
Sub-total 89,017 84,394 4,623 5.5
General and administrative 12,866 11,272 1,594 14.1
Depreciation and amortization 45,435 45,127 308 0.7
Interest expense 56,920 53,261 3,659 6.9
Non-recurring charges -- 9,228 (9,228) (100.0)
- ----------------------------------------------------------------------------------------------------------------------
Total expenses 204,238 203,282 956 0.5
- ----------------------------------------------------------------------------------------------------------------------
Income before realized gains and unrealized losses
on disposition of rental property and
minority interest 90,686 85,586 5,100 6.0
Realized gains and unrealized losses on disposition
of rental property 1,947 76,169 (74,222) (97.4)
- ----------------------------------------------------------------------------------------------------------------------
Income before minority interest 92,633 161,755 (69,122) (42.7)
Minority interest in consolidated
partially-owned properties -- 5,072 (5,072) (100.0)
- ----------------------------------------------------------------------------------------------------------------------
Net income 92,633 156,683 (64,050) (40.9)
Preferred unit distributions (7,758) (7,634) (124) (1.6)
- ----------------------------------------------------------------------------------------------------------------------
Net income available to common unitholders $ 84,875 $149,049 $(64,174) (43.1)%
======================================================================================================================
</Table>
30
<Page>
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):
<Table>
<Caption>
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 $11,125 4.6% $ 9,273 3.8% $14,055 5.8% $(12,203) (5.0)%
Escalations and recoveries
from tenants (3,103) (9.9) (1,835) (5.9) 1,081 3.5 (2,349) (7.5)
Parking and other (4,044) (42.8) (3,683) (39.0) 171 1.8 (532) (5.6)
- --------------------------------------------------------------------------------------------------------------------------------
Total $ 3,978 1.4% $3,755 1.3% $15,307 5.4% $(15,084) (5.3)%
================================================================================================================================
PROPERTY EXPENSES:
Real estate taxes $ 1,360 4.6% $ 461 1.6% $ 1,952 6.6% $ (1,053) (3.6)%
Utilities 2,262 11.1 1,910 9.4 1,236 6.1 (884) (4.4)
Operating services 1,001 2.9 1,024 3.0 2,140 6.2 (2,163) (6.3)
- --------------------------------------------------------------------------------------------------------------------------------
Total $ 4,623 5.5% $3,395 4.0% $ 5,328 6.3% $ (4,100) (4.8)%
================================================================================================================================
OTHER DATA:
Number of Consolidated Properties 261 245 16 10
Square feet (in thousands) 27,353 25,297 2,056 2,276
</Table>
Base rents for the Same-Store Properties increased $9.3 million, or 3.8 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
$1.8 million, or 5.9 percent, for 2001 over 2000, due to the recovery of a
decreased amount of total property expenses in 2001, as well as increased
settle-up billings in 2000. Parking and other income for the Same-Store
Properties decreased $3.7 million, or 39.0 percent, due primarily to fewer lease
termination fees in 2001.
Real estate taxes on the Same-Store Properties increased $0.5 million, or 1.6
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 $1.9 million, or 9.4 percent, for 2001 as compared to 2000,
due primarily to increased gas rates. Operating services for the Same-Store
Properties increased $1.0 million, or 3.0 percent, due primarily to an increase
in maintenance costs in 2001.
Equity in earnings of unconsolidated joint ventures increased $3.2 million, or
146.8 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 decreased $1.2 million, or 51.7 percent, for 2001 as compared to
2000. This decrease was due primarily to additional interest income in 2000 on
investment of proceeds from the Dispositions in cash and cash equivalents.
General and administrative increased by $1.6 million, or 14.1 percent, for 2001
as compared to 2000. This increase is due primarily to increased professional
fees, mostly on account of costs for transactions not consummated, and increased
payroll and related costs in 2001.
Depreciation and amortization decreased by $0.3 million, or 0.7 percent, for
2001 over 2000. Of this increase, $2.6 million, or 5.9 percent, is due to the
Acquired Properties, partially offset by a decrease of $1.4 million, or 3.2
percent, due to the Dispositions and $0.9 million, or 2.0 percent, attributable
to the Same-Store Properties.
Interest expense increased $3.7 million, or 6.9 percent, for 2001 as compared to
2000. This increase is due primarily to the replacement in 2001 of short-term
credit facility borrowings with higher, long-term fixed rate unsecured debt.
31
<Page>
Income before realized gains and unrealized losses on disposition of rental
property and minority interest increased to $90.7 million in 2001 from $85.6
million in 2000. The increase of approximately $5.1 million is due to the
factors discussed above.
Net income available to common unitholders decreased by $64.2 million, from
$149.1 million in 2000 to $84.9 million in 2001. This decrease was a result of a
gain on sale of rental property of $76.2 million and an increase in preferred
unit distributions of $0.1 million. This was partially offset by a gain on sale
of rental property of $1.9 million in 2001, an increase in income before
realized gains and unrealized losses on disposition of rental property and
minority interest of $5.1 million, and a decrease in minority interest in
consolidated partially-owned properties of $5.1 million in 2001.
LIQUIDITY AND CAPITAL RESOURCES
STATEMENT OF CASH FLOWS
During the six months ended June 30, 2001, the Operating Partnership generated
$133.0 million in cash flows from operating activities, and together with $586.8
million in borrowings from the Operating Partnership's senior unsecured notes,
revolving credit facilities and additional mortgage financing, $44.8 million in
proceeds from sales of rental property, $19.1 million in distributions received
from unconsolidated joint ventures, $6.0 million in proceeds from repayment of a
mortgage note receivable and $2.4 million in proceeds from stock options
exercised used an aggregate of approximately $792.1 million to acquire
properties and land parcels and pay for other tenant and building improvements
totaling $148.1 million, repay outstanding borrowings on its revolving credit
facilities and other mortgage debt of $494.7 million, pay quarterly dividends
and distributions of $87.0 million, invest $24.5 million in unconsolidated joint
ventures, pay financing costs of $3.2 million, repurchase 881,500 shares of the
Corporation's outstanding common stock for $24.1 million, add $0.9 million to
restricted cash and add $9.6 million to cash and cash equivalents.
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
late 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 late 2002. Plaza 10 is 100 percent pre-leased to
Charles Schwab & Co. Inc. 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.
On September 13, 2000, the Board of Directors 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
July 31, 2001, the Corporation
32
<Page>
purchased for constructive retirement 2.9 million shares of its outstanding
common stock for an aggregate cost of approximately $79.7 million under the
Repurchase Program. The Corporation has authorization to repurchase up to an
additional $70.3 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 June 30, 2001, the Operating Partnership's total indebtedness of $1.7
billion (weighted average interest rate of 7.27 percent) was comprised of $108.7
million of revolving credit facility borrowings and other variable rate mortgage
debt (weighted average rate of 5.07 percent) and fixed rate debt of $1.6 billion
(weighted average rate of 7.42 percent).
As of June 30, 2001, the Operating Partnership had outstanding borrowings of
$76.5 million under its 2000 Unsecured Facility (with aggregate borrowing
capacity of $800.0 million). 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 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 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.
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.
On May 18, 2001, the Operating Partnership obtained $70.0 million in additional
mortgage financing secured by Harborside Financial Center Plazas II and III from
the existing lender. The 7.42 percent interest only financing matures concurrent
with the existing financing on January 1, 2006. The total financing secured by
Harborside Financial Center Plazas II and III of $163.9 million at June 30,
2001, has a weighted average interest rate of 7.36 percent. Proceeds from the
financing were used to pay down the outstanding borrowings on the 2000 Unsecured
Facility.
As of June 30, 2001, the Operating Partnership had 236 unencumbered properties,
totaling 21.3 million square feet, representing 77.3 percent of the Operating
Partnership's total portfolio on a square footage basis.
33
<Page>
The Operating Partnership and Corporation also have an effective shelf
registration statement with the SEC for an aggregate of $2.0 billion in debt
securities, preferred stock and preferred stock represented by depositary
shares, under which the Operating Partnership has issued an aggregate of $1.1
billion of unsecured 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 June 30, 2001, the Operating Partnership's total debt had a weighted
average term to maturity of approximately 5.3 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. Moreover, the Corporation intends to continue to
make regular quarterly distributions to its stockholders which, based upon
current policy, in the aggregate would equal approximately $139.1 million on an
annualized basis. However, any such distribution, whether for federal income tax
purposes or otherwise, would only be paid out of available cash after meeting
both operating requirements and scheduled debt service on mortgages and loans
payable and preferred unit distributions.
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 gains and
unrealized losses 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.
34
<Page>
Funds from operations for the three and six month periods ended June 30, 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):
<Table>
<Caption>
Three Months Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
- -----------------------------------------------------------------------------------------------------------------------------
Income before realized gains and unrealized losses
on disposition of rental property and
minority interest $47,161 $40,153 $ 90,686 $ 85,586
Add: Real estate-related depreciation and
amortization (1) 23,068 23,434 47,071 46,152
Gain on sale of land -- -- -- 2,248
Non-recurring charges -- 9,228 -- 9,228
Deduct: Rental income adjustment for
straight-lining of rents (2) (4,057) (3,400) (7,862) (5,590)
Minority interest in consolidated
partially-owned properties -- (2,982) -- (5,072)
- -----------------------------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment
for straight-lining of rents and non-recurring
charges $66,172 $66,433 $ 129,895 $ 132,552
Deduct: Distributions to preferred unitholders (3,879) (3,765) (7,758) (7,634)
- -----------------------------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment for
straight-lining of rents and non-recurring charges,
after distributions to preferred unitholders $62,293 $62,668 $ 122,137 $ 124,918
=============================================================================================================================
Cash flows provided by operating activities $ 133,022 $ 120,576
Cash flows used in investing activities $(103,715) $ 62,329
Cash flows used in financing activities $ (19,748) $(181,041)
- -----------------------------------------------------------------------------------------------------------------------------
Basic weighted averages units
outstanding (3) 64,476 66,627 64,621 66,527
- -----------------------------------------------------------------------------------------------------------------------------
Diluted weighted average units
outstanding (3) 71,044 73,284 71,198 73,237
- -----------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Includes the Operating Partnership's share from unconsolidated joint
ventures of $1,471 and $686 for the three months ended June 30, 2001 and
2000, respectively, and $2,193 and $1,420 for the six months ended June
30, 2001 and 2000, respectively.
(2) Includes the Operating Partnership's share from unconsolidated joint
ventures of $90 and $(3) for the three months ended June 30, 2001 and
2000, respectively, and $126 and $54 for the six months ended June 30,
2001
and 2000, respectively.
(3) See calculations for the amounts presented in the following
reconciliation.
35
<Page>
The following schedule reconciles the Operating Partnership's basic weighted
average units to the basic and diluted weighted average units presented above:
<Table>
<Caption>
Three Months Six Months
Ended June 30, Ended June 30,
2001 2000 2001 2000
- ----------------------------------------------------------------------------------------------------------------------
Basic weighted average units: 64,476 66,627 64,621 66,527
Add: Weighted average preferred units
(after conversion to common units) 6,359 6,457 6,359 6,537
Stock options 209 200 218 173
- ----------------------------------------------------------------------------------------------------------------------
Diluted weighted average units: 71,044 73,284 71,198 73,237
======================================================================================================================
</Table>
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.
36
<Page>
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 $1.6 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
June 30, 2001 ranged from LIBOR plus 65 basis points to LIBOR plus 80 basis
points.
JUNE 30, 2001
<Table>
<Caption>
DEBT, 7/1/01 -
INCLUDING CURRENT PORTION 12/31/01 2002 2003 2004 2005 THEREAFTER TOTAL FAIR VALUE
- ------------------------- -------- ---- ---- ---- ---- ---------- ----- ----------
Fixed Rate $3,650 $3,260 $195,500 $312,110 $254,598 $843,004 $1,612,122 $1,619,032
Average Interest Rate 9.08% 10.25% 7.31% 7.34% 7.14% 7.53% 7.42%
Variable Rate $76,500 $32,178 $ 108,678 $ 108,678
</Table>
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.
37
<Page>
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.
38
<Page>
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
11, 2001.
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. dated August
21, 1998 (filed as Exhibit 3.1 to the Corporation's and the
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. dated July 6,
1999 (filed as Exhibit 10.1 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).
39
<Page>
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).
40
<Page>
EXHIBIT
NUMBER EXHIBIT TITLE
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).
10.10 Restricted Share Award Agreement dated as of March 12, 2001
between Roger W. Thomas and Mack-Cali Realty Corporation
(filed as Exhibit 10.10 to the Operating Partnership's Form
10-Q dated March 31, 2001 and incorporated herein by
reference).
10.11 Restricted Share Award Agreement dated as of March 12, 2001
between Michael Grossman and Mack-Cali Realty Corporation
(filed as Exhibit 10.11 to the Operating Partnership's Form
10-Q dated March 31, 2001 and incorporated herein by
reference).
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 the 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).
41
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EXHIBIT
NUMBER EXHIBIT TITLE
*10.19 Amended and Restated Mortgage and Security made as of May 18,
2001 between Cali Harborside (Fee) Associates L.P., a New
Jersey limited partnership, Cal-Harbor II & III Urban Renewal
Associates L.P., a New Jersey limited partnership, Cal-Harbor
IV Urban Renewal Associates L.P., a New Jersey limited
partnership and Cal-Harbor VI Urban Renewal Associates L.P., a
New Jersey limited partnership, and The Northwestern Mutual
Life Insurance Company, a Wisconsin corporation, and Principal
Life Insurance Company, an Iowa corporation, formerly known as
Principal Mutual Life Insurance Company.
*10.20 Promissory Note of Cali Harborside (Fee) Associates L.P., a
New Jersey limited partnership, Cal-Harbor II & III Urban
Renewal Associates L.P., a New Jersey limited partnership,
Cal-Harbor IV Urban Renewal Associates L.P., a New Jersey
limited partnership and Cal-Harbor VI Urban Renewal Associates
L.P., a New Jersey limited partnership, dated as of May 18,
2001 in the amount of $35,000,000.00 payable to the order of
Principal Life Insurance Company, an Iowa corporation.
*10.21 Promissory Note of Cali Harborside (Fee) Associates L.P., a
New Jersey limited partnership, Cal-Harbor II & III Urban
Renewal Associates L.P., a New Jersey limited partnership,
Cal-Harbor IV Urban Renewal Associates L.P., a New Jersey
limited partnership and Cal-Harbor VI Urban Renewal Associates
L.P., a New Jersey limited partnership, dated as of May 18,
2001 in the amount of $35,000,000.00 payable to the order of
The Northwestern Mutual Life Insurance Company, a Wisconsin
corporation.
*10.22 Purchase and Sale Agreement dated August 3, 2001, between
Robert Martin Company, LLC, a New York limited liability
company, and 5/6 Skyline Realty L.L.C., a New York limited
liability company.
*10.23 Partnership Interest Purchase Agreement dated August 3, 2001,
by and between Madeira-RMC L.P., a New York limited
partnership, Madeira Management Company, Inc., a Delaware
corporation, Merlot Management Company, Inc., a Delaware
corporation, Robert Martin Company, LLC, a New York limited
liability company, and Robert Martin Company, LLC, as agent
for 5/6 Skyline Realty L.L.C., a New York limited liability
company.
*10.24 Nominee Agreement dated as of August 3, 2001, by and between
Robert Martin Company, LLC, a New York limited liability
company, and 5/6 Skyline Realty L.L.C., a New York limited
liability company.
(b) Reports on Form 8-K
The Operating Partnership did not file a Current Report on Form 8-K
during the second quarter of 2001.
- --------------
*filed herewith
42
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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: August 13, 2001 By: /s/ Mitchell E. Hersh
--------------------------------
Mitchell E. Hersh
Chief Executive Officer
Date: August 13, 2001 By: /s/ Barry Lefkowitz
--------------------------------
Barry Lefkowitz
Executive Vice President &
Chief Financial Officer
43