10-K 1 a06-5430_210k.htm ANNUAL REPORT PURSUANT TO SECTION 13 AND 15(D)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

 

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

 

For the fiscal year ended December 31, 2005

 

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

 

Commission File Number:  333-57103

 

MACK-CALI REALTY, L.P.

(Exact Name of Registrant as specified in its charter)

 

Delaware

 

22-3315804

(State or other jurisdiction of

 

(IRS Employer

incorporation or organization)

 

Identification No.)

 

 

 

11 Commerce Drive, Cranford, New Jersey

 

07016-3599

(Address of principal executive offices)

 

(Zip code)

 

(908) 272-8000

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

None

 

Securities registered pursuant to Section 12(g) of the Act:

None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ý  No  o

 

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

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ý   No o

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K.  ý

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):

 

Large accelerated filer ý            Accelerated filer o            Non-accelerated filer o

 

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

 

LOCATION OF EXHIBIT INDEX:  The index of exhibits is contained herein on page number 127.

 

DOCUMENTS INCORPORATED BY REFERENCE:  Portions of Mack-Cali Realty Corporation’s definitive proxy statement for fiscal year ended December 31, 2005 to be issued in conjunction with Mack-Cali Realty Corporation’s annual meeting of shareholders expected to be held on May 24, 2006 are incorporated by reference in Part III of this Form 10-K.  The definitive proxy statement will be filed by Mack-Cali Realty Corporation with the SEC not later than 120 days from the end of Mack-Cali Realty Corporation’s fiscal year ended December 31, 2005.

 

 


 

FORM 10-K

 

Table of Contents

 

PART I

 

Item 1

Business

 

Item 1A

Risk Factors

 

Item 1B

Unresolved Staff Comments

 

Item 2

Properties

 

Item 3

Legal Proceedings

 

Item 4

Submission of Matters to a Vote of Security Holders

 

 

 

 
PART II
 

Item 5

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

Item 6

Selected Financial Data

 

Item 7

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Item 7A

Quantitative and Qualitative Disclosures About Market Risk

 

Item 8

Financial Statements and Supplementary Data

 

Item 9

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

Item 9A

Controls and Procedures

 

Item 9B

Other Information

 

 

 

 

PART III

 

Item 10

Directors and Executive Officers of the Registrant

 

Item 11

Executive Compensation

 

Item 12

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

Item 13

Certain Relationships and Related Transactions

 

Item 14

Principal Accounting Fees and Services

 

 

 

 
PART IV
 

Item 15

Exhibits, Financial Statement Schedules

 

 

 

 

SIGNATURES

 

 

 

 

EXHIBIT INDEX

 

 

2


 

PART I

 

ITEM 1.     BUSINESS

 

GENERAL

Mack-Cali Realty, L.P., a Delaware limited partnership (together with its subsidiaries, the “Operating Partnership”), is a majority-owned subsidiary of Mack-Cali Realty Corporation, a Maryland corporation (the “Corporation”).  The Operating Partnership owns and operates a real estate portfolio comprised predominantly of Class A office and office/flex properties located primarily in the Northeast.  The Operating Partnership performs substantially all commercial real estate leasing, management, acquisition, development and construction services on an in-house basis. The Operating Partnership was formed on May 31, 1994.  The Operating Partnership’s executive offices are located at 11 Commerce Drive, Cranford, New Jersey 07016, and its telephone number is (908) 272-8000.  The Corporation has an internet website at www.mack-cali.com.

 

As of December 31, 2005, the Operating Partnership owned or had interests in 270 properties, aggregating approximately 30.0 million square feet, plus developable land (collectively, the “Properties”).  The Properties are comprised of: (a) 267 wholly-owned or Operating Partnership-controlled properties consisting of 161 office buildings and 96 office/flex buildings aggregating approximately 29.1 million square feet, six industrial/warehouse buildings totaling approximately 387,400 square feet, two stand-alone retail properties totaling approximately 17,300 square feet, and two land leases (collectively, the “Consolidated Properties”); and (b) one office building and one office/flex building aggregating approximately 538,000 square feet, and a 350-room hotel, which are owned by unconsolidated joint ventures in which the Operating Partnership has investment interests.  Unless otherwise indicated, all references to square feet represent net rentable area.  As of December 31, 2005, the office, office/flex, industrial/warehouse and stand-alone retail properties included in the Consolidated Properties were 91.0 percent leased to approximately 2,200 tenants.  Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future (including, at December 31, 2005, leases with commencement dates substantially in the future consisting of 15,125 square feet scheduled to commence in 2009 and 10,205 square feet scheduled to commence in 2011), and leases that expire at the period end date.  Leases that expire as of the period end date aggregate 311,623 square feet, or 1.1 percent of the net rentable square footage.  The Properties are located in seven states, primarily in the Northeast, and the District of Columbia.  See Item 2: Properties.

 

The general partner of the Operating Partnership is the Corporation, which has elected to be treated and operated so as to qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended.  The common stock, par value $0.01, of the Corporation (the “Common Stock”) is listed on the New York Stock Exchange and the Pacific Exchange under the symbol “CLI.”  Substantially all of the Corporation’s interests in the Properties are held through, and its operations are conducted through, the Operating Partnership, or through entities controlled by the Operating Partnership.  As of February 17, 2006, 62,150,563 shares of Common Stock were outstanding.  Also, as of February 17, 2006, the Corporation owned an 82.0 percent general partnership interest in the Operating Partnership. As used herein, the term “Units” refers to common limited partnership interests in the Operating Partnership.  Units are redeemable for an equal number of shares of Common Stock or cash.

 

The Operating Partnership’s strategy has been to focus its operations, acquisition and development of office properties in markets and sub-markets where it believes it is, or can become, a significant and preferred owner and operator.  The Operating Partnership plans to continue this strategy by expanding through acquisitions and/or development in Northeast markets where it has, or can achieve, similar status.  The Operating Partnership believes that its Properties have excellent locations and access and are well-maintained and professionally managed.  As a result, the Operating Partnership believes that its Properties attract high quality tenants and achieve among the highest rental, occupancy and tenant retention rates within their markets.  The Operating Partnership also believes that its extensive market knowledge provides it with a significant competitive advantage, which is further enhanced by its strong reputation for, and emphasis on, delivering highly responsive, professional management services.  See “Business Strategies.”

 

The Corporation’s executive officers have been employed by the Corporation and/or its predecessor companies for an average of approximately 19 years.

 

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BUSINESS STRATEGIES

Operations

Reputation: The Operating Partnership has established a reputation as a highly-regarded landlord with an emphasis on delivering quality tenant services in buildings it owns and/or manages.  The Operating Partnership believes that its continued success depends in part on enhancing its reputation as an operator of choice, which will facilitate the retention of current tenants and the attraction of new tenants.  The Operating Partnership believes it provides a superior level of service to its tenants, which should in turn allow the Operating Partnership to outperform the market with respect to occupancy rates, as well as improve tenant retention.

 

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

 

Additionally, the Operating Partnership’s in-house leasing representatives develop and maintain long-term relationships with the Operating Partnership’s diverse tenant base and coordinate leasing, expansion, relocation and build-to-suit opportunities within the Operating Partnership’s portfolio.  This approach allows the Operating Partnership to offer office space in the appropriate size and location to current or prospective tenants in any of its sub-markets.

 

Growth

The Operating Partnership plans to continue to own and operate a portfolio of properties in high-barrier-to-entry markets, with a primary focus in the Northeast.  The Operating Partnership’s primary objectives are to maximize operating cash flow and to enhance the value of its portfolio through effective management, acquisition, development and property sales strategies, as follows:

 

Internal Growth: The Operating Partnership seeks to maximize the value of its existing portfolio through implementing operating strategies designed to produce the highest effective rental and occupancy rates and lowest tenant installation cost within the markets that it operates.  The Operating Partnership continues to pursue internal growth through re-leasing space at higher effective rents with contractual rent increases and developing or redeveloping space for its diverse base of high credit tenants, including IBM Corporation, Morgan Stanley and Allstate Insurance Company.  In addition, the Operating Partnership seeks economies of scale through volume discounts to take advantage of its size and dominance in particular sub-markets, and operating efficiencies through the use of in-house management, leasing, marketing, financing, accounting, legal, development and construction services.

 

Acquisitions: The Operating Partnership also believes that growth opportunities exist through acquiring operating properties or properties for redevelopment with attractive returns in its core Northeast sub-markets where, based on its expertise in leasing, managing and operating properties, it believes it is, or can become, a significant and preferred owner and operator.  The Operating Partnership intends to acquire, invest in or redevelop additional properties that: (i) are expected to provide attractive initial yields with potential for growth in cash flow from operations; (ii) are well-located, of high quality and competitive in their respective sub-markets; (iii) are located in its existing sub-markets or in sub-markets in which the Operating Partnership can become a significant and preferred owner and operator; and (iv) it believes have been under-managed or are otherwise capable of improved performance through intensive management, capital improvements and/or leasing that should result in increased effective rental and occupancy rates.

 

Development: The Operating Partnership seeks to selectively develop additional properties where it believes such development will result in a favorable risk-adjusted return on investment in coordination with the above operating strategies.  Such development primarily will occur: (i) when leases have been executed prior to construction; (ii) in stable core Northeast sub-markets where the demand for such space exceeds available supply; and (iii) where the Operating Partnership is, or can become, a significant and preferred owner and operator.

 

4


 

Property Sales: While management’s principal intention is to own and operate its properties on a long-term basis, it periodically assesses the attributes of each of its properties, with a particular focus on the supply and demand fundamentals of the sub-markets in which they are located.  Based on these ongoing assessments, the Operating Partnership may, from time to time, decide to sell any of its properties.

 

Financial

The Operating Partnership currently intends to maintain a ratio of debt-to-undepreciated assets (total debt of the Operating Partnership as a percentage of total undepreciated assets) of 50 percent or less.  As of December 31, 2005, the Operating Partnership’s total debt constituted approximately 42.8 percent of total undepreciated assets of the Operating Partnership.  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 existing and prospective preferred stock offerings of the Corporation.  Moody’s Investors Service (“Moody’s”) has assigned its Baa2 rating to existing and prospective senior unsecured debt of the Operating Partnership and its Baa3 rating to existing and prospective preferred stock offerings of the Corporation.  Although there is no limit in the Operating Partnership’s organizational documents on the amount of indebtedness that the Operating Partnership may incur or a requirement for the maintenance of investment grade credit ratings, the Operating Partnership has entered into certain financial agreements which contain covenants that limit the Operating Partnership’s ability to incur indebtedness under certain circumstances.  The Operating Partnership intends to conduct its operations so as to best be able to maintain its investment grade rated status.  The Operating Partnership intends to utilize the most appropriate sources of capital for future acquisitions, development, capital improvements and other investments, which may include funds from operating activities, proceeds from property and land sales, short-term and long-term borrowings (including draws on the Operating Partnership’s revolving credit facility), and the issuance of additional debt or equity securities by the Operating Partnership or equity securities by the Corporation.

 

EMPLOYEES

 

As of December 31, 2005, the Operating Partnership had no employees.  The Corporation had approximately 350 full-time employees.

 

COMPETITION

 

The leasing of real estate is highly competitive.  The Properties compete for tenants with lessors and developers of similar properties located in their respective markets primarily on the basis of location, rent charged, services provided, and the design and condition of the Properties.  The Operating Partnership also experiences competition when attempting to acquire or dispose of real estate, including competition from domestic and foreign financial institutions, other REITs, life insurance companies, pension trusts, trust funds, partnerships, individual investors and others.

 

REGULATIONS

 

Many laws and governmental regulations are applicable to the Properties and changes in these laws and regulations, or their interpretation by agencies and the courts, occur frequently.

 

Under various laws and regulations relating to the protection of the environment, an owner of real estate may be held liable for the costs of removal or remediation of certain hazardous or toxic substances located on or in the property.  These laws often impose liability without regard to whether the owner was responsible for, or even knew of, the presence of such substances.  The presence of such substances may adversely affect the owner’s ability to rent or sell the property or to borrow using such property as collateral and may expose it to liability resulting from any release of, or exposure to, such substances.  Persons who arrange for the disposal or treatment of hazardous or toxic substances at another location may also be liable for the costs of removal or remediation of such substances at the disposal or treatment facility, whether or not such facility is owned or operated by such person.  Certain environmental laws impose liability for the release of asbestos-containing materials into the air, and third parties may also seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials and other hazardous or toxic substances.

 

In connection with the ownership (direct or indirect), operation, management and development of real properties, the

 

5


 

Operating Partnership may be considered an owner or operator of such properties or as having arranged for the disposal or treatment of hazardous or toxic substances and, therefore, potentially liable for removal or remediation costs, as well as certain other related costs, including governmental penalties and injuries to persons and property.

 

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

 

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

 

INDUSTRY SEGMENTS

 

The Operating Partnership operates in only one industry segment – real estate.  The Operating Partnership does not have any foreign operations and its business is not seasonal.  Please see our financial statements attached hereto and incorporated by reference herein for financial information relating to our industry segment.

 

RECENT DEVELOPMENTS

 

As a result of the economic climate since 2001, substantially all of the real estate markets the Operating Partnership operates in materially softened.  Demand for office space declined significantly and vacancy rates increased in each of the Operating Partnership’s core markets over the period.  Through February 22, 2006, the Operating Partnership’s core markets continued to be weak.  The percentage leased in the Operating Partnership’s consolidated portfolio of stabilized operating properties decreased to 91.0 percent at December 31, 2005 as compared to 91.2 percent at December 31, 2004 and 91.5 percent at December 31, 2003.  Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future (including, at December 31, 2005, leases with commencement dates substantially in the future consisting of 15,125 square feet scheduled to commence in 2009 and 10,205 square feet scheduled to commence in 2011), and leases that expire at the period end date.  Leases that expire as of the period end date aggregate 311,623 square feet, or 1.1 percent of the net rentable square footage.  Excluded from percentage leased at December 31, 2004 was a non-strategic, non-core 318,224 square foot property acquired through a deed in lieu of foreclosure, which was 12.7 percent leased at December 31, 2004 and subsequently sold on February 4, 2005.  Market rental rates have declined in most markets from peak levels in late 2000 and early 2001.  Rental rates on the Operating Partnership’s space that was re-leased (based on first rents payable) during the year ended December 31, 2005 decreased an average of 8.2 percent compared to rates that were in effect under expiring leases, as compared to a 8.7 percent decrease in 2004 and a 7.8 percent decrease in 2003.  The Operating Partnership believes that vacancy rates may continue to increase in most of its markets in 2006.  As a result, the Operating Partnership’s future earnings and cash flow may continue to be negatively impacted by current market conditions.

 

In 2005, the Operating Partnership:

•                                          acquired six office properties, aggregating 1,832,251 square feet, at a total cost of approximately $387.8 million and;

•                                          sold seven office properties, aggregating 1,081,389 square feet, for aggregate net sales proceeds of approximately $115.0 million.

 

Additionally, in 2005, the Operating Partnership sold its interest in an unconsolidated joint venture which owned two office properties aggregating 298,000 square feet, for aggregate net sales proceeds of approximately $2.7 million.  See Note 4 to the Financial Statements for further information regarding joint venture activity.

 

6


 

Property Acquisitions

The Operating Partnership acquired the following office properties during the year ended December 31, 2005:

 

 

 

 

 

 

 

 

 

 

 

Investment by

 

 

 

 

 

 

 

 

 

 

 

Operating

 

Acquisition

 

 

 

 

 

# of

 

Rentable

 

Partnership

 

Date

 

Property/Address

 

Location

 

Bldgs.

 

Square Feet

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

03/02/05

 

101 Hudson Street (a)

 

Jersey City, Hudson County, NJ

 

1

 

1,246,283

 

$

330,302

 

03/29/05

 

23 Main Street (a) (b)

 

Holmdel, Monmouth County, NJ

 

1

 

350,000

 

23,948

 

07/12/05

 

Monmouth Executive Center (c)

 

Freehold, Monmouth County, NJ

 

4

 

235,968

 

33,561

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Property Acquisitions:

 

 

 

6

 

1,832,251

 

$

387,811

 

 

(a)   Transaction was funded primarily through borrowing on the Operating Partnership’s revolving credit facility.

(b)   In addition to its initial investment, the Operating Partnership intends to make additional investments related to the property of approximately $12.1 million, of which the Operating Partnership has incurred $6.2 million through December 31, 2005.

(c)   Transaction was funded primarily through available cash and assumption of mortgage debt.

 

In November 2005, the Operating Partnership announced that it entered into a contract to acquire all the interests in Capital Office Park, a seven-building office complex totaling approximately 842,300 square feet in Greenbelt, Maryland for aggregate purchase consideration of approximately $161.7 million.  The purchase consideration for the acquisition, which is expected to close in the first quarter of 2006, will consist of the issuance of approximately $97.9 million of common units in the Operating Partnership and the assumption of approximately $63.8 million of mortgage debt.  At closing, the sellers may elect to receive approximately $27.9 million in cash in lieu of common operating partnership units.

 

On February 16, 2006, the Operating Partnership announced it had reached agreements in principle with each of SL Green Realty Corp. (“SL Green”) and The Gale Company, a privately-owned real estate services company based in New Jersey (“Gale”), pursuant to which the Operating Partnership plans to acquire interests in certain assets and operations of SL Green and Gale.

 

Pursuant to the contemplated transactions, the Operating Partnership is expected to:

 

•                  Purchase the Gale Real Estate Services Company for up to $40 million.  The purchase price is expected to be based on an earn-out formula with an initial payment of $10 million in common units in the Operating Partnership, and $12 million in cash, with a total consideration of up to $40 million.

•                  Acquire substantially all the ownership interests in 12 office properties, valued at approximately $337 million and totaling 1.7 million square feet in Northern and Central New Jersey; and

•                  Acquire approximately one-half of the ownership interests in eight office properties, valued at approximately $168 million and totaling 1.1 million square feet, also in Northern and Central New Jersey.

 

The Operating Partnership plans to finance the transactions through a combination of approximately $240 million in drawings on its revolving credit facility, the assumption of existing and placement of new mortgage debt, and the issuance of common operating partnership units.

 

These planned acquisitions are subject to the execution of definitive acquisition agreements with Gale and SL Green in one instance, and with Gale alone in the other instance, which agreements shall contain mutually acceptable terms and customary closing conditions to be negotiated in good faith with such parties and entered into as soon as practicable. While the Operating Partnership is confident that these transactions will be completed in accordance with the terms outlined above, there can be no assurance that either or both will close or that the structure or terms of one or both acquisition agreements may not reflect changes from the current agreements in principle.

 

7


 

Property Sales

 

The Operating Partnership sold the following office properties during the year ended December 31, 2005:

 

 

 

 

 

 

 

 

 

 

 

Net

 

Net

 

Realized

 

 

 

 

 

 

 

 

 

Rentable

 

Sales

 

Book

 

Gain/

 

Sale

 

 

 

 

 

# of

 

Square

 

Proceeds

 

Value

 

(Loss)

 

Date

 

Property/Address

 

Location

 

Bldgs.

 

Feet

 

(in thousands)

 

(in thousands)

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

02/04/05

 

210 South 16th Street

 

Omaha, Douglas County, Nebraska

 

1

 

318,224

 

$

8,464

 

$

8,210

 

$

254

 

02/11/05

 

1122 Alma Road

 

Richardson, Dallas County, Texas

 

1

 

82,576

 

2,075

 

2,344

 

(269

)

02/15/05

 

3 Skyline Drive

 

Hawthorne, Westchester County,
New York

 

1

 

75,668

 

9,587

 

8,856

 

731

 

05/11/05

 

201 Willowbrook Blvd.

 

Wayne, Passaic County, New Jersey (a)

 

1

 

178,329

 

17,696

 

17,705

 

(9

)

06/03/05

 

600 Community Drive/
111 East Shore Road

 

North Hempstead, Nassau County,
New York

 

2

 

292,849

 

71,593

 

59,609

 

11,984

 

12/29/05

 

3600 South Yosemite

 

Denver, Denver County, Colorado

 

1

 

133,743

 

5,566

 

11,121

 

(5,555

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Office Property Sales:

 

 

 

7

 

1,081,389

 

$

114,981

 

$

107,845

 

$

7,136

 

 

(a)          In connection with the sale, the Operating Partnership provided a mortgage loan to the buyer of $12 million which bears interest at 5.74 percent, matures in five years with a five year renewal option, and requires monthly payments of principal and interest.

 

Investments in Marketable Securities

In 2005, the Operating Partnership purchased approximately 1.5 million shares of common stock in CarrAmerica Realty Corporation, which carried a value of approximately $50.8 million at December 31, 2005.  From January 1 through January 25, 2006, the Operating Partnership purchased an additional 336,500 shares in CarrAmerica for a total purchase price of approximately $11.9 million.

 

FINANCING ACTIVITY

 

Senior Unsecured Notes Transactions

On January 25, 2005, the Operating Partnership issued $150 million face amount of 5.125 percent senior unsecured notes due January 15, 2015 with interest payable semi-annually in arrears.  The proceeds from the issuance (net of selling commissions and discount) of approximately $148.1 million were used primarily to reduce outstanding borrowings under the Operating Partnership’s unsecured facility.

 

On April 15, 2005, the Operating Partnership issued $150 million face amount of 5.05 percent senior unsecured notes due April 15, 2010 with interest payable semi-annually in arrears.  The proceeds from the issuance (net of selling commissions and discount) of approximately $148.8 million were used to reduce outstanding borrowings under the 2004 unsecured facility.

 

On November 15, 2005, the Operating Partnership issued $100 million face amount of 5.80 percent senior unsecured notes due January 15, 2016 with interest payable semi-annually in arrears.  The proceeds from the issuance (net of selling commissions and discount) of approximately $99 million were used to reduce outstanding borrowings under the 2004 unsecured facility.

 

On January 24, 2006, the Operating Partnership issued $100 million face amount of 5.80 percent senior unsecured notes due January 15, 2016 with interest payable semi-annually in arrears, and $100 million face amount of 5.25 percent senior unsecured notes due January 15, 2012 with interest payable semi-annually in arrears.  The total proceeds from the issuances, including accrued interest on the 5.80 percent notes of approximately $200.8 million, were used to reduce outstanding borrowings under the Operating Partnership’s unsecured facility.

 

Revolving Credit Facility

In 2004, the Operating Partnership refinanced its unsecured revolving credit facility.  The $600 million unsecured facility, which is expandable to $800 million, currently carries an interest rate equal to LIBOR plus 65 basis points, representing a reduction of five basis points from the previous facility.  The credit facility was refinanced for a three-year term with a one-year extension option.  The interest rate and facility fee are subject to adjustment, on a sliding scale, based upon the Operating Partnership’s unsecured debt ratings.

 

On September 16, 2005, the Operating Partnership extended and modified its unsecured facility with a group of 23

 

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lenders (reduced from 27).  The facility was extended for an additional two years and now matures in November 2009, with an extension option of one year, which would require a payment of 25 basis points of the then borrowing capacity of the facility upon exercise.  In addition, the facility fee was reduced by five basis points to 15 basis points at the current BBB/Baa2 pricing level.

 

AVAILABLE INFORMATION

 

The Corporation’s internet website is www.mack-cali.com.  The Operating Partnership makes available free of charge on or through the Corporation’s website its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after it electronically files or furnishes such materials to the Securities and Exchange Commission.  In addition, the Corporation’s internet website includes other items related to corporate governance matters, including, among other things, the Corporation’s corporate governance guidelines, charters of various committees of the Board of Directors of the Corporation, and the Corporation’s code of business conduct and ethics applicable to all employees, officers and directors of the Corporation.  The Corporation intends to disclose on its internet website any amendments to or waivers from its code of business conduct and ethics as well as any amendments to its corporate governance principles or the charters of various committees of the Board of Directors.  Copies of these documents may be obtained, free of charge, from our internet website.  Any shareholder of the Corporation also may obtain copies of these documents, free of charge, by sending a request in writing to: Mack-Cali Investor Relations Department, 11 Commerce Drive, Cranford, NJ 07016-3501.

 

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
 

We consider portions of this report, including the documents incorporated by reference, to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.  We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of such act.  Such forward-looking statements relate to, without limitation, our future economic performance, plans and objectives for future operations and projections of revenue and other financial items.  Forward-looking statements can be identified by the use of words such as “may,” “will,” “plan,” “should,” “expect,” “anticipate,” “estimate,” “continue” or comparable terminology.  Forward-looking statements are inherently subject to risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate.  Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, we can give no assurance that such expectations will be achieved.  Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

 

Among the factors about which we have made assumptions are:

 

•                  changes in the general economic climate and conditions, including those affecting industries in which our principal tenants compete;

 

•                  the extent of any tenant bankruptcies or of any early lease terminations;

 

•                  our ability to lease or re-lease space at current or anticipated rents;

 

•                  changes in the supply of and demand for office, office/flex and industrial/warehouse properties;

 

•                  changes in interest rate levels;

 

•                  changes in operating costs;

 

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

 

•                  the availability of financing;

 

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•                  changes in governmental regulation, tax rates and similar matters; and

 

•                  other risks associated with the development and acquisition of properties, including risks that the development may not be completed on schedule, that the tenants will not take occupancy or pay rent, or that development or operating costs may be greater than anticipated.

 

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

 

ITEM 1A.                    RISK FACTORS
 

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

 

Declines in economic activities in the Northeastern office markets could adversely affect our operating results.

A majority of our revenues are derived from our properties located in the Northeast, particularly in New Jersey, New York, Pennsylvania and Connecticut.  Adverse economic developments in this region could adversely impact the operations of our properties and, therefore, our profitability.  Because our portfolio consists primarily of office and office/flex buildings (as compared to a more diversified real estate portfolio), a decline in the economy and/or a decline in the demand for office space may adversely affect our ability to make distributions or payments to our investors.

 

The continued economic downturn in the real estate market has resulted in the relocation of companies and an uncertain economic future for many businesses.  We are uncertain how long the current downturn will last.  The current economic downturn may also be having a negative economic impact on many industries, including securities, insurance services, telecommunications and computer systems and other technology, businesses in which many of our tenants are involved. Such economic impact may cause our tenants to have difficulty or be unable to meet their obligations to us.

 

Our performance is subject to risks associated with the real estate industry.

General: Our business and our ability to make distributions or payments to our investors depend on the ability of our properties to generate funds in excess of operating expenses (including scheduled principal payments on debt and capital expenditure requirements).  Events or conditions that are beyond our control may adversely affect our operations and the value of our properties.  Such events or conditions could include:

 

•                                          changes in the general economic climate;

•                                          changes in local conditions such as an oversupply of office space, a reduction in demand for office space, or reductions in office market rental rates;

•                                          decreased attractiveness of our properties to tenants;

•                                          competition from other office and office/flex properties;

•                                          our inability to provide adequate maintenance;

•                                          increased operating costs, including insurance premiums, utilities and real estate taxes, due to inflation and other factors which may not necessarily be offset by increased rents;

•                                          changes in laws and regulations (including tax, environmental, zoning and building codes, and housing laws and regulations) and agency or court interpretations of such laws and regulations and the related costs of compliance;

•                                          changes in interest rate levels and the availability of financing;

•                                          the inability of a significant number of tenants to pay rent;

•                                          our inability to rent office space on favorable terms; and

•                                          civil unrest, earthquakes, acts of terrorism and other natural disasters or acts of God that may result in uninsured losses.

 

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Financially distressed tenants may be unable to pay rent: If a tenant defaults, we may experience delays and incur substantial costs in enforcing our rights as landlord and protecting our investments.  If a tenant files for bankruptcy, a potential court judgment rejecting and terminating such tenant’s lease could adversely affect our ability to make distributions or payments to our investors.

 

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

 

Our insurance coverage on our properties may be inadequate: We currently carry comprehensive insurance on all of our properties, including insurance for liability, fire and flood.  We cannot guarantee that the limits of our current policies will be sufficient in the event of a catastrophe to our properties.  We cannot guarantee that we will be able to renew or duplicate our current insurance coverage in adequate amounts or at reasonable prices.  In addition, while our current insurance policies insure us against loss from terrorist acts and toxic mold, in the future insurance companies may no longer offer coverage against these types of losses, or, if offered, these types of insurance may be prohibitively expensive. If any or all of the foregoing should occur, we may not have insurance coverage against certain types of losses and/or there may be decreases in the limits of insurance available.  Should an uninsured loss or a loss in excess of our insured limits occur, we could lose all or a portion of the capital we have invested in a property or properties, as well as the anticipated future revenue from the property or properties.  Nevertheless, we might remain obligated for any mortgage debt or other financial obligations related to the property or properties.  We cannot guarantee that material losses in excess of insurance proceeds will not occur in the future.  If any of our properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property.  Such events could adversely affect our ability to make distributions or payments to our investors.

 

Illiquidity of real estate limits our ability to act quickly: Real estate investments are relatively illiquid.  Such illiquidity may limit our ability to react quickly in response to changes in economic and other conditions.  If we want to sell an investment, we might not be able to dispose of that investment in the time period we desire, and the sales price of that investment might not recoup or exceed the amount of our investment.  The prohibition in the Internal Revenue Code of 1986, as amended, and related regulations on a real estate investment trust holding property for sale also may restrict our ability to sell property.  In addition, we acquired a significant number of our properties from individuals to whom we issued limited partnership units as part of the purchase price.  In connection with the acquisition of these properties, in order to preserve such individual’s tax deferral, we contractually agreed not to sell or otherwise transfer the properties for a specified period of time, except in a manner which does not result in recognition of any built-in-gain (which may result in an income tax liability) or which reimburses the appropriate individuals for the tax consequences of the recognition of such built-in-gains.  As of December 31, 2005, 56 of our properties, with an aggregate net book value of approximately $1.3 billion, were subject to these restrictions, which expire periodically through 2010.  For those properties where such restrictions have lapsed, we are generally required to use commercially reasonable efforts to prevent any sale, transfer or other disposition of the subject properties from resulting in the recognition of built-in gain to the appropriate individuals.  74 of our properties, with an aggregate net book value of approximately $667.7 million, have lapsed restrictions and are subject to these conditions.  The above limitations on our ability to sell our investments could adversely affect our ability to make distributions or payments to our investors.

 

Americans with Disabilities Act compliance could be costly: Under the Americans with Disabilities Act of 1990 (“ADA”), all public accommodations and commercial facilities must meet certain federal requirements related to access and use by disabled persons.  Compliance with the ADA requirements could involve removal of structural barriers from certain disabled persons’ entrances.  Other federal, state and local laws may require modifications to or restrict further renovations of our properties with respect to such accesses.  Although we believe that our properties are substantially in compliance with present requirements, noncompliance with the ADA or related laws or regulations could result in the United States government imposing fines or private litigants being awarded damages against us.  Such costs may adversely affect our ability to make distributions or payments to our investors.

 

Environmental problems are possible and may be costly: Various federal, state and local laws and regulations subject property owners or operators to liability for the costs of removal or remediation of certain hazardous or toxic substances located on or in the property.  These laws often impose liability without regard to whether the owner or operator was

 

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

 

Competition for acquisitions may result in increased prices for properties: We plan to acquire additional properties in New Jersey, New York and Pennsylvania and in the Northeast generally.  We may be competing for investment opportunities with entities that have greater financial resources.  Several office building developers and real estate companies may compete with us in seeking properties for acquisition, land for development and prospective tenants. Such competition may adversely affect our ability to make distributions or payments to our investors by:

 

•                                          reducing the number of suitable investment opportunities offered to us;

•                                          increasing the bargaining power of property owners;

•                                          interfering with our ability to attract and retain tenants;

•                                          increasing vacancies which lowers market rental rates and limits our ability to negotiate rental rates; and/or

•                                          adversely affecting our ability to minimize expenses of operation.

 

Development of real estate could be costly: As part of our operating strategy, we may acquire land for development or construct on owned land, under certain conditions.  Included among the risks of the real estate development business are the following, which may adversely affect our ability to make distributions or payments to our investors:

 

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

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

•                                          failure to complete construction on schedule or within budget may increase debt service expense and construction costs.

 

Property ownership through joint ventures could subject us to the contrary business objectives of our co-venturers: We, from time to time, invest in joint ventures or partnerships in which we do not hold a controlling interest.  These investments involve risks that do not exist with properties in which we own a controlling interest, including the possibility that our co-venturers or partners may, at any time, have business, economic or other objectives that are inconsistent with our objectives.  Because we lack a controlling interest, our co-venturers or partners may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives.  While we seek protective rights against such contrary actions, there can be no assurance that we will be successful in procuring any such protective rights, or if procured, that the rights will be sufficient to fully protect us against contrary actions.  Our organizational documents do not limit the amount of available funds that we may invest in joint ventures or partnerships.  If the objectives of our co-venturers or partners are inconsistent with ours, it may adversely affect our ability to make distributions or payments to our investors.

 

Debt financing could adversely affect our economic performance.

Scheduled debt payments and refinancing could adversely affect our financial condition: We are subject to the risks normally associated with debt financing.  These risks, including the following, may adversely affect our ability to make distributions or payments to our investors:

 

•                                          our cash flow may be insufficient to meet required payments of principal and interest;

•                                          payments of principal and interest on borrowings may leave us with insufficient cash resources to pay

 

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operating expenses;

•                                          we may not be able to refinance indebtedness on our properties at maturity; and

•                                          if refinanced, the terms of refinancing may not be as favorable as the original terms of the related indebtedness.

 

As of December 31, 2005, we had total outstanding indebtedness of $2.1 billion comprised of $1.4 billion of senior unsecured notes, outstanding borrowings of $227.0 million under our $600.0 million revolving credit facility and approximately $468.7 million of mortgage loans payable and other obligations indebtedness.  We may have to refinance the principal due on our current or future indebtedness at maturity, and we may not be able to do so.

 

If we are unable to refinance our indebtedness on acceptable terms, or at all, events or conditions that may adversely affect our ability to make distributions or payments to our investors include the following:

 

•                                          we may need to dispose of one or more of our properties upon disadvantageous terms;

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

•                                          if we mortgage property to secure payment of indebtedness and are unable to meet mortgage payments, the mortgagee could foreclose upon such property or appoint a receiver to receive an assignment of our rents and leases; and

•                                          foreclosures upon mortgaged property could create taxable income without accompanying cash proceeds and, therefore, hinder our ability to meet the real estate investment trust distribution requirements of the Internal Revenue Code.

 

We are obligated to comply with financial covenants in our indebtedness that could restrict our range of operating activities: The mortgages on our properties contain customary negative covenants, including limitations on our ability, without the prior consent of the lender, to further mortgage the property, to enter into new leases outside of stipulated guidelines or to materially modify existing leases.  In addition, our credit facility contains customary requirements, including restrictions and other limitations on our ability to incur debt, debt to assets ratios, secured debt to total assets ratios, interest coverage ratios and minimum ratios of unencumbered assets to unsecured debt.  The indentures under which our senior unsecured debt have been issued contain financial and operating covenants including coverage ratios and limitations on our ability to incur secured and unsecured debt.  These covenants limit our flexibility in conducting our operations and create a risk of default on our indebtedness if we cannot continue to satisfy them.

 

Rising interest rates may adversely affect our cash flow: As of December 31, 2005, outstanding borrowings of approximately $227 million under our revolving credit facility bear interest at variable rates.  We may incur additional indebtedness in the future that also bears interest at variable rates.  Variable rate debt creates higher debt service requirements if market interest rates increase. Higher debt service requirements could adversely affect our ability to make distributions or payments to our investors and/or cause us to default under certain debt covenants.

 

Our degree of leverage could adversely affect our cash flow: We fund acquisition opportunities and development partially through short-term borrowings (including our revolving credit facility), as well as from proceeds from property sales and undistributed cash.  We expect to refinance projects purchased with short-term debt either with long-term indebtedness or equity financing depending upon the economic conditions at the time of refinancing.  The Board of Directors of Mack-Cali Realty Corporation, our general partner, has a general policy of limiting the ratio of our indebtedness to total undepreciated assets (total debt as a percentage of total undepreciated assets) to 50 percent or less, although there is no limit in Mack-Cali Realty Corporation’s or our organizational documents on the amount of indebtedness that we may incur.  However, we have entered into certain financial agreements which contain financial and operating covenants that limit our ability under certain circumstances to incur additional secured and unsecured indebtedness.  The Board of Directors of Mack-Cali Realty Corporation could alter or eliminate its current policy on borrowing at any time at its discretion.  If this policy were changed, we could become more highly leveraged, resulting in an increase in debt service that could adversely affect our cash flow and our ability to make distributions or payments to our investors and/or could cause an increased risk of default on our obligations.

 

We are dependent on external sources of capital for future growth: To qualify as a real estate investment trust, Mack-Cali

 

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Realty Corporation must distribute to its shareholders each year at least 90 percent of its net taxable income, excluding any net capital gain. Because of this distribution requirement, it is not likely that we will be able to fund all future capital needs, including for acquisitions and developments, from income from operations.  Therefore, we will have to rely on third-party sources of capital, which may or may not be available on favorable terms or at all.  Our access to third-party sources of capital depends on a number of things, including the market’s perception of our growth potential and our current and potential future earnings.  Moreover, additional equity offerings by Mack-Cali Realty Corporation may result in substantial dilution of its shareholders’ interests, and additional debt financing may substantially increase our leverage.

 

Competition for skilled personnel could increase our labor costs.

We compete with various other companies in attracting and retaining qualified and skilled personnel.  We depend on our ability to attract and retain skilled management personnel who are responsible for the day-to-day operations of our company.  Competitive pressures may require that we enhance our pay and benefits package to compete effectively for such personnel.  We may not be able to offset such added costs by increasing the rates we charge our tenants.  If there is an increase in these costs or if we fail to attract and retain qualified and skilled personnel, our business and operating results could be harmed.

 

We are dependent on our key personnel whose continued service is not guaranteed.

We are dependent upon the executive officers of Mack-Cali Realty Corporation for strategic business direction and real estate experience.  While we believe that we could find replacements for these key personnel, loss of their services could adversely affect our operations.  Mack-Cali Realty Corporation has entered into an employment agreement (including non-competition provisions) which provides for a continuous four-year employment term with each of Mitchell E. Hersh, Barry Lefkowitz and Roger W. Thomas, and a continuous one-year employment term with Michael A. Grossman.  Mack-Cali Realty Corporation does not have key man life insurance for our executive officers.

 

Certain provisions of Maryland law and the charter, bylaws and stockholder rights plan of Mack-Cali Realty Corporation could hinder, delay or prevent changes in control.

Certain provisions of Maryland law, the charter, bylaws, and stockholder rights plan of Mack-Cali Realty Corporation have the effect of discouraging, delaying or preventing transactions that involve an actual or threatened change in control. These provisions include the following:

 

Classified Board of Directors: The Board of Directors of Mack-Cali Realty Corporation is divided into three classes with staggered terms of office of three years each.  The classification and staggered terms of office of the directors make it more difficult for a third party to gain control of the board of directors.  At least two annual meetings of Mack-Cali Realty Corporation stockholders, instead of one, generally would be required to affect a change in a majority of the board of directors.

 

Removal of Directors: Under Mack-Cali Realty Corporation’s charter, subject to the rights of one or more classes or series of preferred stock to elect one or more directors, a director may be removed only for cause and only by the affirmative vote of at least two-thirds of all votes entitled to be cast by Mack-Cali Realty Corporation’s stockholders generally in the election of directors.  Neither the Maryland General Corporation Law nor Mack-Cali Realty Corporation’s charter define the term “cause.”  As a result, removal for “cause” is subject to Maryland common law and to judicial interpretation and review in the context of the facts and circumstances of any particular situation.

 

Number of Directors, Board Vacancies, Term of Office: Mack-Cali Realty Corporation has, in its bylaws, elected to be subject to certain provisions of Maryland law which vest in the Board of Directors the exclusive right to determine the number of directors and the exclusive right, by the affirmative vote of a majority of the remaining directors, even if the remaining directors do not constitute a quorum, to fill vacancies on the board.  These provisions of Maryland law, which are applicable even if other provisions of Maryland law or the charter or bylaws provide to the contrary, also provide that any director elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred, rather than the next annual meeting of stockholders as would otherwise be the case, and until his or her successor is elected and qualifies.

 

Stockholder Requested Special Meetings: Mack-Cali Realty Corporation’s bylaws provide that its stockholders have the right to call a special meeting only upon the written request of the stockholders entitled to cast not less than a majority of all the votes entitled to be cast by the stockholders at such meeting.

 

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Advance Notice Provisions for Stockholder Nominations and Proposals: Mack-Cali Realty Corporation’s bylaws require advance written notice for stockholders to nominate persons for election as directors at, or to bring other business before, any meeting of stockholders.  This bylaw provision limits the ability of stockholders to make nominations of persons for election as directors or to introduce other proposals unless Mack-Cali Realty Corporation is notified in a timely manner prior to the meeting.

 

Exclusive Authority of the Board to Amend the Bylaws: Mack-Cali Realty Corporation’s bylaws provide that its board of directors has the exclusive power to adopt, alter or repeal any provision of the bylaws or to make new bylaws.  Thus, Mack-Cali Realty Corporation’s stockholders may not effect any changes to its bylaws.

 

Preferred Stock: Under Mack-Cali Realty Corporation’s charter, its Board of Directors has authority to issue preferred stock from time to time in one or more series and to establish the terms, preferences and rights of any such series of preferred stock, all without approval of Mack-Cali Realty Corporation’s stockholders.

 

Duties of Directors with Respect to Unsolicited Takeovers: Maryland law provides protection for Maryland corporations against unsolicited takeovers by limiting, among other things, the duties of the directors in unsolicited takeover situations. The duties of directors of Maryland corporations do not require them to (a) accept, recommend or respond to any proposal by a person seeking to acquire control of the corporation, (b) authorize the corporation to redeem any rights under, or modify or render inapplicable, any stockholders rights plan, (c) make a determination under the Maryland Business Combination Act or the Maryland Control Share Acquisition Act, or (d) act or fail to act solely because of the effect of the act or failure to act may have on an acquisition or potential acquisition of control of the corporation or the amount or type of consideration that may be offered or paid to the stockholders in an acquisition.  Moreover, under Maryland law the act of a director of a Maryland corporation relating to or affecting an acquisition or potential acquisition of control is not subject to any higher duty or greater scrutiny than is applied to any other act of a director. Maryland law also contains a statutory presumption that an act of a director of a Maryland corporation satisfies the applicable standards of conduct for directors under Maryland law.

 

Ownership Limit: In order to preserve Mack-Cali Realty Corporation’s status as a real estate investment trust under the Code, Mack-Cali Realty Corporation’s charter generally prohibits any single stockholder, or any group of affiliated stockholders, from beneficially owning more than 9.8 percent of our outstanding capital stock unless the Board of Directors waives or modifies this ownership limit.

 

Maryland Business Combination Act: The Maryland Business Combination Act provides that unless exempted, a Maryland corporation may not engage in business combinations, including mergers, dispositions of 10 percent or more of its assets, certain issuances of shares of stock and other specified transactions, with an “interested stockholder” or an affiliate of an interested stockholder for five years after the most recent date on which the interested stockholder became an interested stockholder, and thereafter unless specified criteria are met.  An interested stockholder is generally a person owning or controlling, directly or indirectly, 10 percent or more of the voting power of the outstanding stock of the Maryland corporation.  The Board of Directors has exempted from this statute business combinations between the Company and certain affiliated individuals and entities.  However, unless the Board of Directors adopts other exemptions, the provisions of the Maryland Business Combination Act will be applicable to business combinations with other persons.

 

Maryland Control Share Acquisition Act: Maryland law provides that “control shares” of a corporation acquired in a “control share acquisition” shall have no voting rights except to the extent approved by a vote of two-thirds of the votes eligible to cast on the matter under the Maryland Control Share Acquisition Act.  “Control Shares” means shares of stock that, if aggregated with all other shares of stock previously acquired by the acquirer, would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of the voting power:  one-tenth or more but less than one-third, one-third or more but less than a majority or a majority or more of all voting power.  A “control share acquisition” means the acquisition of control shares, subject to certain exceptions.

 

If voting rights of control shares acquired in a control share acquisition are not approved at a stockholder’s meeting, then subject to certain conditions and limitations, the issuer may redeem any or all of the control shares for fair value. If voting rights of such control shares are approved at a stockholder’s meeting and the acquirer becomes entitled to vote a majority

 

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of the shares of stock entitled to vote, all other stockholders may exercise appraisal rights.  Mack-Cali Realty Corporation’s bylaws contain a provision exempting from the Maryland Control Share Acquisition Act any acquisitions of shares by certain affiliated individuals and entities, any directors, officers or employees of Mack-Cali Realty Corporation and any person approved by the Board of Directors prior to the acquisition by such person of control shares. Any control shares acquired in a control share acquisition which are not exempt under the foregoing provisions of Mack-Cali Realty Corporation’s bylaws will be subject to the Maryland Control Share Acquisition Act.

 

Stockholder Rights Plan: Mack-Cali Realty Corporation adopted a stockholder rights plan that may discourage any potential acquirer from acquiring more than 15 percent of Mack-Cali Realty Corporation’s outstanding common stock since, upon this type of acquisition without approval of the Board of Directors, all other common stockholders will have the right to purchase a specified amount of common stock at a substantial discount from market price.

 

Consequences of failure of Mack-Cali Realty Corporation to qualify as a real estate investment trust could adversely affect our financial condition.  Failure to maintain ownership limits could cause Mack-Cali Realty Corporation to lose its qualification as a real estate investment trust: In order for Mack-Cali Realty Corporation to maintain its qualification as a real estate investment trust, not more than 50 percent in value of its outstanding stock may be actually and/or constructively owned by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities).  Mack-Cali Realty Corporation has limited the ownership of its outstanding shares of its common stock by any single stockholder to 9.8 percent of the outstanding shares of its common stock.  The Board of Directors of Mack-Cali Realty Corporation could waive this restriction if they were satisfied, based upon the advice of tax counsel or otherwise, that such action would be in the best interests of Mack-Cali Realty Corporation and would not affect its qualifications as a real estate investment trust.  Common stock of Mack-Cali Realty Corporation acquired or transferred in breach of the limitation may be redeemed by Mack-Cali Realty Corporation for the lesser of the price paid and the average closing price for the 10 trading days immediately preceding redemption or sold at the direction of us.  Mack-Cali Realty Corporation may elect to redeem such shares of common stock for limited partnership units, which are nontransferable except in very limited circumstances.  Any transfer of shares of common stock which, as a result of such transfer, causes Mack-Cali Realty Corporation to be in violation of any ownership limit will be deemed void.  Although Mack-Cali Realty Corporation currently intends to continue to operate in a manner which will enable it to continue to qualify as a real estate investment trust, it is possible that future economic, market, legal, tax or other considerations may cause Mack-Cali Realty Corporation’s Board of Directors to revoke the election for it to qualify as a real estate investment trust.  Under Mack-Cali Realty Corporation’s organizational documents, its Board of Directors can make such revocation without the consent of Mack-Cali Realty Corporation’s stockholders.

 

In addition, the consent of the holders of at least 85 percent of our partnership units is required: (i) to merge (or permit the merger of) us with another unrelated person, pursuant to a transaction in which we are not the surviving entity; (ii) to dissolve, liquidate or wind up or (iii) to convey or otherwise transfer all or substantially all of our assets.  As of February 17, 2006, Mack-Cali Realty Corporation, as general partner, owns approximately 82.0 percent of our outstanding partnership units.

 

Tax liabilities as a consequence of failure of Mack-Cali Realty Corporation to qualify as a real estate investment trust: Mack-Cali Realty Corporation has elected to be treated and has operated so as to qualify as a real estate investment trust for federal income tax purposes since its taxable year ended December 31, 1994.  Although Mack-Cali Realty Corporation believes it will continue to operate in such manner, it cannot guarantee that it will do so.  Qualification as a real estate investment trust involves the satisfaction of various requirements (some on an annual and some on a quarterly basis) established under highly technical and complex tax provisions of the Internal Revenue Code.  Because few judicial or administrative interpretations of such provisions exist and qualification determinations are fact sensitive, Mack-Cali Realty Corporation cannot assure you that it will qualify as a real estate investment trust for any taxable year.

 

If Mack-Cali Realty Corporation fails to qualify as a real estate investment trust in any taxable year, it will be subject to the following:

 

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

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

 

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

 

A loss of Mack-Cali Realty Corporation’s status as a real estate investment trust could have an adverse effect on us.  Failure to qualify as a real estate investment trust also would eliminate the requirement that Mack-Cali Realty Corporation pay dividends to its stockholders.

 

Other tax liabilities: Even if Mack-Cali Realty Corporation qualifies as a real estate investment trust, it is subject to certain federal, state and local taxes on its income and property and, in some circumstances, certain other state and local taxes.  In addition, its taxable REIT subsidiaries will be subject to federal, state and local income tax for income received in connection with certain non-customary services performed for tenants and/or third parties.

 

Risk of changes in the tax law applicable to real estate investment trusts: Since the Internal Revenue Service, the United States Treasury Department and Congress frequently review federal income tax legislation, we cannot predict whether, when or to what extent new federal tax laws, regulations, interpretations or rulings will be adopted.  Any of such legislative action may prospectively or retroactively modify our and Mack-Cali Realty Corporation’s tax treatment and, therefore, may adversely affect taxation of us, Mack-Cali Realty Corporation, and/or our investors.

 

ITEM 1B.                    UNRESOLVED STAFF COMMENTS

 

None.

 

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ITEM 2.                             PROPERTIES
 

PROPERTY LIST

 

As of December 31, 2005, the Operating Partnership’s Consolidated Properties consisted of 263 in-service office, office/flex and industrial/warehouse properties, as well as two stand-alone retail properties and two land leases.  The Consolidated Properties are located primarily in the Northeast.  The Consolidated Properties are easily accessible from major thoroughfares and are in close proximity to numerous amenities.  The Consolidated Properties contain a total of approximately 29.5 million square feet, with the individual properties ranging from 6,216 to 1,246,283 square feet.  The Consolidated Properties, managed by on-site employees, generally have attractively landscaped sites and atriums in addition to quality design and construction.  The Operating Partnership’s tenants include many service sector employers, including a large number of professional firms and national and international businesses.  The Operating Partnership believes that all of its properties are well-maintained and do not require significant capital improvements.

 

18


 

Office Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2005

 

 

 

 

 

 

 

Percentage

 

2005

 

2005

 

 

 

2005

 

Average

 

 

 

 

 

Net

 

Leased

 

Base

 

Effective

 

 

 

Average

 

Effective

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Rent

 

Percentage

 

Base Rent

 

Rent

 

 

 

Year

 

Area

 

12/31/05

 

($000’s)

 

($000’s)

 

of Total 2005

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

(c) (d)

 

Base Rent (%)

 

($) (c) (e)

 

($) (c) (f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW JERSEY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Atlantic County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Egg Harbor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Decadon Drive

 

1987

 

40,422

 

100.0

 

951

 

857

 

0.18

 

23.53

 

21.20

 

200 Decadon Drive

 

1991

 

39,922

 

100.0

 

923

 

801

 

0.17

 

23.12

 

20.06

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bergen County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Lawn

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17-17 Route 208 North

 

1987

 

143,000

 

100.0

 

3,449

 

2,945

 

0.64

 

24.12

 

20.59

 

Fort Lee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One Bridge Plaza

 

1981

 

200,000

 

92.2

 

4,778

 

4,384

 

0.88

 

25.91

 

23.77

 

2115 Linwood Avenue

 

1981

 

68,000

 

82.6

 

1,297

 

954

 

0.24

 

23.09

 

16.98

 

Little Ferry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

200 Riser Road

 

1974

 

286,628

 

100.0

 

1,907

 

1,742

 

0.35

 

6.65

 

6.08

 

Montvale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

95 Chestnut Ridge Road

 

1975

 

47,700

 

100.0

 

796

 

729

 

0.15

 

16.69

 

15.28

 

135 Chestnut Ridge Road

 

1981

 

66,150

 

92.1

 

1,535

 

1,242

 

0.28

 

25.20

 

20.39

 

Paramus

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15 East Midland Avenue

 

1988

 

259,823

 

100.0

 

6,201

 

6,122

 

1.14

 

23.87

 

23.56

 

140 East Ridgewood Avenue

 

1981

 

239,680

 

90.4

 

4,625

 

3,923

 

0.85

 

21.35

 

18.11

 

461 From Road

 

1988

 

253,554

 

98.6

 

6,064

 

6,045

 

1.12

 

24.26

 

24.18

 

650 From Road

 

1978

 

348,510

 

99.1

 

8,114

 

7,182

 

1.50

 

23.49

 

20.79

 

61 South Paramus Avenue

 

1985

 

269,191

 

93.3

 

6,609

 

5,998

 

1.22

 

26.31

 

23.88

 

Rochelle Park

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

120 Passaic Street

 

1972

 

52,000

 

99.6

 

1,398

 

1,318

 

0.26

 

26.99

 

25.45

 

365 West Passaic Street

 

1976

 

212,578

 

94.5

 

4,062

 

3,531

 

0.75

 

20.22

 

17.58

 

Upper Saddle River

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Lake Street

 

1973/94

 

474,801

 

100.0

 

7,465

 

7,465

 

1.38

 

15.72

 

15.72

 

10 Mountainview Road

 

1986

 

192,000

 

100.0

 

4,032

 

3,758

 

0.74

 

21.00

 

19.57

 

Woodcliff Lake

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

400 Chestnut Ridge Road

 

1982

 

89,200

 

100.0

 

1,950

 

1,456

 

0.36

 

21.86

 

16.32

 

470 Chestnut Ridge Road

 

1987

 

52,500

 

100.0

 

1,192

 

1,192

 

0.22

 

22.70

 

22.70

 

530 Chestnut Ridge Road

 

1986

 

57,204

 

100.0

 

1,166

 

1,166

 

0.22

 

20.38

 

20.38

 

50 Tice Boulevard

 

1984

 

235,000

 

100.0

 

6,041

 

5,432

 

1.12

 

25.71

 

23.11

 

300 Tice Boulevard

 

1991

 

230,000

 

100.0

 

6,099

 

5,343

 

1.13

 

26.52

 

23.23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Burlington County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Moorestown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

224 Strawbridge Drive

 

1984

 

74,000

 

85.4

 

1,371

 

1,252

 

0.25

 

21.69

 

19.81

 

228 Strawbridge Drive

 

1984

 

74,000

 

100.0

 

1,043

 

896

 

0.19

 

14.09

 

12.11

 

232 Strawbridge Drive

 

1986

 

74,258

 

98.8

 

1,131

 

1,127

 

0.21

 

15.42

 

15.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Essex County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Millburn

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

150 J.F. Kennedy Parkway

 

1980

 

247,476

 

100.0

 

7,009

 

6,079

 

1.29

 

28.32

 

24.56

 

 

19


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2005

 

 

 

 

 

 

 

Percentage

 

2005

 

2005

 

 

 

2005

 

Average

 

 

 

 

 

Net

 

Leased

 

Base

 

Effective

 

 

 

Average

 

Effective

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Rent

 

Percentage

 

Base Rent

 

Rent

 

 

 

Year

 

Area

 

12/31/05

 

($000’s)

 

($000’s)

 

of Total 2005

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

(c) (d)

 

Base Rent (%)

 

($) (c) (e)

 

($) (c) (f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Roseland

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101 Eisenhower Parkway

 

1980

 

237,000

 

94.8

 

5,395

 

4,953

 

1.00

 

24.01

 

22.05

 

103 Eisenhower Parkway

 

1985

 

151,545

 

82.2

 

3,054

 

2,608

 

0.56

 

24.52

 

20.94

 

105 Eisenhower Parkway

 

2001

 

220,000

 

71.6

 

3,848

 

2,927

 

0.71

 

24.43

 

18.58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hudson County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jersey City

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Harborside Financial Center Plaza 1

 

1983

 

400,000

 

44.8

 

2,609

 

2,403

 

0.48

 

14.56

 

13.41

 

Harborside Financial Center Plaza 2

 

1990

 

761,200

 

100.0

 

18,577

 

17,518

 

3.43

 

24.40

 

23.01

 

Harborside Financial Center Plaza 3

 

1990

 

725,600

 

100.0

 

17,045

 

16,035

 

3.15

 

23.49

 

22.10

 

Harborside Financial Center Plaza 4-A

 

2000

 

207,670

 

97.5

 

6,659

 

5,834

 

1.23

 

32.89

 

28.81

 

Harborside Financial Center Plaza 5

 

2002

 

977,225

 

94.7

 

30,183

 

25,832

 

5.58

 

32.62

 

27.91

 

101 Hudson Street (g)

 

1992

 

1,246,283

 

99.5

 

23,254

 

20,084

 

4.29

 

22.44

 

19.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mercer County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hamilton Township

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

600 Horizon Drive

 

2002

 

95,000

 

100.0

 

1,373

 

1,373

 

0.25

 

14.45

 

14.45

 

Princeton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

103 Carnegie Center

 

1984

 

96,000

 

100.0

 

1,983

 

1,818

 

0.37

 

20.66

 

18.94

 

100 Overlook Center

 

1988

 

149,600

 

100.0

 

4,102

 

3,607

 

0.76

 

27.42

 

24.11

 

5 Vaughn Drive

 

1987

 

98,500

 

94.0

 

2,339

 

2,080

 

0.43

 

25.26

 

22.46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Middlesex County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Brunswick

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

377 Summerhill Road

 

1977

 

40,000

 

100.0

 

363

 

357

 

0.07

 

9.08

 

8.93

 

Piscataway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30 Knightsbridge Road, Bldg 3

 

1977

 

160,000

 

100.0

 

2,464

 

2,464

 

0.45

 

15.40

 

15.40

 

30 Knightsbridge Road, Bldg 4

 

1977

 

115,000

 

100.0

 

1,771

 

1,771

 

0.33

 

15.40

 

15.40

 

30 Knightsbridge Road, Bldg 5

 

1977

 

332,607

 

43.6

 

169

 

166

 

0.03

 

1.17

 

1.14

 

30 Knightsbridge Road, Bldg 6

 

1977

 

72,743

 

47.2

 

30

 

30

 

0.01

 

0.87

 

0.87

 

Plainsboro

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

500 College Road East

 

1984

 

158,235

 

100.0

 

4,365

 

4,187

 

0.81

 

27.59

 

26.46

 

South Brunswick

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3 Independence Way

 

1983

 

111,300

 

38.8

 

414

 

377

 

0.08

 

9.59

 

8.73

 

Woodbridge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

581 Main Street

 

1991

 

200,000

 

100.0

 

4,924

 

4,667

 

0.91

 

24.62

 

23.34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Monmouth County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Freehold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2 Paragon Way (g)

 

1989

 

44,524

 

86.9

 

336

 

263

 

0.06

 

18.32

 

14.34

 

3 Paragon Way (g)

 

1991

 

66,898

 

69.3

 

288

 

258

 

0.05

 

13.11

 

11.74

 

4 Paragon Way (g)

 

2002

 

63,989

 

100.0

 

545

 

411

 

0.10

 

17.97

 

13.55

 

100 Willbowbrook (g)

 

1988

 

60,557

 

73.6

 

390

 

345

 

0.07

 

18.46

 

16.33

 

Holmdel

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23 Main Street (g)

 

1977

 

350,000

 

100.0

 

3,782

 

3,610

 

0.70

 

14.19

 

13.54

 

Middletown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One River Center Bldg 1

 

1983

 

122,594

 

89.2

 

2,099

 

1,950

 

0.39

 

19.19

 

17.83

 

One River Center Bldg 2

 

1983

 

120,360

 

100.0

 

2,769

 

2,736

 

0.51

 

23.01

 

22.73

 

One River Center Bldg 3

 

1984

 

214,518

 

94.7

 

4,362

 

4,311

 

0.81

 

21.47

 

21.22

 

Neptune

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3600 Route 66

 

1989

 

180,000

 

100.0

 

2,400

 

2,171

 

0.44

 

13.33

 

12.06

 

Wall Township

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1305 Campus Parkway

 

1988

 

23,350

 

92.4

 

361

 

337

 

0.07

 

16.73

 

15.62

 

1350 Campus Parkway

 

1990

 

79,747

 

99.9

 

1,599

 

1,454

 

0.30

 

20.07

 

18.25

 

 

20


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2005

 

 

 

 

 

 

 

Percentage

 

2005

 

2005

 

 

 

2005

 

Average

 

 

 

 

 

Net

 

Leased

 

Base

 

Effective

 

 

 

Average

 

Effective

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Rent

 

Percentage

 

Base Rent

 

Rent

 

 

 

Year

 

Area

 

12/31/05

 

($000’s)

 

($000’s)

 

of Total 2005

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

(c) (d)

 

Base Rent (%)

 

($) (c) (e)

 

($) (c) (f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Morris County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Florham Park

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

325 Columbia Turnpike

 

1987

 

168,144

 

99.4

 

3,972

 

3,634

 

0.73

 

23.77

 

21.74

 

Morris Plains

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

250 Johnson Road

 

1977

 

75,000

 

100.0

 

1,587

 

1,473

 

0.29

 

21.16

 

19.64

 

201 Littleton Road

 

1979

 

88,369

 

88.9

 

1,783

 

1,582

 

0.33

 

22.70

 

20.14

 

Morris Township

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

412 Mt. Kemble Avenue

 

1986

 

475,100

 

—

 

2,984

 

2,984

 

0.55

 

—

 

—

 

Parsippany

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4 Campus Drive

 

1983

 

147,475

 

91.1

 

3,482

 

3,282

 

0.64

 

25.92

 

24.43

 

6 Campus Drive

 

1983

 

148,291

 

67.9

 

2,038

 

1,696

 

0.38

 

20.24

 

16.84

 

7 Campus Drive

 

1982

 

154,395

 

100.0

 

2,037

 

1,924

 

0.38

 

13.19

 

12.46

 

8 Campus Drive

 

1987

 

215,265

 

100.0

 

6,282

 

5,588

 

1.16

 

29.18

 

25.96

 

9 Campus Drive

 

1983

 

156,495

 

92.5

 

3,659

 

3,142

 

0.68

 

25.28

 

21.71

 

4 Century Drive

 

1981

 

100,036

 

68.2

 

1,163

 

1,163

 

0.21

 

17.05

 

17.05

 

5 Century Drive

 

1981

 

79,739

 

97.3

 

2,073

 

2,073

 

0.38

 

26.72

 

26.72

 

6 Century Drive

 

1981

 

100,036

 

3.0

 

125

 

125

 

0.02

 

41.65

 

41.65

 

2 Dryden Way

 

1990

 

6,216

 

100.0

 

108

 

108

 

0.02

 

17.37

 

17.37

 

4 Gatehall Drive

 

1988

 

248,480

 

78.8

 

4,895

 

4,416

 

0.90

 

25.00

 

22.55

 

2 Hilton Court

 

1991

 

181,592

 

100.0

 

5,019

 

4,518

 

0.93

 

27.64

 

24.88

 

1633 Littleton Road

 

1978

 

57,722

 

100.0

 

1,131

 

1,131

 

0.21

 

19.59

 

19.59

 

600 Parsippany Road

 

1978

 

96,000

 

65.7

 

1,179

 

982

 

0.22

 

18.69

 

15.57

 

1 Sylvan Way

 

1989

 

150,557

 

100.0

 

3,502

 

3,106

 

0.65

 

23.26

 

20.63

 

5 Sylvan Way

 

1989

 

151,383

 

98.0

 

3,683

 

3,403

 

0.68

 

24.83

 

22.94

 

7 Sylvan Way

 

1987

 

145,983

 

100.0

 

2,927

 

2,509

 

0.54

 

20.05

 

17.19

 

5 Wood Hollow Road

 

1979

 

317,040

 

88.1

 

4,274

 

4,167

 

0.79

 

15.30

 

14.92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Passaic County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Clifton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

777 Passaic Avenue

 

1983

 

75,000

 

100.0

 

1,532

 

1,338

 

0.28

 

20.43

 

17.84

 

Totowa

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

999 Riverview Drive

 

1988

 

56,066

 

100.0

 

880

 

797

 

0.16

 

15.70

 

14.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Somerset County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basking Ridge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

222 Mt. Airy Road

 

1986

 

49,000

 

60.7

 

597

 

466

 

0.11

 

20.07

 

15.67

 

233 Mt. Airy Road

 

1987

 

66,000

 

100.0

 

1,315

 

1,103

 

0.24

 

19.92

 

16.71

 

Bernards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

106 Allen Road

 

2000

 

132,010

 

93.2

 

2,714

 

2,066

 

0.50

 

22.06

 

16.79

 

Bridgewater

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

721 Route 202/206

 

1989

 

192,741

 

87.8

 

3,923

 

3,792

 

0.72

 

23.18

 

22.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Union County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Clark

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Walnut Avenue

 

1985

 

182,555

 

99.5

 

4,551

 

3,996

 

0.84

 

25.05

 

22.00

 

 

21


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2005

 

 

 

 

 

 

 

Percentage

 

2005

 

2005

 

 

 

2005

 

Average

 

 

 

 

 

Net

 

Leased

 

Base

 

Effective

 

 

 

Average

 

Effective

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Rent

 

Percentage

 

Base Rent

 

Rent

 

 

 

Year

 

Area

 

12/31/05

 

($000’s)

 

($000’s)

 

of Total 2005

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

(c) (d)

 

Base Rent (%)

 

($) (c) (e)

 

($) (c) (f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cranford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6 Commerce Drive

 

1973

 

56,000

 

100.0

 

1,234

 

1,116

 

0.23

 

22.04

 

19.93

 

11 Commerce Drive (c)

 

1981

 

90,000

 

97.1

 

1,242

 

1,068

 

0.23

 

14.21

 

12.22

 

12 Commerce Drive

 

1967

 

72,260

 

95.1

 

873

 

700

 

0.16

 

12.70

 

10.19

 

14 Commerce Drive

 

1971

 

67,189

 

100.0

 

1,341

 

1,335

 

0.25

 

19.96

 

19.87

 

20 Commerce Drive

 

1990

 

176,600

 

98.4

 

3,522

 

3,191

 

0.65

 

20.27

 

18.36

 

25 Commerce Drive

 

1971

 

67,749

 

100.0

 

1,395

 

1,319

 

0.26

 

20.59

 

19.47

 

65 Jackson Drive

 

1984

 

82,778

 

100.0

 

1,948

 

1,729

 

0.36

 

23.53

 

20.89

 

New Providence

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

890 Mountain Avenue

 

1977

 

80,000

 

89.6

 

1,830

 

1,721

 

0.34

 

25.53

 

24.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total New Jersey Office

 

 

 

16,918,908

 

89.7

 

331,860

 

300,619

 

61.29

 

22.36

 

20.24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW YORK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dutchess County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fishkill

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

300 Westage Business Center Drive

 

1987

 

118,727

 

82.1

 

2,134

 

1,822

 

0.39

 

21.89

 

18.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rockland County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suffern

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

400 Rella Boulevard

 

1988

 

180,000

 

100.0

 

4,209

 

3,656

 

0.78

 

23.38

 

20.31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Westchester County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elmsford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Clearbrook Road (c)

 

1975

 

60,000

 

99.5

 

1,135

 

1,046

 

0.21

 

19.01

 

17.52

 

101 Executive Boulevard

 

1971

 

50,000

 

45.3

 

678

 

611

 

0.13

 

29.93

 

26.98

 

555 Taxter Road

 

1986

 

170,554

 

100.0

 

3,897

 

3,321

 

0.72

 

22.85

 

19.47

 

565 Taxter Road

 

1988

 

170,554

 

92.8

 

3,836

 

3,491

 

0.71

 

24.24

 

22.06

 

570 Taxter Road

 

1972

 

75,000

 

100.0

 

1,800

 

1,635

 

0.33

 

24.00

 

21.80

 

Hawthorne

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Skyline Drive

 

1980

 

20,400

 

99.0

 

392

 

369

 

0.07

 

19.41

 

18.27

 

2 Skyline Drive

 

1987

 

30,000

 

87.9

 

424

 

364

 

0.08

 

16.08

 

13.80

 

7 Skyline Drive

 

1987

 

109,000

 

100.0

 

2,421

 

2,239

 

0.45

 

22.21

 

20.54

 

17 Skyline Drive

 

1989

 

85,000

 

100.0

 

1,360

 

1,335

 

0.25

 

16.00

 

15.71

 

19 Skyline Drive

 

1982

 

248,400

 

100.0

 

4,471

 

4,174

 

0.83

 

18.00

 

16.80

 

 

22


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2005

 

 

 

 

 

 

 

Percentage

 

2005

 

2005

 

 

 

2005

 

Average

 

 

 

 

 

Net

 

Leased

 

Base

 

Effective

 

 

 

Average

 

Effective

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Rent

 

Percentage

 

Base Rent

 

Rent

 

 

 

Year

 

Area

 

12/31/05

 

($000’s)

 

($000’s)

 

of Total 2005

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

(c) (d)

 

Base Rent (%)

 

($) (c) (e)

 

($) (c) (f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tarrytown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

200 White Plains Road

 

1982

 

89,000

 

94.7

 

1,935

 

1,770

 

0.36

 

22.96

 

21.00

 

220 White Plains Road

 

1984

 

89,000

 

88.0

 

1,929

 

1,774

 

0.36

 

24.63

 

22.65

 

White Plains

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Barker Avenue

 

1975

 

68,000

 

97.3

 

1,773

 

1,650

 

0.33

 

26.80

 

24.94

 

3 Barker Avenue

 

1983

 

65,300

 

100.0

 

1,747

 

1,583

 

0.32

 

26.75

 

24.24

 

50 Main Street

 

1985

 

309,000

 

99.5

 

8,999

 

7,926

 

1.67

 

29.27

 

25.78

 

11 Martine Avenue

 

1987

 

180,000

 

95.9

 

4,822

 

4,260

 

0.89

 

27.93

 

24.68

 

1 Water Street

 

1979

 

45,700

 

86.0

 

1,025

 

911

 

0.19

 

26.08

 

23.18

 

Yonkers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Executive Boulevard

 

1982

 

112,000

 

98.0

 

2,776

 

2,479

 

0.51

 

25.29

 

22.59

 

3 Executive Plaza

 

1987

 

58,000

 

100.0

 

1,460

 

1,269

 

0.27

 

25.17

 

21.88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total New York Office

 

 

 

2,333,635

 

95.7

 

53,223

 

47,685

 

9.85

 

23.83

 

21.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PENNSYLVANIA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chester County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Berwyn

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1000 Westlakes Drive

 

1989

 

60,696

 

95.7

 

1,563

 

1,496

 

0.29

 

26.91

 

25.75

 

1055 Westlakes Drive

 

1990

 

118,487

 

96.8

 

2,741

 

2,264

 

0.51

 

23.90

 

19.74

 

1205 Westlakes Drive

 

1988

 

130,265

 

58.8

 

2,804

 

2,573

 

0.52

 

36.61

 

33.59

 

1235 Westlakes Drive

 

1986

 

134,902

 

91.3

 

2,648

 

2,341

 

0.49

 

21.50

 

19.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delaware County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lester

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Stevens Drive

 

1986

 

95,000

 

100.0

 

2,551

 

2,356

 

0.47

 

26.85

 

24.80

 

200 Stevens Drive

 

1987

 

208,000

 

100.0

 

5,598

 

5,251

 

1.03

 

26.91

 

25.25

 

300 Stevens Drive

 

1992

 

68,000

 

100.0

 

1,087

 

915

 

0.20

 

15.99

 

13.46

 

Media

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1400 Providence Road - Center I

 

1986

 

100,000

 

84.8

 

1,911

 

1,723

 

0.35

 

22.54

 

20.32

 

1400 Providence Road - Center II

 

1990

 

160,000

 

97.6

 

3,488

 

3,072

 

0.64

 

22.34

 

19.67

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Montgomery County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bala Cynwyd

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

150 Monument Road

 

1981

 

125,783

 

70.0

 

2,118

 

2,110

 

0.39

 

24.06

 

23.96

 

Blue Bell

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4 Sentry Parkway

 

1982

 

63,930

 

94.1

 

1,373

 

1,370

 

0.25

 

22.82

 

22.77

 

16 Sentry Parkway

 

1988

 

93,093

 

100.0

 

2,408

 

2,347

 

0.44

 

25.87

 

25.21

 

18 Sentry Parkway

 

1988

 

95,010

 

97.6

 

2,176

 

2,121

 

0.40

 

23.47

 

22.87

 

King of Prussia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2200 Renaissance Boulevard

 

1985

 

174,124

 

91.1

 

3,501

 

3,252

 

0.65

 

22.07

 

20.50

 

Lower Providence

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1000 Madison Avenue

 

1990

 

100,700

 

36.0

 

698

 

580

 

0.13

 

19.25

 

16.00

 

Plymouth Meeting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1150 Plymouth Meeting Mall

 

1970

 

167,748

 

100.0

 

2,960

 

2,514

 

0.55

 

17.65

 

14.99

 

 

23


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2005

 

 

 

 

 

 

 

Percentage

 

2005

 

2005

 

 

 

2005

 

Average

 

 

 

 

 

Net

 

Leased

 

Base

 

Effective

 

 

 

Average

 

Effective

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Rent

 

Percentage

 

Base Rent

 

Rent

 

 

 

Year

 

Area

 

12/31/05

 

($000’s)

 

($000’s)

 

of Total 2005

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

(c) (d)

 

Base Rent (%)

 

($) (c) (e)

 

($) (c) (f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Five Sentry Parkway East

 

1984

 

91,600

 

100.0

 

1,952

 

1,896

 

0.36

 

21.31

 

20.70

 

Five Sentry Parkway West

 

1984

 

38,400

 

69.8

 

709

 

691

 

0.13

 

26.45

 

25.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Pennsylvania Office

 

 

 

2,025,738

 

88.8

 

42,286

 

38,872

 

7.80

 

23.50

 

21.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONNECTICUT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fairfield County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greenwich

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

500 West Putnam Avenue

 

1973

 

121,250

 

99.1

 

3,347

 

3,125

 

0.62

 

27.85

 

26.01

 

Norwalk

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40 Richards Avenue

 

1985

 

145,487

 

69.9

 

2,429

 

2,107

 

0.45

 

23.89

 

20.72

 

Shelton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1000 Bridgeport Avenue

 

1986

 

133,000

 

88.1

 

2,069

 

1,681

 

0.38

 

17.66

 

14.35

 

Stamford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1266 East Main Street

 

1984

 

179,260

 

70.3

 

3,752

 

3,622

 

0.69

 

29.77

 

28.74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Connecticut Office

 

 

 

578,997

 

80.3

 

11,597

 

10,535

 

2.14

 

24.94

 

22.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DISTRICT OF COLUMBIA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1201 Connecticut Avenue, NW

 

1940

 

169,549

 

86.2

 

5,219

 

4,930

 

0.96

 

35.71

 

33.73

 

1400 L Street, NW

 

1987

 

159,000

 

87.3

 

3,347

 

3,182

 

0.62

 

24.11

 

22.92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total District of Columbia Office

 

 

 

328,549

 

86.7

 

8,566

 

8,112

 

1.58

 

30.06

 

28.47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MARYLAND

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prince George’s County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lanham

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4200 Parliament Place

 

1989

 

122,000

 

93.7

 

2,767

 

2,562

 

0.51

 

24.21

 

22.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Maryland Office

 

 

 

122,000

 

93.7

 

2,767

 

2,562

 

0.51

 

24.21

 

22.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COLORADO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arapahoe County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denver

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

400 South Colorado Boulevard

 

1983

 

125,415

 

87.9

 

1,710

 

1,379

 

0.32

 

15.51

 

12.51

 

 

24


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2005

 

 

 

 

 

 

 

Percentage

 

2005

 

2005

 

 

 

2005

 

Average

 

 

 

 

 

Net

 

Leased

 

Base

 

Effective

 

 

 

Average

 

Effective

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Rent

 

Percentage

 

Base Rent

 

Rent

 

 

 

Year

 

Area

 

12/31/05

 

($000’s)

 

($000’s)

 

of Total 2005

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

(c) (d)

 

Base Rent (%)

 

($) (c) (e)

 

($) (c) (f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Englewood

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9359 East Nichols Avenue

 

1997

 

72,610

 

100.0

 

779

 

642

 

0.14

 

10.73

 

8.84

 

5350 South Roslyn Street

 

1982

 

63,754

 

100.0

 

1,036

 

864

 

0.19

 

16.25

 

13.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boulder County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broomfield

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

105 South Technology Drive

 

1997

 

37,574

 

81.1

 

202

 

82

 

0.04

 

6.63

 

2.69

 

303 South Technology Drive-A

 

1997

 

34,454

 

100.0

 

270

 

193

 

0.05

 

7.84

 

5.60

 

303 South Technology Drive-B

 

1997

 

40,416

 

100.0

 

316

 

225

 

0.06

 

7.82

 

5.57

 

Louisville

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

248 Centennial Parkway

 

1996

 

39,266

 

100.0

 

305

 

168

 

0.06

 

7.77

 

4.28

 

1172 Century Drive

 

1996

 

49,566

 

100.0

 

384

 

211

 

0.07

 

7.75

 

4.26

 

285 Century Place

 

1997

 

69,145

 

100.0

 

761

 

711

 

0.14

 

11.01

 

10.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denver County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denver

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8181 East Tufts Avenue

 

2001

 

185,254

 

98.6

 

4,256

 

3,592

 

0.79

 

23.30

 

19.66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Douglas County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Centennial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5975 South Quebec Street (c)

 

1996

 

102,877

 

94.7

 

1,271

 

855

 

0.23

 

13.05

 

8.78

 

Englewood

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67 Inverness Drive East

 

1996

 

54,280

 

100.0

 

338

 

200

 

0.06

 

6.23

 

3.68

 

384 Inverness Parkway

 

1985

 

51,523

 

97.5

 

694

 

597

 

0.13

 

13.82

 

11.88

 

400 Inverness Parkway

 

1997

 

111,608

 

98.3

 

1,631

 

1,299

 

0.30

 

14.87

 

11.84

 

9777 Pyramid Court

 

1995

 

120,281

 

95.1

 

1,489

 

1,149

 

0.27

 

13.02

 

10.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

El Paso County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Colorado Springs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8415 Explorer

 

1998

 

47,368

 

97.1

 

547

 

511

 

0.10

 

11.89

 

11.11

 

1975 Research Parkway

 

1997

 

115,250

 

98.7

 

1,151

 

760

 

0.21

 

10.12

 

6.68

 

2375 Telstar Drive

 

1998

 

47,369

 

100.0

 

548

 

510

 

0.10

 

11.57

 

10.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jefferson County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lakewood

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

141 Union Boulevard

 

1985

 

63,600

 

96.3

 

1,155

 

998

 

0.21

 

18.86

 

16.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Colorado Office

 

 

 

1,431,610

 

96.9

 

18,843

 

14,946

 

3.47

 

13.59

 

10.78

 

 

25


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2005

 

 

 

 

 

 

 

Percentage

 

2005

 

2005

 

 

 

2005

 

Average

 

 

 

 

 

Net

 

Leased

 

Base

 

Effective

 

 

 

Average

 

Effective

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Rent

 

Percentage

 

Base Rent

 

Rent

 

 

 

Year

 

Area

 

12/31/05

 

($000’s)

 

($000’s)

 

of Total 2005

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

(c) (d)

 

Base Rent (%)

 

($) (c) (e)

 

($) (c) (f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CALIFORNIA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

795 Folsom Street

 

1977

 

183,445

 

85.3

 

4,358

 

3,455

 

0.80

 

27.85

 

22.08

 

760 Market Street

 

1908

 

267,446

 

78.5

 

7,397

 

6,936

 

1.37

 

35.23

 

33.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total California Office

 

 

 

450,891

 

81.3

 

11,755

 

10,391

 

2.17

 

32.08

 

28.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL OFFICE PROPERTIES

 

 

 

24,190,328

 

90.2

 

480,897

 

433,722

 

88.81

 

22.38

 

20.17

 

 

26


 

Office/Flex Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2005

 

 

 

 

 

 

 

Percentage

 

2005

 

2005

 

 

 

2005

 

Average

 

 

 

 

 

Net

 

Leased

 

Base

 

Effective

 

 

 

Average

 

Effective

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Rent

 

Percentage

 

Base Rent

 

Rent

 

 

 

Year

 

Area

 

12/31/05

 

($000’s)

 

($000’s)

 

of Total 2005

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

(c) (d)

 

Base Rent (%)

 

($) (c) (e)

 

($) (c) (f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW JERSEY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Burlington County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Burlington

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3 Terri Lane

 

1991

 

64,500

 

82.5

 

459

 

374

 

0.08

 

8.63

 

7.03

 

5 Terri Lane

 

1992

 

74,555

 

91.7

 

598

 

418

 

0.11

 

8.75

 

6.11

 

Moorestown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2 Commerce Drive

 

1986

 

49,000

 

76.3

 

256

 

231

 

0.05

 

6.85

 

6.18

 

101 Commerce Drive

 

1988

 

64,700

 

100.0

 

275

 

249

 

0.05

 

4.25

 

3.85

 

102 Commerce Drive

 

1987

 

38,400

 

87.5

 

175

 

146

 

0.03

 

5.21

 

4.35

 

201 Commerce Drive

 

1986

 

38,400

 

75.0

 

157

 

107

 

0.03

 

5.45

 

3.72

 

202 Commerce Drive

 

1988

 

51,200

 

100.0

 

303

 

233

 

0.06

 

5.92

 

4.55

 

1 Executive Drive

 

1989

 

20,570

 

81.1

 

156

 

100

 

0.03

 

9.35

 

5.99

 

2 Executive Drive

 

1988

 

60,800

 

73.3

 

339

 

290

 

0.06

 

7.61

 

6.51

 

101 Executive Drive

 

1990

 

29,355

 

90.5

 

269

 

251

 

0.05

 

10.13

 

9.45

 

102 Executive Drive

 

1990

 

64,000

 

100.0

 

399

 

358

 

0.07

 

6.23

 

5.59

 

225 Executive Drive

 

1990

 

50,600

 

100.0

 

378

 

330

 

0.07

 

7.47

 

6.52

 

97 Foster Road

 

1982

 

43,200

 

75.5

 

199

 

182

 

0.04

 

6.10

 

5.58

 

1507 Lancer Drive

 

1995

 

32,700

 

100.0

 

55

 

52

 

0.01

 

1.68

 

1.59

 

1510 Lancer Drive

 

1998

 

88,000

 

100.0

 

413

 

413

 

0.08

 

4.69

 

4.69

 

1245 North Church Street

 

1998

 

52,810

 

100.0

 

397

 

383

 

0.07

 

7.52

 

7.25

 

1247 North Church Street

 

1998

 

52,790

 

100.0

 

350

 

337

 

0.06

 

6.63

 

6.38

 

1256 North Church Street

 

1984

 

63,495

 

100.0

 

415

 

357

 

0.08

 

6.54

 

5.62

 

840 North Lenola Road

 

1995

 

38,300

 

100.0

 

326

 

270

 

0.06

 

8.51

 

7.05

 

844 North Lenola Road

 

1995

 

28,670

 

100.0

 

143

 

95

 

0.03

 

4.99

 

3.31

 

915 North Lenola Road

 

1998

 

52,488

 

100.0

 

296

 

224

 

0.05

 

5.64

 

4.27

 

2 Twosome Drive

 

2000

 

48,600

 

100.0

 

391

 

391

 

0.07

 

8.05

 

8.05

 

30 Twosome Drive

 

1997

 

39,675

 

75.8

 

191

 

173

 

0.04

 

6.35

 

5.75

 

31 Twosome Drive

 

1998

 

84,200

 

100.0

 

452

 

452

 

0.08

 

5.37

 

5.37

 

40 Twosome Drive

 

1996

 

40,265

 

86.1

 

261

 

207

 

0.05

 

7.53

 

5.97

 

41 Twosome Drive

 

1998

 

43,050

 

91.6

 

218

 

214

 

0.04

 

5.53

 

5.43

 

50 Twosome Drive

 

1997

 

34,075

 

100.0

 

265

 

249

 

0.05

 

7.78

 

7.31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gloucester County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West Deptford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1451 Metropolitan Drive

 

1996

 

21,600

 

100.0

 

148

 

148

 

0.03

 

6.85

 

6.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mercer County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hamilton Township

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Horizon Center Boulevard

 

1989

 

13,275

 

100.0

 

188

 

150

 

0.03

 

14.16

 

11.30

 

200 Horizon Drive

 

1991

 

45,770

 

100.0

 

591

 

537

 

0.11

 

12.91

 

11.73

 

300 Horizon Drive

 

1989

 

69,780

 

95.7

 

1,116

 

981

 

0.21

 

16.71

 

14.69

 

500 Horizon Drive

 

1990

 

41,205

 

100.0

 

610

 

577

 

0.11

 

14.80

 

14.00

 

 

27


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2005

 

 

 

 

 

 

 

Percentage

 

2005

 

2005

 

 

 

2005

 

Average

 

 

 

 

 

Net

 

Leased

 

Base

 

Effective

 

 

 

Average

 

Effective

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Rent

 

Percentage

 

Base Rent

 

Rent

 

 

 

Year

 

Area

 

12/31/05

 

($000’s)

 

($000’s)

 

of Total 2005

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

(c) (d)

 

Base Rent (%)

 

($) (c) (e)

 

($) (c) (f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Monmouth County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wall Township

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1325 Campus Parkway

 

1988

 

35,000

 

100.0

 

495

 

256

 

0.09

 

14.14

 

7.31

 

1340 Campus Parkway

 

1992

 

72,502

 

100.0

 

613

 

484

 

0.11

 

8.45

 

6.68

 

1345 Campus Parkway

 

1995

 

76,300

 

100.0

 

825

 

633

 

0.15

 

10.81

 

8.30

 

1433 Highway 34

 

1985

 

69,020

 

59.3

 

578

 

499

 

0.11

 

14.12

 

12.19

 

1320 Wyckoff Avenue

 

1986

 

20,336

 

100.0

 

178

 

168

 

0.03

 

8.75

 

8.26

 

1324 Wyckoff Avenue

 

1987

 

21,168

 

100.0

 

221

 

191

 

0.04

 

10.44

 

9.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Passaic County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totowa

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Center Court

 

1999

 

38,961

 

100.0

 

534

 

415

 

0.10

 

13.71

 

10.65

 

2 Center Court

 

1998

 

30,600

 

55.5

 

267

 

220

 

0.05

 

15.72

 

12.95

 

11 Commerce Way

 

1989

 

47,025

 

100.0

 

547

 

487

 

0.10

 

11.63

 

10.36

 

20 Commerce Way

 

1992

 

42,540

 

85.9

 

473

 

460

 

0.09

 

12.94

 

12.59

 

29 Commerce Way

 

1990

 

48,930

 

100.0

 

659

 

535

 

0.12

 

13.47

 

10.93

 

40 Commerce Way

 

1987

 

50,576

 

100.0

 

684

 

640

 

0.13

 

13.52

 

12.65

 

45 Commerce Way

 

1992

 

51,207

 

64.5

 

302

 

252

 

0.06

 

9.14

 

7.63

 

60 Commerce Way

 

1988

 

50,333

 

100.0

 

645

 

562

 

0.12

 

12.81

 

11.17

 

80 Commerce Way

 

1996

 

22,500

 

88.7

 

303

 

268

 

0.06

 

15.18

 

13.43

 

100 Commerce Way

 

1996

 

24,600

 

100.0

 

331

 

293

 

0.06

 

13.46

 

11.91

 

120 Commerce Way

 

1994

 

9,024

 

100.0

 

109

 

103

 

0.02

 

12.08

 

11.41

 

140 Commerce Way

 

1994

 

26,881

 

99.5

 

324

 

307

 

0.06

 

12.11

 

11.48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total New Jersey Office/Flex

 

 

 

2,277,531

 

92.7

 

18,877

 

16,252

 

3.49

 

8.95

 

7.70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW YORK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Westchester County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elmsford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11 Clearbrook Road

 

1974

 

31,800

 

100.0

 

441

 

420

 

0.08

 

13.87

 

13.21

 

75 Clearbrook Road

 

1990

 

32,720

 

100.0

 

730

 

730

 

0.13

 

22.31

 

22.31

 

125 Clearbrook Road

 

2002

 

33,000

 

100.0

 

712

 

592

 

0.13

 

21.58

 

17.94

 

150 Clearbrook Road

 

1975

 

74,900

 

84.9

 

893

 

829

 

0.16

 

14.04

 

13.04

 

175 Clearbrook Road

 

1973

 

98,900

 

100.0

 

1,559

 

1,425

 

0.29

 

15.76

 

14.41

 

200 Clearbrook Road

 

1974

 

94,000

 

99.8

 

1,221

 

1,120

 

0.23

 

13.02

 

11.94

 

250 Clearbrook Road

 

1973

 

155,000

 

97.3

 

1,380

 

1,250

 

0.25

 

9.15

 

8.29

 

50 Executive Boulevard

 

1969

 

45,200

 

95.2

 

405

 

389

 

0.07

 

9.41

 

9.04

 

77 Executive Boulevard

 

1977

 

13,000

 

100.0

 

220

 

208

 

0.04

 

16.92

 

16.00

 

85 Executive Boulevard

 

1968

 

31,000

 

50.4

 

243

 

230

 

0.04

 

15.55

 

14.72

 

300 Executive Boulevard

 

1970

 

60,000

 

100.0

 

581

 

550

 

0.11

 

9.68

 

9.17

 

350 Executive Boulevard

 

1970

 

15,400

 

98.8

 

296

 

272

 

0.05

 

19.45

 

17.88

 

399 Executive Boulevard

 

1962

 

80,000

 

100.0

 

1,024

 

997

 

0.19

 

12.80

 

12.46

 

400 Executive Boulevard

 

1970

 

42,200

 

100.0

 

771

 

688

 

0.14

 

18.27

 

16.30

 

500 Executive Boulevard

 

1970

 

41,600

 

100.0

 

684

 

622

 

0.13

 

16.44

 

14.95

 

 

28


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2005

 

 

 

 

 

 

 

Percentage

 

2005

 

2005

 

 

 

2005

 

Average

 

 

 

 

 

Net

 

Leased

 

Base

 

Effective

 

 

 

Average

 

Effective

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Rent

 

Percentage

 

Base Rent

 

Rent

 

 

 

Year

 

Area

 

12/31/05

 

($000’s)

 

($000’s)

 

of Total 2005

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

(c) (d)

 

Base Rent (%)

 

($) (c) (e)

 

($) (c) (f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

525 Executive Boulevard

 

1972

 

61,700

 

83.6

 

811

 

722

 

0.15

 

15.72

 

14.00

 

1 Westchester Plaza

 

1967

 

25,000

 

100.0

 

327

 

312

 

0.06

 

13.08

 

12.48

 

2 Westchester Plaza

 

1968

 

25,000

 

100.0

 

492

 

483

 

0.09

 

19.68

 

19.32

 

3 Westchester Plaza

 

1969

 

93,500

 

100.0

 

730

 

636

 

0.13

 

7.81

 

6.80

 

4 Westchester Plaza

 

1969

 

44,700

 

99.8

 

643

 

597

 

0.12

 

14.41

 

13.38

 

5 Westchester Plaza

 

1969

 

20,000

 

100.0

 

327

 

289

 

0.06

 

16.35

 

14.45

 

6 Westchester Plaza

 

1968

 

20,000

 

100.0

 

326

 

304

 

0.06

 

16.30

 

15.20

 

7 Westchester Plaza

 

1972

 

46,200

 

100.0

 

721

 

708

 

0.13

 

15.61

 

15.32

 

8 Westchester Plaza

 

1971

 

67,200

 

100.0

 

904

 

815

 

0.17

 

13.45

 

12.13

 

Hawthorne

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

200 Saw Mill River Road

 

1965

 

51,100

 

88.8

 

607

 

553

 

0.11

 

13.38

 

12.19

 

4 Skyline Drive

 

1987

 

80,600

 

92.2

 

1,378

 

1,245

 

0.25

 

18.54

 

16.75

 

5 Skyline Drive

 

1980

 

124,022

 

100.0

 

1,580

 

1,531

 

0.30

 

12.74

 

12.34

 

6 Skyline Drive

 

1980

 

44,155

 

100.0

 

394

 

394

 

0.07

 

8.92

 

8.92

 

8 Skyline Drive

 

1985

 

50,000

 

98.7

 

897

 

349

 

0.17

 

18.18

 

7.07

 

10 Skyline Drive

 

1985

 

20,000

 

49.4

 

164

 

157

 

0.03

 

16.60

 

15.89

 

11 Skyline Drive

 

1989

 

45,000

 

100.0

 

803

 

760

 

0.15

 

17.84

 

16.89

 

12 Skyline Drive

 

1999

 

46,850

 

85.1

 

600

 

371

 

0.11

 

15.05

 

9.31

 

15 Skyline Drive

 

1989

 

55,000

 

54.7

 

862

 

806

 

0.16

 

28.65

 

26.79

 

Yonkers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Corporate Boulevard

 

1987

 

78,000

 

98.2

 

1,493

 

1,405

 

0.28

 

19.49

 

18.34

 

200 Corporate Boulevard South

 

1990

 

84,000

 

99.8

 

1,370

 

1,340

 

0.25

 

16.34

 

15.98

 

4 Executive Plaza

 

1986

 

80,000

 

99.0

 

1,036

 

861

 

0.19

 

13.08

 

10.87

 

6 Executive Plaza

 

1987

 

80,000

 

98.0

 

1,174

 

1,118

 

0.22

 

14.97

 

14.26

 

1 Odell Plaza

 

1980

 

106,000

 

99.9

 

1,470

 

1,378

 

0.27

 

13.88

 

13.01

 

3 Odell Plaza

 

1984

 

71,065

 

100.0

 

1,597

 

1,481

 

0.29

 

22.47

 

20.84

 

5 Odell Plaza

 

1983

 

38,400

 

99.6

 

656

 

609

 

0.12

 

17.15

 

15.92

 

7 Odell Plaza

 

1984

 

42,600

 

99.6

 

714

 

686

 

0.13

 

16.83

 

16.17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total New York Office/Flex

 

 

 

2,348,812

 

95.6

 

33,236

 

30,232

 

6.11

 

14.80

 

13.46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONNECTICUT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fairfield County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stamford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

419 West Avenue

 

1986

 

88,000

 

100.0

 

1,161

 

992

 

0.21

 

13.19

 

11.27

 

500 West Avenue

 

1988

 

25,000

 

100.0

 

463

 

419

 

0.09

 

18.52

 

16.76

 

550 West Avenue

 

1990

 

54,000

 

100.0

 

884

 

879

 

0.16

 

16.37

 

16.28

 

600 West Avenue

 

1999

 

66,000

 

100.0

 

804

 

767

 

0.15

 

12.18

 

11.62

 

650 West Avenue

 

1998

 

40,000

 

100.0

 

555

 

424

 

0.10

 

13.88

 

10.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Connecticut Office/Flex

 

 

 

273,000

 

100.0

 

3,867

 

3,481

 

0.71

 

14.16

 

12.75

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL OFFICE/FLEX PROPERTIES

 

 

4,899,343

 

94.5

 

55,980

 

49,965

 

10.31

 

12.09

 

10.79

 

 

29


 

Industrial/Warehouse, Retail and Land Lease Properties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2005

 

 

 

 

 

 

 

Percentage

 

2005

 

2005

 

 

 

2005

 

Average

 

 

 

 

 

Net

 

Leased

 

Base

 

Effective

 

 

 

Average

 

Effective

 

 

 

 

 

Rentable

 

as of

 

Rent

 

Rent

 

Percentage

 

Base Rent

 

Rent

 

 

 

Year

 

Area

 

12/31/05

 

($000’s)

 

($000’s)

 

of Total 2005

 

Per Sq. Ft.

 

Per Sq. Ft.

 

Property Location

 

Built

 

(Sq. Ft.)

 

(%) (a)

 

(b) (c)

 

(c) (d)

 

Base Rent (%)

 

($) (c) (e)

 

($) (c) (f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW YORK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Westchester County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elmsford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Warehouse Lane

 

1957

 

6,600

 

100.0

 

81

 

79

 

0.01

 

12.27

 

11.97

 

2 Warehouse Lane

 

1957

 

10,900

 

100.0

 

166

 

138

 

0.03

 

15.23

 

12.66

 

3 Warehouse Lane

 

1957

 

77,200

 

100.0

 

324

 

293

 

0.06

 

4.20

 

3.80

 

4 Warehouse Lane

 

1957

 

195,500

 

96.7

 

2,166

 

1,963

 

0.40

 

11.46

 

10.38

 

5 Warehouse Lane

 

1957

 

75,100

 

97.1

 

989

 

887

 

0.18

 

13.56

 

12.16

 

6 Warehouse Lane

 

1982

 

22,100

 

100.0

 

512

 

508

 

0.09

 

23.17

 

22.99

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Industrial/Warehouse Properties

 

 

 

387,400

 

97.8

 

4,238

 

3,868

 

0.77

 

11.19

 

10.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Westchester County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tarrytown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

230 White Plains Road

 

1984

 

9,300

 

100.0

 

195

 

183

 

0.04

 

20.97

 

19.68

 

Yonkers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2 Executive Boulevard

 

1986

 

8,000

 

100.0

 

108

 

108

 

0.02

 

13.50

 

13.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Retail Properties

 

 

 

17,300

 

100.0

 

303

 

291

 

0.06

 

17.51

 

16.82

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Westchester County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elmsford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

700 Executive Boulevard

 

—

 

—

 

—

 

114

 

114

 

0.02

 

—

 

—

 

Yonkers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Enterprise Boulevard

 

—

 

—

 

—

 

170

 

169

 

0.03

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Land Leases

 

 

 

—

 

—

 

284

 

283

 

0.05

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL PROPERTIES

 

 

 

29,494,371

 

91.0

 

541,702

 

488,129

 

100.00

 

20.45

 

18.40

 

 

(a)          Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future (including leases with commencement dates substantially in the future consisting of 15,125 square feet scheduled to commence in 2009 and 10,205 square feet scheduled to commence in 2011), and leases expiring December 31, 2005 aggregating 311,623 square feet (representing 1.1 percent of the Operating Partnership’s total net rentable square footage) for which no new leases were signed.

(b)         Total base rent for 2005, determined in accordance with generally accepted accounting principles (“GAAP”). Substantially all of the leases provide for annual base rents plus recoveries and escalation charges based upon the tenant’s proportionate share of and/or increases in real estate taxes and certain operating costs, as defined, and the pass through of charges for electrical usage.

(c)          Excludes space leased by the Operating Partnership.

(d)         Total base rent for 2005 minus total 2005 amortization of tenant improvements, leasing commissions and other concessions and costs, determined in accordance with GAAP.

(e)          Base rent for 2005 divided by net rentable square feet leased at December 31, 2005. For those properties acquired during 2005, amounts are annualized, as per Note g.

(f)            Effective rent for 2005 divided by net rentable square feet leased at December 31, 2005. For those properties acquired during 2005, amounts are annualized, as described in Note g.

(g)         As this property was acquired by the Operating Partnership during 2005, the amounts represented in 2005 base rent and 2005 effective rent reflect only that portion of the year during which the Operating Partnership owned the property. Accordingly, these amounts may not be indicative of the property’s full year results. For comparison purposes, the amounts represented in 2005 average base rent per sq. ft. and 2005 average effective rent per sq. ft. for this property have been calculated by taking 2005 base rent and 2005 effective rent for such property and annualizing these partial-year results, dividing such annualized amounts by the net rentable square feet leased at December 31, 2005. These annualized per square foot amounts may not be indicative of the property’s results had the Operating Partnership owned the property for the entirety of 2005.

 

30


 

PERCENTAGE LEASED

 

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

 

 

 

Percentage of

 

December 31,

 

Square Feet Leased (%) (a)

 

2005

 

91.0

 

 

 

 

 

2004 (b)

 

91.2

 

 

 

 

 

2003

 

91.5

 

 

 

 

 

2002

 

92.3

 

 

 

 

 

2001

 

94.6

 

 

(a)          Percentage of square-feet leased includes all leases in effect as of the period end date, some of which have commencement dates in the future (including, at December 31, 2005, leases with commencement dates substantially in the future consisting of 15,125 square feet scheduled to commence in 2009 and 10,205 square feet scheduled to commence in 2011), and leases that expire at the period end date.

(b)         Excluded from percentage leased at December 31, 2004 is a non-strategic, non-core 318,224 square foot property acquired through a deed in lieu of foreclosure, which was 12.7 percent leased at December 31, 2004 and subsequently sold on February 4, 2005.

 

31


 

SIGNIFICANT TENANTS

 

The following table sets forth a schedule of the Operating Partnership’s 50 largest tenants for the Consolidated Properties as of December 31, 2005 based upon annualized base rental revenue:

 

 

 

 

 

 

 

Percentage of

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating

 

 

 

Percentage

 

 

 

 

 

 

 

Annualized

 

Partnership

 

Square

 

Total Operating

 

Year of

 

 

 

Number of

 

Base Rental

 

Annualized Base

 

Feet

 

Partnership

 

Lease

 

 

 

Properties

 

Revenue ($ ) (a)

 

Rental Revenue (%)

 

Leased

 

Leased Sq. Ft. (%)

 

Expiration

 

New Cingular Wireless PCS, LLC

 

3

 

11,274,462

 

1.9

 

456,190

 

1.8

 

2014

(b)

Morgan Stanley D.W., Inc.

 

5

 

9,375,915

 

1.6

 

381,576

 

1.5

 

2013

(c)

Credit Suisse First Boston

 

1

 

9,196,912

 

1.5

 

271,953

 

1.0

 

2012

(d)

Merrill Lynch

 

1

 

8,327,484

 

1.5

 

489,564

 

1.9

 

2012

(e)

Keystone Mercy Health Plan

 

2

 

7,790,929

 

1.4

 

303,149

 

1.1

 

2015

 

National Union Fire Insurance

 

1

 

7,711,023

 

1.4

 

317,799

 

1.2

 

2012

 

Prentice-Hall, Inc.

 

1

 

7,694,097

 

1.4

 

474,801

 

1.8

 

2014

 

Forest Laboratories Inc.

 

2

 

6,961,107

 

1.2

 

202,857

 

0.8

 

2017

(f)

Cendant Operations Inc.

 

2

 

6,839,418

 

1.2

 

296,934

 

1.1

 

2011

(g)

Allstate Insurance Company

 

10

 

6,076,187

 

1.1

 

264,550

 

1.0

 

2010

(h)

Toys ‘R’ Us – NJ, Inc.

 

1

 

6,072,651

 

1.1

 

242,518

 

0.9

 

2012

 

American Institute of Certified Public Accountants

 

1

 

5,817,181

 

1.0

 

249,768

 

0.9

 

2012

 

TD Waterhouse Investor Services, Inc.

 

1

 

5,572,716

 

1.0

 

184,222

 

0.7

 

2015

 

IBM Corporation

 

3

 

5,529,841

 

1.0

 

310,263

 

1.2

 

2012

(i)

Garban LLC

 

1

 

5,495,470

 

1.0

 

148,025

 

0.6

 

2017

 

United States of America-GSA

 

7

 

5,384,893

 

1.0

 

170,920

 

0.6

 

2015

(j)

KPMG, LLP

 

3

 

4,784,243

 

0.9

 

181,025

 

0.7

 

2012

(k)

AT&T Corp.

 

3

 

4,691,911

 

0.8

 

311,967

 

1.2

 

2014

(l)

National Financial Services

 

1

 

4,346,765

 

0.8

 

112,964

 

0.4

 

2012

 

Bank of Tokyo-Mitsubishi Ltd.

 

1

 

4,228,795

 

0.8

 

137,076

 

0.5

 

2009

 

Vonage America, Inc.

 

1

 

3,830,750

 

0.7

 

350,000

 

1.3

 

2017

 

Citigroup Global Markets, Inc.

 

5

 

3,455,193

 

0.6

 

132,475

 

0.5

 

2016

(m)

Lehman Brothers Holdings, Inc.

 

1

 

3,420,667

 

0.6

 

207,300

 

0.8

 

2010

 

SSB Realty, LLC

 

1

 

3,321,051

 

0.6

 

114,519

 

0.4

 

2009

 

URS Greiner Woodward-Clyde

 

1

 

3,252,691

 

0.6

 

120,550

 

0.5

 

2011

 

Dow Jones & Company Inc.

 

3

 

3,168,843

 

0.6

 

96,873

 

0.4

 

2012

(n)

Montefiore Medical Center

 

5

 

3,155,950

 

0.6

 

147,457

 

0.6

 

2019

(o)

Sankyo Pharma Inc.

 

2

 

2,843,876

 

0.5

 

90,366

 

0.3

 

2012

(p)

SunAmerica Asset Management

 

1

 

2,680,409

 

0.5

 

69,621

 

0.3

 

2018

 

American Home Assurance Co.

 

2

 

2,679,704

 

0.5

 

131,174

 

0.5

 

2019

(q)

Regus Business Centre Corp.

 

3

 

2,650,376

 

0.5

 

107,608

 

0.4

 

2011

 

Sumitomo Mitsui Banking Corp.

 

2

 

2,580,155

 

0.5

 

71,153

 

0.3

 

2016

 

United States Life Insurance Co.

 

1

 

2,520,000

 

0.5

 

180,000

 

0.7

 

2013

 

New Jersey Turnpike Authority

 

1

 

2,455,463

 

0.4

 

100,223

 

0.4

 

2016

 

Barr Laboratories Inc.

 

2

 

2,450,087

 

0.4

 

109,510

 

0.4

 

2015

(r)

BT Harborside

 

1

 

2,354,850

 

0.4

 

90,000

 

0.3

 

2007

 

Moody’s Investors Service

 

1

 

2,290,374

 

0.4

 

79,537

 

0.3

 

2010

(s)

Merck & Company Inc.

 

3

 

2,289,288

 

0.4

 

100,146

 

0.4

 

2008

(t)

Movado Group, Inc.

 

1

 

2,275,175

 

0.4

 

90,050

 

0.3

 

2013

 

Lonza, Inc.

 

1

 

2,236,200

 

0.4

 

89,448

 

0.3

 

2007

 

Computer Sciences Corporation

 

3

 

2,180,913

 

0.4

 

109,825

 

0.4

 

2007

(u)

Deloitte & Touche USA LLP

 

1

 

2,171,275

 

0.4

 

86,851

 

0.3

 

2007

 

High Point Safety & Insurance

 

1

 

2,095,629

 

0.4

 

88,237

 

0.3

 

2015

 

Nextel of New York Inc.

 

2

 

2,093,440

 

0.4

 

97,436

 

0.4

 

2014

(v)

Pfizer, Inc.

 

1

 

2,072,046

 

0.4

 

89,912

 

0.3

 

2007

 

Xerox Corporation

 

4

 

2,057,047

 

0.4

 

83,789

 

0.3

 

2010

(w)

UBS Financial Services, Inc.

 

4

 

2,057,007

 

0.4

 

76,915

 

0.3

 

2016

(x)

Mellon HR Solutions LLC

 

1

 

2,044,590

 

0.4

 

68,153

 

0.3

 

2006

 

GAB Robins North America, Inc.

 

2

 

2,028,512

 

0.4

 

84,649

 

0.3

 

2009

(y)

PR Newswire Association, Inc.

 

1

 

1,912,908

 

0.3

 

56,262

 

0.2

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

 

 

209,796,469

 

37.6

 

8,828,160

 

33.4

 

 

 

 

See footnotes on subsequent page.

 

32


 

Significant Tenants Footnotes

 

(a)          Annualized base rental revenue is based on actual December 2005 billings times 12. For leases whose rent commences after January 1, 2006, annualized base rental revenue is based on the first full month’s billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above.

(b)         383,805 square feet expire in 2013; 72,385 square feet expire in 2014.

(c)          19,500 square feet expire in 2008; 7,000 square feet expire in 2009; 48,906 square feet expire in 2010; 306,170 square feet expire in 2013.

(d)         190,000 feet expire in 2011; 81,953 square feet expire in 2012.

(e)          311,053 square feet expire in 2007; 178,511 square feet expire in 2012.

(f)            22,785 square feet expire in 2010; 180,072 square feet expire in 2017.

(g)         150,951 square feet expire in 2008; 145,983 square feet expire in 2011.

(h)         22,444 square feet expire in 2006; 93,541 square feet expire in 2007; 59,562 square feet expire in 2008; 22,185 square feet expire in 2009; 66,818 square feet expire in 2010.

(i)             61,864 square feet expire in 2010; 248,399 square feet expire in 2012.

(j)             6,610 square feet expire in 2006; 4,950 square feet expire in 2007; 19,702 square feet expire in 2008; 4,879 square feet expire in 2014; 134,779 square feet expire in 2015.

(k)          57,204 square feet expire in 2007; 46,440 square feet expire in 2009; 77,381 square feet expire in 2012.

(l)             4,786 square feet expire in 2007; 32,181 square feet expire in 2009; 275,000 square feet expire in 2014.

(m)       19,668 square feet expire in 2007; 59,711 square feet expire in 2009; 26,834 square feet expire in 2014; 26,262 square feet expire in 2016.

(n)         4,561 square feet expire in 2006; 92,312 square feet expire in 2012.

(o)         19,000 square feet expire in 2007; 48,542 square feet expire in 2009; 5,850 square feet expire in 2014;  3,000 square feet expire in 2016; 71,065 square feet expire in 2019.

(p)         5,315 square feet expire in 2011; 85,051 square feet expire in 2012.

(q)         14,056 square feet expire in 2008; 117,118 square feet expire in 2019.

(r)            20,000 square feet expire in 2007; 89,510 square feet expire in 2015.

(s)          43,344 square feet expire in 2009; 36,193 square feet expire in 2010.

(t)            97,396 square feet expire in 2006; 2,750 square feet expire in 2008.

(u)         82,850 square feet expire in 2006; 26,975 square feet expire in 2007.

(v)         62,436 square feet expire in 2010; 35,000 square feet expire in 2014.

(w)       34,901 square feet expire in 2006; 2,875 square feet expire in 2007; 1,500 square feet expire in 2008; 44,513 square feet expire in 2010.

(x)           3,665 square feet expire in 2006; 21,554 square feet expire in 2010; 17,383 square feet expire in 2013; 34,313 square feet expire in 2016.

(y)         75,049 square feet expire in 2008; 9,600 square feet expire in 2009.

 

33


 

SCHEDULE OF LEASE EXPIRATIONS: ALL CONSOLIDATED PROPERTIES

 

The following table sets forth a schedule of lease expirations for the total of the Operating Partnership’s office, office/flex, industrial/warehouse and stand-alone retail properties included in the Consolidated Properties beginning January 1, 2006, assuming that none of the tenants exercise renewal or termination options:

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual

 

 

 

 

 

 

 

 

 

Percentage Of

 

 

 

Rent Per Net

 

 

 

 

 

 

 

Net Rentable

 

Total Leased

 

Annualized

 

Rentable

 

Percentage Of

 

 

 

 

 

Area Subject

 

Square Feet

 

Base Rental

 

Square Foot

 

Annual Base

 

 

 

Number Of

 

To Expiring

 

Represented

 

Revenue Under

 

Represented

 

Rent Under

 

Year Of

 

Leases

 

Leases

 

By Expiring

 

Expiring

 

By Expiring

 

Expiring

 

Expiration

 

Expiring (a)

 

(Sq. Ft.)

 

Leases (%)

 

Leases ($) (b)

 

Leases ($)

 

Leases (%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2006 (c)

 

400

 

2,005,042

 

7.6

 

44,391,023

 

22.14

 

7.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2007

 

391

 

2,603,375

 

9.9

 

52,885,133

 

20.31

 

9.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2008

 

417

 

3,058,780

 

11.6

 

58,917,395

 

19.26

 

10.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

347

 

2,385,673

 

9.0

 

51,050,483

 

21.40

 

9.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2010

 

337

 

2,811,274

 

10.6

 

55,703,986

 

19.81

 

10.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011

 

256

 

3,063,930

 

11.6

 

66,227,673

 

21.62

 

11.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

146

 

2,250,372

 

8.5

 

50,700,147

 

22.53

 

9.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

105

 

2,245,910

 

8.5

 

49,011,976

 

21.82

 

8.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

 

53

 

1,279,798

 

4.8

 

28,744,046

 

22.46

 

5.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

56

 

2,338,945

 

8.9

 

48,649,113

 

20.80

 

8.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

34

 

719,206

 

2.7

 

13,992,211

 

19.46

 

2.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017 and thereafter

 

44

 

1,659,844

 

6.3

 

37,142,228

 

22.38

 

6.7

 

Totals/Weighted Average

 

2,586

 

26,422,149

(d)

100.0

 

557,415,414

 

21.10

 

100.0

 

 

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

(b)         Annualized base rental revenue is based on actual December 2005 billings times 12. For leases whose rent commences after January 1, 2006, annualized base rental revenue is based on the first full month’s billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above.

(c)          Includes leases expiring December 31, 2005 aggregating 306,733 square feet and representing annualized rent of $4,688,871 for which no new leases were signed.

(d)         Reconciliation to the Operating Partnership’s total net rentable square footage is as follows:

 

 

 

Square Feet

 

Square footage leased to commercial tenants

 

26,422,149

 

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

 

427,109

 

Square footage unleased

 

2,645,113

 

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

 

29,494,371

 

 

34


 

SCHEDULE OF LEASE EXPIRATIONS: OFFICE PROPERTIES

 

The following table sets forth a schedule of lease expirations for the office properties beginning January 1, 2006, assuming that none of the tenants exercise renewal or termination options:

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual

 

 

 

 

 

 

 

 

 

Percentage Of

 

 

 

Rent Per Net

 

 

 

 

 

 

 

Net Rentable

 

Total Leased

 

Annualized

 

Rentable

 

Percentage Of

 

 

 

 

 

Area Subject

 

Square Feet

 

Base Rental

 

Square Foot

 

Annual Base

 

 

 

Number Of

 

To Expiring

 

Represented By

 

Revenue Under

 

Represented By

 

Rent Under

 

Year Of

 

Leases

 

Leases

 

Expiring

 

Expiring

 

Expiring

 

Expiring

 

Expiration

 

Expiring (a)

 

(Sq. Ft.)

 

Leases (%)

 

Leases ($) (b)

 

Leases ($)

 

Leases (%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2006 (c)

 

341

 

1,663,997

 

7.7

 

39,787,414

 

23.91

 

8.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2007

 

316

 

1,936,407

 

9.0

 

44,519,145

 

22.99

 

9.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2008

 

331

 

2,182,701

 

10.2

 

50,027,179

 

22.92

 

10.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

285

 

1,854,119

 

8.7

 

44,043,432

 

23.75

 

8.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2010

 

262

 

1,992,300

 

9.3

 

44,611,712

 

22.39

 

9.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011

 

210

 

2,547,985

 

11.9

 

60,496,453

 

23.74

 

12.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

111

 

1,902,057

 

8.9

 

45,889,698

 

24.13

 

9.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

82

 

1,971,356

 

9.2

 

44,958,470

 

22.81

 

9.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

 

43

 

1,170,339

 

5.5

 

27,046,621

 

23.11

 

5.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

43

 

2,176,794

 

10.2

 

46,681,350

 

21.45

 

9.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

25

 

507,107

 

2.4

 

11,441,170

 

22.56

 

2.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017 and thereafter

 

37

 

1,503,779

 

7.0

 

35,035,878

 

23.30

 

7.1

 

Totals/Weighted Average

 

2,086

 

21,408,941

 

100.0

 

494,538,522

 

23.10

 

100.0

 

 

(a)          Includes office tenants only. Excludes leases for amenity, retail, parking and month-to-month tenants. Some tenants have multiple leases.

(b)         Annualized base rental revenue is based on actual December 2005 billings times 12. For leases whose rent commences after January 1, 2006, annualized base rental revenue is based on the first full month’s billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above.

(c)          Includes leases expiring December 31, 2005 aggregating 240,688 square feet and representing annualized rent of $3,791,513 for which no new leases were signed.

 

35


 

SCHEDULE OF LEASE EXPIRATIONS: OFFICE/FLEX PROPERTIES

 

The following table sets forth a schedule of lease expirations for the office/flex properties beginning January 1, 2006, assuming that none of the tenants exercise renewal or termination options:

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual

 

 

 

 

 

 

 

 

 

Percentage Of

 

 

 

Rent Per Net

 

 

 

 

 

 

 

Net Rentable

 

Total Leased

 

Annualized

 

Rentable

 

Percentage Of

 

 

 

 

 

Area Subject

 

Square Feet

 

Base Rental

 

Square Foot

 

Annual Base

 

 

 

Number Of

 

To Expiring

 

Represented By

 

Revenue Under

 

Represented

 

Rent Under

 

Year Of

 

Leases

 

Leases

 

Expiring

 

Expiring

 

By Expiring

 

Expiring

 

Expiration

 

Expiring (a)

 

(Sq. Ft.)

 

Leases (%)

 

Leases ($) (b)

 

Leases ($)

 

Leases (%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2006 (c)

 

59

 

341,045

 

7.3

 

4,603,609

 

13.50

 

7.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2007

 

72

 

654,318

 

14.2

 

8,147,033

 

12.45

 

13.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2008

 

83

 

784,710

 

17.0

 

8,417,367

 

10.73

 

14.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

56

 

473,271

 

10.3

 

6,023,326

 

12.73

 

10.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2010

 

74

 

790,974

 

17.1

 

10,798,274

 

13.65

 

18.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011

 

45

 

508,345

 

11.0

 

5,640,020

 

11.09

 

9.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

35

 

348,315

 

7.5

 

4,810,449

 

13.81

 

8.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

16

 

219,318

 

4.8

 

3,366,333

 

15.35

 

5.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

 

10

 

109,459

 

2.4

 

1,697,425

 

15.51

 

2.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

13

 

162,151

 

3.5

 

1,967,763

 

12.14

 

3.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

7

 

77,017

 

1.7

 

1,132,680

 

14.71

 

1.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017 and thereafter

 

6

 

148,065

 

3.2

 

1,881,350

 

12.71

 

3.2

 

Totals/Weighted Average

 

476

 

4,616,988

 

100.0

 

58,485,629

 

12.67

 

100.0

 

 

(a)          Includes office/flex tenants only. Excludes leases for amenity, retail, parking and month-to-month tenants. Some tenants have multiple leases.

(b)         Annualized base rental revenue is based on actual December 2005 billings times 12. For leases whose rent commences after January 1, 2006, annualized base rental revenue is based on the first full month’s billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above.

(c)          Includes leases expiring December 31, 2005 aggregating 66,045 square feet and representing annualized rent of $897,358 for which no new leases were signed.

 

36


 

SCHEDULE OF LEASE EXPIRATIONS: INDUSTRIAL/WAREHOUSE PROPERTIES

 

The following table sets forth a schedule of lease expirations for the industrial/warehouse properties beginning January 1, 2006, assuming that none of the tenants exercise renewal or termination options:

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual

 

 

 

 

 

 

 

 

 

Percentage Of

 

 

 

Rent Per Net

 

 

 

 

 

 

 

Net Rentable

 

Total Leased

 

Annualized

 

Rentable

 

Percentage Of

 

 

 

 

 

Area Subject

 

Square Feet

 

Base Rental

 

Square Foot

 

Annual Base

 

 

 

Number Of

 

To Expiring

 

Represented By

 

Revenue Under

 

Represented

 

Rent Under

 

Year Of

 

Leases

 

Leases

 

Expiring

 

Expiring

 

By Expiring

 

Expiring

 

Expiration

 

Expiring (a)

 

(Sq. Ft.)

 

Leases (%)

 

Leases ($) (b)

 

Leases ($)

 

Leases (%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2007

 

3

 

12,650

 

3.3

 

218,955

 

17.31

 

5.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2008

 

3

 

91,369

 

24.1

 

472,849

 

5.18

 

11.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

5

 

48,983

 

12.9

 

788,725

 

16.10

 

19.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2010

 

1

 

28,000

 

7.4

 

294,000

 

10.50

 

7.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011

 

1

 

7,600

 

2.0

 

91,200

 

12.00

 

2.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

7

 

55,236

 

14.6

 

687,173

 

12.44

 

17.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016

 

2

 

135,082

 

35.7

 

1,418,361

 

10.50

 

35.7

 

Totals/Weighted Average

 

22

 

378,920

 

100.0

 

3,971,263

 

10.48

 

100.0

 

 

(a)          Includes industrial/warehouse tenants only. Excludes leases for amenity, retail, parking and month-to-month industrial/warehouse tenants. Some tenants have multiple leases.

(b)         Annualized base rental revenue is based on actual December 2005 billings times 12. For leases whose rent commences after January 1, 2006, annualized base rental revenue is based on the first full month’s billing times 12. As annualized base rental revenue is not derived from historical GAAP results, the historical results may differ from those set forth above.

 

SCHEDULE OF LEASE EXPIRATIONS: STAND-ALONE RETAIL PROPERTIES

 

The following table sets forth a schedule of lease expirations for the stand-alone retail properties beginning January 1, 2006, assuming that none of the tenants exercise renewal or termination options:

 

 

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual

 

 

 

 

 

 

 

 

 

Percentage Of

 

 

 

Rent Per Net

 

 

 

 

 

 

 

Net Rentable

 

Total Leased

 

Annualized

 

Rentable

 

Percentage Of

 

 

 

 

 

Area Subject

 

Square Feet

 

Base Rental

 

Square Foot

 

Annual Base

 

 

 

Number Of

 

To Expiring

 

Represented By

 

Revenue Under

 

Represented

 

Rent Under

 

Year Of

 

Leases

 

Leases

 

Expiring

 

Expiring

 

By Expiring

 

Expiring

 

Expiration

 

Expiring (a)

 

(Sq. Ft.)

 

Leases (%)

 

Leases ($) (b)

 

Leases ($)

 

Leases (%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

1

 

9,300

 

53.8

 

195,000

 

20.97

 

46.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2017 and thereafter

 

1

 

8,000

 

46.2

 

225,000

 

28.13

 

53.6

 

Totals/Weighted Average

 

2

 

17,300

 

100.0

 

420,000

 

24.28

 

100.0

 

 

(a)          Includes stand-alone retail property tenants only.

(b)         Annualized base rental revenue is based on actual December 2005 billings times 12. For leases whose rent commences after January 1, 2006 annualized base rental revenue is based on the first full month’s billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above.

 

37


 

INDUSTRY DIVERSIFICATION

 

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

 

Industry Classification (a)

 

Annualized
Base Rental
Revenue
($) (b) (c) (d)

 

Percentage of
Operating
Partnership
Annualized Base
Rental Revenue (%)

 

Square
Feet
Leased (d)

 

Percentage of
Total Operating
Partnership
Leased
Sq. Ft. (%)

 

Securities, Commodity Contracts & Other Financial

 

98,372,782

 

17.6

 

3,772,027

 

14.3

 

Manufacturing

 

50,950,692

 

9.1

 

2,592,720

 

9.8

 

Insurance Carriers & Related Activities

 

44,139,749

 

7.9

 

2,026,110

 

7.7

 

Telecommunications

 

28,433,504

 

5.1

 

1,369,986

 

5.2

 

Computer System Design Svcs.

 

27,608,346

 

5.0

 

1,344,921

 

5.1

 

Health Care & Social Assistance

 

26,245,100

 

4.7

 

1,376,719

 

5.2

 

Legal Services

 

22,942,652

 

4.1

 

933,071

 

3.5

 

Credit Intermediation & Related Activities

 

22,930,882

 

4.1

 

971,011

 

3.7

 

Wholesale Trade

 

22,670,061

 

4.1

 

1,459,230

 

5.5

 

Scientific Research/Development

 

19,660,248

 

3.5

 

922,943

 

3.5

 

Accounting/Tax Prep.

 

18,788,958

 

3.4

 

799,421

 

3.0

 

Retail Trade

 

16,160,001

 

2.9

 

960,653

 

3.6

 

Advertising/Related Services

 

13,373,820

 

2.4

 

579,199

 

2.2

 

Other Professional

 

13,318,926

 

2.4

 

563,405

 

2.1

 

Public Administration

 

12,159,567

 

2.2

 

474,866

 

1.8

 

Information Services

 

11,979,116

 

2.1

 

579,968

 

2.2

 

Architectural/Engineering

 

11,259,351

 

2.0

 

489,609

 

1.9

 

Other Services (except Public Administration)

 

11,064,687

 

2.0

 

653,181

 

2.5

 

Arts, Entertainment & Recreation

 

10,647,111

 

1.9

 

666,991

 

2.5

 

Real Estate & Rental & Leasing

 

9,829,809

 

1.8

 

551,307

 

2.1

 

Broadcasting

 

6,829,985

 

1.2

 

457,600

 

1.7

 

Utilities

 

6,457,926

 

1.2

 

320,522

 

1.2

 

Publishing Industries

 

5,752,461

 

1.0

 

255,973

 

1.0

 

Data Processing Services

 

5,657,322

 

1.0

 

253,808

 

1.0

 

Transportation

 

5,652,997

 

1.0

 

321,717

 

1.2

 

Construction

 

5,605,538

 

1.0

 

285,170

 

1.1

 

Educational Services

 

4,624,838

 

0.8

 

245,133

 

0.9

 

Management of Companies & Finance

 

4,448,341

 

0.8

 

191,135

 

0.7

 

Admin & Support, Waste Mgt. & Remediation Svcs.

 

3,331,989

 

0.6

 

221,867

 

0.8

 

Specialized Design Services

 

3,223,136

 

0.6

 

153,661

 

0.6

 

Other

 

13,295,519

 

2.5

 

628,225

 

2.4

 

 

 

 

 

 

 

 

 

 

 

Totals

 

557,415,414

 

100.0

 

26,422,149

 

100.0

 

 

(a)          The Operating Partnership’s tenants are classified according to the U.S. Government’s North American Industrial Classification System (NAICS) which has replaced the Standard Industrial Code (SIC) system.

(b)         Annualized base rental revenue is based on actual December, 2005 billings times 12.  For leases whose rent commences after January 1, 2006, annualized base rental revenue is based on the first full month’s billing times 12.  As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above.

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

(d)         Includes leases in effect as of the period end date, some of which have commencement dates in the future (including, at December 31, 2005, leases with commencement dates substantially in the future consisting of 15,125 square feet scheduled to commence in 2009 and 10,205 square feet scheduled to commence in 2011), and leases expiring December 31, 2005 aggregating 306,733 square feet and representing annualized rent of $4,688,871 for which no new leases were signed.

 

38


 

MARKET DIVERSIFICATION

 

The following table lists the Operating Partnership’s markets (MSAs), based on annualized contractual base rent of the Consolidated Properties:

 

Market (MSA)

 

Annualized Base
Rental Revenue
($) (a) (b) (c)

 

Percentage Of
Operating
Partnership
Annualized
Base Rental
Revenue (%)

 

Total Property
Size Rentable
Area (b) (c)

 

Percentage Of
Rentable Area (%)

 

Jersey City, NJ

 

103,376,501

 

18.6

 

4,317,978

 

14.7

 

Newark, NJ
(Essex-Morris-Union Counties)

 

102,277,027

 

18.3

 

5,674,820

 

19.2

 

New York, NY
(Westchester-Rockland Counties)

 

91,165,468

 

16.4

 

4,968,420

 

16.8

 

Bergen-Passaic, NJ

 

89,493,867

 

16.1

 

4,351,762

 

14.8

 

Philadelphia, PA-NJ

 

55,169,038

 

9.9

 

3,617,994

 

12.3

 

Monmouth-Ocean, NJ

 

25,164,573

 

4.5

 

1,620,863

 

5.5

 

Trenton, NJ (Mercer County)

 

17,227,825

 

3.1

 

767,365

 

2.6

 

Middlesex-Somerset-Hunterdon, NJ

 

15,170,097

 

2.7

 

791,051

 

2.7

 

Denver, CO

 

14,652,941

 

2.6

 

951,202

 

3.2

 

Stamford-Norwalk, CT

 

12,813,911

 

2.3

 

706,510

 

2.4

 

Washington, DC-MD-VA-WV

 

11,625,066

 

2.1

 

450,549

 

1.5

 

San Francisco, CA

 

8,268,000

 

1.5

 

450,891

 

1.5

 

Bridgeport, CT

 

2,412,796

 

0.4

 

145,487

 

0.5

 

Boulder-Longmont, CO

 

2,323,387

 

0.4

 

270,421

 

0.9

 

Colorado Springs, CO

 

2,288,040

 

0.4

 

209,987

 

0.7

 

Dutchess County, NY

 

2,062,226

 

0.4

 

118,727

 

0.4

 

Atlantic-Cape May, NJ

 

1,924,651

 

0.3

 

80,344

 

0.3

 

 

 

 

 

 

 

 

 

 

 

Totals

 

557,415,414

 

100.0

 

29,494,371

 

100.0

 

 

(a)          Annualized base rental revenue is based on actual December 2005 billings times 12.  For leases whose rent commences after January 1, 2006, annualized base rental revenue is based on the first full month’s billing times 12.  As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above.

(b)         Includes leases in effect as of the period end date, some of which have commencement dates in the future (including, at December 31, 2005, leases with commencement dates substantially in the future consisting of 15,125 square feet scheduled to commence in 2009 and 10,205 square feet scheduled to commence in 2011), and leases expiring December 31, 2005 aggregating 306,733 square feet and representing annualized rent of $4,688,871 for which no new leases were signed.

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

 

39


 

ITEM 3.          LEGAL PROCEEDINGS

 

On February 12, 2003, the NJSEA selected The Mills Corporation and the Operating Partnership to redevelop the Continental Airlines Arena site (“Arena Site”) for mixed uses, including retail.  In March 2003, Hartz Mountain Industries, Inc., (“Hartz”), filed a lawsuit in the Superior Court of New Jersey, Law Division, for Bergen County, seeking to enjoin NJSEA from entering into a contract with the Meadowlands venture for the redevelopment of the Continental Airlines Arena site.  In May 2003, the court denied Hartz’s request for an injunction and dismissed its suit for failure to exhaust administrative remedies.  In June 2003, the NJSEA held hearings on Hartz’s protest, and on a parallel protest filed by another rejected developer, Westfield, Inc. (“Westfield”).  On September 10, 2003, the NJSEA ruled against Hartz’s and Westfield’s protests, Hartz and Westfield, as well as Elliot Braha and three other taxpayers (collectively “Braha”), thereafter filed appeals from the NJSEA’s final decision.  By decision dated May 14, 2004, the Appellate Division of the Superior Court of New Jersey rejected the appellants’ contention that the NJSEA lacks statutory authority to allow retail development of its property.  The Appellate Division also remanded Hart’s claim under the Open Public Records Acts, seeking disclosure of additional documents from NJSEA, to the Law Division for further proceedings. The Supreme Court of New Jersey declined to review the Appellate Division’s decision.  On August 19, 2004, the Law Division issued a decision resolving Hartz’s Open Public Records Act claim and ordered NJSEA to disclose some, but not all, of the documents Hartz was seeking.  The Appellate Division, in a decision rendered on November 24, 2004, upheld the findings of the Law Division in the remand proceeding.  The Supreme Court of New Jersey declined to review the Appellate Division’s decision.  At Hartz’s request, the NJSEA thereafter held further hearings on December 15 and 16, 2004, to review certain additional facts in support of Hartz’s and Westfield’s bid protest.  Braha, as a taxpayer, did not have standing to participate in the supplemental protest hearing.  On March 4, 2005, the Hearing Officer rendered his Supplemental Report and Recommendation to the NJSEA, finding no merit in the protests presented by Hartz and Westfield.  The NJSEA accepted the Hearing Officer’s Supplemental Report and Recommendation on March 30, 2005 and Hartz and Braha have appealed that decision to the Appellate Division.

 

In January 2004, Hartz and Westfield also appealed to the Appellate Division of the Supreme Court of New Jersey from the NJSEA’s December 2003 approval and execution of the Redevelopment Agreement with the Meadowlands Venture.

 

In November 2004, Hartz and Westfield filed additional appeals in the Appellate Division challenging NJSEA’s resolution authorizing the execution of the First Amendment to the Redevelopment Agreement with Meadowlands Venture and the ground lease with the Meadowlands Venture.

 

All of the above appeals have been consolidated by the Appellate Division and are pending.

 

On September 30, 2004, the Borough of Carlstadt filed an action in the Superior Court of New Jersey Law Division, challenging Meadowlands Xanadu, which asserts claims that are substantially the same as claims asserted by Hartz and Braha in the above appeals.  By Order dated November 19, 2004, the Law Division transferred that matter to the Superior Court of New Jersey, Appellate Division.  The matter is pending.

 

Several appeals filed by Hartz, Westfield and others, including certain environmental groups, that challenge certain approvals received by the Meadowlands Venture from the NJSEA, the New Jersey Meadowlands Commission (“NJMC”) and the New Jersey Department of Environmental Protection (“NJDEP”) remain pending before the Appellate Division.

Some of these appeals challenge NJDEP’s issuance of a stream encroachment permit, waterfront development permit, and coastal zone consistency determination for Meadowlands Xanadu.  Other of these appeals are from NJDEP’s and NJMC’s issuance of reports in connection with a consultation process the NJSEA was statutorily required to undertake in connection with any NJSEA-development project.

 

A Hartz affiliate and a trade association have filed an appeal from an advisory opinion favorable to the Meadowlands Venture issued by the Director of the Division of Alcoholic Beverage Control concerning the availability of special concessionaire permits.  That appeal is also pending in the Appellate Division of the Superior Court of New Jersey.

 

Three separate lawsuits have been filed in the United States District Court for the District of New Jersey, challenging a permit issued by the U.S. Army Corps of Engineers (“USACE”) in connection with the project.  The first suit was filed on March 30, 2005, by the Sierra Club, the New Jersey Public Interest Group, Citizen Lobby, Inc. and the New Jersey Environmental Federation.  Additional suits were filed on May 16 and May 31, 2005, respectively, by Hartz (together

 

40


 

with one of its officers as an individual named plaintiff) and the Borough of Carlstadt.  The Sierra Club also filed a motion for a preliminary injunction to stop certain construction activities on the project, which the Court denied on July 6, 2005.  The parties are currently briefing cross motions for summary judgment on the merits of the Sierra Club’s claims. A decision is expected sometime in the latter part of 2006.  On October 26, 2005, the court granted the motions of the Meadowlands Venture and the USACE to dismiss the Hartz complaint for lack of standing.  The deadline for appealing that decision has passed, so the Hartz action is ended.  On October 31, 2005, the USACE filed a motion to dismiss the complaint filed by the Borough of Carlstadt for lack of standing.  On February 7, 2006 the Court granted the motion and dismissed the Borough of Carlstadt complaint in its entirety.  Subject to any appeal that may be brought within 60 days after this order of dismissal, the Borough of Carlstadt action is ended.

 

On April 5, 2005, the New York Football Giants (“Giants”) filed an emergent application with the Supreme Court of New Jersey, Chancery Division, seeking an injunction stopping all work on the Meadowlands Xanadu as being in violation of its existing lease with the NJSEA.  The court heard an oral argument on the application on August 5, 2005, and denied the Giants’ motion for preliminary injunctive relief.  The Giants’ claim for permanent injunction relief remains pending.  However, the parties to this dispute have reached a tentative settlement.  In September 2005, the Giants and Meadowlands Venture executed a settlement agreement.  NJSEA subsequently proposed modifications to the settlement agreement, and the parties have not yet executed a final agreement.  The proposed settlement agreement provides, among other things, for the Meadowlands Venture to pay the Giants approximately $15 million as compensation for claims of construction interference and for the Giants to otherwise withdraw the assertion of the right to object to the project.

 

The New Jersey Builders’ Association (“NJBA”) has commenced an action, which is pending in the Appellate Division, alleging that the NJSEA has failed to meet a purported obligation to provide affordable housing at the Meadowlands Complex and seeking, among other relief, an order enjoining the construction of Meadowlands Xanadu.  NJBA filed an application for preliminary injunctive relief seeking to enjoin further construction of Meadowlands Xanadu, which the Appellate Division denied on July 28, 2005.  The Meadowlands Venture is not a party to that action.

 

On January 25, 2006, the Bergen Cliff Hawks Baseball Club, LLC (the “Cliff Hawks”), filed a complaint against the Operating Partnership and Mills, alleging that the Operating Partnership and Mills breached an agreement to provide the Cliff Hawks with a minor league baseball park as part of the Xanadu Project.  This matter remains pending.

 

The Operating Partnership believes that the Meadowlands Venture’s proposal and the planned project comply with applicable laws, and the Meadowlands Venture intends to continue its vigorous defense of its rights under the Redevelopment Agreement and Ground Lease.  Although there can be no assurance, the Operating Partnership does not believe that the pending lawsuits will have any material affect on its ability to develop the Meadowlands Xanadu project.

 

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

 

ITEM 4.          SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

Not applicable.

 

41


 

PART II

 

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

 

MARKET INFORMATION

The shares of the Corporation’s Common Stock are traded on the New York Stock Exchange (“NYSE”) and the Pacific Exchange under the symbol “CLI.”

 

HOLDERS

 

On February 17, 2006, the Operating Partnership had 102 owners of limited partnership units and one owner of General Partnership units.

 

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

 

During the three months ended December 31, 2005, the Corporation issued 77,000 shares of common stock to holders of common units in the Operating Partnership upon the redemption of such common units in private offerings pursuant to Section 4(2) of the Securities Act.  The holders of the common units were limited partners of the Operating Partnership and accredited investors under Rule 501 of the Securities Act.  The common units were converted into an equal number of shares of common stock.  The Corporation has registered the resale of such shares under the Securities Act.

 

DIVIDENDS AND DISTRIBUTIONS

 

During the year ended December 31, 2005, the Corporation and the Operating Partnership declared four quarterly common stock dividends and common unit distributions of $0.63 per share and per unit from the first to the fourth quarter.  Additionally, in 2005, the Operating Partnership declared quarterly Series C preferred unit distributions of $50.00 per preferred unit from the first to the fourth quarter.  The Operating Partnership also declared one quarterly Series B preferred unit distribution of $18.1818 per preferred unit for the first quarter.

 

During the year ended December 31, 2004, the Corporation and the Operating Partnership declared four quarterly common stock dividends and common unit distributions of $0.63 per share and per unit from the first to the fourth quarter.  Additionally, in 2004, the Operating Partnership declared quarterly Series C preferred unit distributions of $50.00 per preferred unit from the first to the fourth quarter.  The Operating Partnership also declared four quarterly Series B preferred unit distributions of $18.1818 per preferred unit from the first to the fourth quarter.

 

The declaration and payment of dividends and distributions will continue to be determined by the Board of Directors of the Corporation in light of conditions then existing, including the Operating Partnership’s earnings, financial condition, capital requirements, applicable REIT and legal restrictions and other factors.

 

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

 

Information regarding securities authorized for issuance under the equity compensation plans of the Corporation is disclosed in Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

 

None.

 

42


 

ITEM 6.          SELECTED FINANCIAL DATA

 

The following table sets forth selected financial data on a consolidated basis for the Operating Partnership.  The consolidated selected operating, balance sheet and other data of the Operating Partnership as of December 31, 2005, 2004, 2003, 2002 and 2001, and for the years then ended have been derived from the Operating Partnership’s financial statements for the respective periods.

 

Operating Data (a)

 

 

 

Year Ended December 31,

 

In thousands, except per share data

 

2005

 

2004

 

2003

 

2002

 

2001

 

Total revenues

 

$

643,405

 

$

577,749

 

$

558,924

 

$

534,071

 

$

536,404

 

Property expenses (b)

 

$

227,074

 

$

186,446

 

$

173,794

 

$

158,191

 

$

164,621

 

General and administrative

 

$

33,090

 

$

31,761

 

$

31,284

 

$

26,883

 

$

28,328

 

Interest expense

 

$

119,337

 

$

109,649

 

$

115,430

 

$

105,861

 

$

109,434

 

Income from continuing operations

 

$

109,599

 

$

120,268

 

$

161,372

 

$

158,306

 

$

158,323

 

Net income available to common unitholders

 

$

112,210

 

$

113,354

 

$

160,486

 

$

158,991

 

$

150,190

 

Income from continuing operations per unit – basic

 

$

1.41

 

$

1.50

 

$

2.20

 

$

2.23

 

$

2.03

 

Income from continuing operations per unit – diluted

 

$

1.40

 

$

1.49

 

$

2.18

 

$

2.22

 

$

2.02

 

Net income per unit – basic

 

$

1.52

 

$

1.66

 

$

2.45

 

$

2.44

 

$

2.33

 

Net income per unit – diluted

 

$

1.51

 

$

1.65

 

$

2.43

 

$

2.43

 

$

2.32

 

Distributions declared per common unit

 

$

2.52

 

$

2.52

 

$

2.52

 

$

2.50

 

$

2.46

 

Basic weighted average units outstanding

 

73,729

 

68,110

 

65,526

 

65,109

 

64,495

 

Diluted weighted average units outstanding

 

74,189

 

68,743

 

65,980

 

65,475

 

64,787

 

 

Balance Sheet Data

 

 

 

December 31,

 

In thousands

 

2005

 

2004

 

2003

 

2002

 

2001

 

Rental property, before accumulated depreciation and amortization

 

$

4,491,752

 

$

4,160,959

 

$

3,954,632

 

$

3,857,657

 

$

3,378,071

 

Rental property held for sale, net

 

—

 

$

19,132

 

$

—

 

$

—

 

$

384,626

 

Total assets

 

$

4,247,502

 

$

3,850,165

 

$

3,749,570

 

$

3,796,429

 

$

3,746,770

 

Total debt (c)

 

$

2,126,181

 

$

1,702,300

 

$

1,628,584

 

$

1,752,372

 

$

1,700,150

 

Total liabilities

 

$

2,335,396

 

$

1,877,096

 

$

1,779,983

 

$

1,912,199

 

$

1,867,938

 

Partners’ capital

 

$

1,912,106

 

$

1,961,966

 

$

1,969,587

 

$

1,884,230

 

$

1,878,832

 

 

(a)          Certain reclassifications have been made to prior period amounts in order to conform with current period presentation.

(b)         Property expenses is calculated by taking the sum of real estate taxes, utilities and operating services for each of the periods presented.

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

 

43


 

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

 

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

 

Executive Overview

 

Mack-Cali Realty Corporation (the “General Partner”) is one of the largest real estate investment trusts (REITs) in the United States, with a total market capitalization of approximately $5.4 billion at December 31, 2005.  Mack-Cali Realty, L.P. (the “Operating Partnership”) has been involved in all aspects of commercial real estate development, management and ownership for over 50 years and the Corporation has been a publicly-traded REIT since 1994.  The Operating Partnership owns or has interests in 270 properties (collectively, the “Properties”), primarily class A office and office/flex buildings, totaling approximately 30.0 million square feet, leased to approximately 2,200 tenants.  The properties are located primarily in suburban markets of the Northeast, some with adjacent, Operating Partnership-controlled developable land sites able to accommodate up to 10.6 million square feet of additional commercial space.

 

The Operating Partnership’s strategy is to be a significant real estate owner and operator in its core, high-barriers-to-entry markets, primarily in the Northeast.

 

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

 

•                                the general economic climate;

•                                the occupancy rates of the Properties;

•                                rental rates on new or renewed leases;

•                                tenant improvement and leasing costs incurred to obtain and retain tenants;

•                                the extent of early lease terminations;

•                                operating expenses;

•                                cost of capital; and

•                                the extent of acquisitions, development and sales of real estate.

 

Any negative effects of the above key factors could potentially cause a deterioration in the Operating Partnership’s revenue and/or earnings.  Such negative effects could include: (1) failure to renew or execute new leases as current leases expire; (2) failure to renew or execute new leases with rental terms at or above the terms of in-place leases; and (3) tenant defaults.

 

A failure to renew or execute new leases as current leases expire or to execute new leases with rental terms at or above the terms of in-place leases may be affected by several factors such as: (1) the local economic climate, which may be adversely impacted by business layoffs or downsizing, industry slowdowns, changing demographics and other factors; and (2) local real estate conditions, such as oversupply of office and office/flex space or competition within the market.

 

As a result of the economic climate since 2001, substantially all of the real estate markets the Operating Partnership operates in materially softened.  Demand for office space declined significantly and vacancy rates increased in each of the Operating Partnership’s core markets over the period.  Through February 22, 2006, the Operating Partnership’s core markets continued to be weak.  The percentage leased in the Operating Partnership’s consolidated portfolio of stabilized operating properties decreased to 91.0 percent at December 31, 2005 as compared to 91.2 percent at December 31, 2004 and 91.5 percent at December 31, 2003.  Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future (including, at December 31, 2005, leases with commencement dates substantially in the future consisting of 15,125 square feet scheduled to commence in 2009 and 10,205 square feet scheduled to commence in 2011), and leases that expire at the period end date.  Excluded from percentage leased at

 

44


 

December 31, 2004 was a non-strategic, non-core 318,224 square foot property acquired through a deed in lieu of foreclosure, which was 12.7 percent leased at December 31, 2004 and subsequently sold on February 4, 2005.  Leases that expired as of December 31, 2005, 2004 and 2003 aggregate 311,623, 439,697 and 143,059 square feet, respectively, or 1.1, 1.5 and 0.5 percentage of the net rentable square footage, respectively.  Market rental rates have declined in most markets from peak levels in late 2000 and early 2001.  Rental rates on the Operating Partnership’s space that was re-leased (based on first rents payable) during the year ended December 31, 2005 decreased an average of 8.2 percent compared to rates that were in effect under expiring leases, as compared to a 8.7 percent decrease in 2004 and a 7.8 percent decrease in 2003.  The Operating Partnership believes that vacancy rates may continue to increase in most of its markets in 2006.  As a result, the Operating Partnership’s future earnings and cash flow may continue to be negatively impacted by current market conditions.

 

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

 

•                                property transactions during the period;

•                                critical accounting policies and estimates;

•                                results of operations for the year ended December 31, 2005, as compared to the same period last year;

•                                results of operations for the year ended December 31, 2004, as compared to the year ended December 31, 2003; and

•                                liquidity and capital resources.

 

Property Transactions

 

Property Acquisitions

The Operating Partnership acquired the following office properties during the year ended December 31, 2005:

 

Acquisition
Date

 

Property/Address

 

Location

 

# of
Bldgs.

 

Rentable
Square Feet

 

Investment by
Operating
Partnership
(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

03/02/05

 

101 Hudson Street (a)

 

Jersey City, Hudson County, NJ

 

1

 

1,246,283

 

$

330,302

 

03/29/05

 

23 Main Street (a) (b)

 

Holmdel, Monmouth County, NJ

 

1

 

350,000

 

23,948

 

07/12/05

 

Monmouth Executive Center (c)

 

Freehold, Monmouth County, NJ

 

4

 

235,968

 

33,561

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Office Property Acquisitions:

 

 

 

6

 

1,832,251

 

$

387,811

 

 

(a)          Transaction was funded primarily through borrowing on the Operating Partnership’s revolving credit facility.

(b)         In addition to its initial investment, the Operating Partnership intends to make additional investments related to the property of approximately $12.1 million, of which the Operating Partnership spend $6.2 million through December 31, 2005.

(c)          Transaction was funded primarily through available cash and assumption of mortgage debt.

 

In November 2005, the Operating Partnership announced that it entered into a contract to acquire all the interests in Capital Office Park, a seven-building office complex totaling approximately 842,300 square feet in Greenbelt, Maryland for aggregate purchase consideration of approximately $161.7 million.  The purchase consideration for the acquisition, which is expected to close in the first quarter of 2006, will consist of the issuance of approximately $97.9 million of common units in the Operating Partnership and the assumption of approximately $63.8 million of mortgage debt.  At closing, the sellers may elect to receive approximately $27.9 million in cash in lieu of common operating partnership units.

 

On February 16, 2006, the Operating Partnership announced it had reached agreements in principle with each of SL Green Realty Corp. (“SL Green”) and The Gale Company, a privately-owned real estate services company based in New Jersey (“Gale”), pursuant to which the Operating Partnership plans to acquire interests in certain assets and operations of SL Green and Gale.

 

45


 

Pursuant to the contemplated transactions, the Operating Partnership is expected to:

 

•                  Purchase the Gale Real Estate Services Company for up to $40 million.  The purchase price is expected to be based on an earn-out formula with an initial payment of $10 million in common units in the Operating Partnership, and $12 million in cash, with a total consideration of up to $40 million.

•                  Acquire substantially all the ownership interests in 12 office properties, valued at approximately $337 million and totaling 1.7 million square feet in Northern and Central New Jersey; and

•                  Acquire approximately one-half of the ownership interests in eight office properties, valued at approximately $168 million and totaling 1.1 million square feet, also in Northern and Central New Jersey.

 

The Operating Partnership plans to finance the transactions through a combination of approximately $240 million in drawings on its revolving credit facility, the assumption of existing and placement of new mortgage debt, and the issuance of common operating partnership units.

 

These planned acquisitions are subject to the execution of definitive acquisition agreements with Gale and SL Green in one instance, and with Gale alone in the other instance, which agreements shall contain mutually acceptable terms and customary closing conditions to be negotiated in good faith with such parties and entered into as soon as practicable. While the Operating Partnership is confident that these transactions will be completed in accordance with the terms outlined above, there can be no assurance that either or both will close or that the structure or terms of one or both acquisition agreements may not reflect changes from the current agreements in principle.

 

Property Sales

The Operating Partnership sold the following office properties during the year ended December 31, 2005:

 

Sale
Date

 

Property/Address

 

Location

 

# of
Bldgs.

 

Rentable
Square
Feet

 

Net
Sales
Proceeds
(in thousands)

 

Net
Book
Value
(in thousands)

 

Realized
Gain/
(Loss)
(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

02/04/05

 

210 South 16th Street

 

Omaha, Douglas County, Nebraska

 

1

 

318,224

 

$

8,464

 

$

8,210

 

$

254

 

02/11/05

 

1122 Alma Road

 

Richardson, Dallas County, Texas

 

1

 

82,576

 

2,075

 

2,344

 

(269

)

02/15/05

 

3 Skyline Drive

 

Hawthorne, Westchester County, New York

 

1

 

75,668

 

9,587

 

8,856

 

731

 

05/11/05

 

201 Willowbrook Blvd.

 

Wayne, Passaic County, New Jersey (a)

 

1

 

178,329

 

17,696

 

17,705

 

(9

)

06/03/05

 

600 Community Drive/
111 East Shore Road

 

North Hempstead, Nassau County, New York

 

2

 

292,849

 

71,593

 

59,609

 

11,984

 

12/29/05

 

3600 South Yosemite

 

Denver, Denver County, Colorado

 

1

 

133,743

 

5,566

 

11,121

 

(5,555

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Office Property Sales:

 

 

 

7

 

1,081,389

 

$

114,981

 

$

107,845

 

$

7,136

 

 

(a)          In connection with the sale, the Operating Partnership provided a mortgage loan to the buyer of $12 million which bears interest at 5.74 percent, matures in five years with a five-year renewal option, and requires monthly payments of principal and interest.

 

Critical Accounting Policies and Estimates

 

The Financial Statements have been prepared in conformity with generally accepted accounting principles.  The preparation of the Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements, and the reported amounts of revenues and expenses during the reported period.  These estimates and assumptions are based on management’s historical experience that are believed to be reasonable at the time.  However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgment.  The Operating Partnership’s critical accounting policies are those which require assumptions to be made about matters that are highly uncertain.  Different estimates could have a material effect on the Operating Partnership’s financial results.  Judgments and uncertainties affecting the application of these policies and estimates may result in materially different amounts being reported under different conditions and circumstances.

 

46


 

Rental Property:

Rental properties are stated at cost less accumulated depreciation and amortization.  Costs directly related to the acquisition, development and construction of rental properties are capitalized.  Capitalized development and construction costs include pre-construction costs essential to the development of the property, development and construction costs, interest, property taxes, insurance, salaries and other project costs incurred during the period of development.  Interest capitalized by the Operating Partnership for the years ended December 31, 2005, 2004 and 2003 was $5.5 million, $3.9 million and $7.3 million, respectively.  Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives.  Fully-depreciated assets are removed from the accounts.

 

The Operating Partnership considers a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year from cessation of major construction activity (as distinguished from activities such as routine maintenance and cleanup).  If portions of a rental project are substantially completed and occupied by tenants, or held available for occupancy, and other portions have not yet reached that stage, the substantially completed portions are accounted for as a separate project.  The Operating Partnership allocates costs incurred between the portions under construction and the portions substantially completed and held available for occupancy and capitalizes only those costs associated with the portion under construction.

 

Properties are depreciated using the straight-line method over the estimated useful lives of the assets.  The estimated useful lives are as follows:

 

Leasehold interests

 

Remaining lease term

Buildings and improvements

 

5 to 40 years

Tenant improvements

 

The shorter of the term of the
related lease or useful life

Furniture, fixtures and equipment

 

5 to 10 years

 

Upon acquisition of rental property, the Operating Partnership estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities generally consisting of the fair value of (i) above and below market leases, (ii) in-place leases and (iii) tenant relationships.  The Operating Partnership allocates the purchase price to the assets acquired and liabilities assumed based on their relative fair values.  In estimating the fair value of the tangible and intangible assets acquired, the Operating Partnership considers information obtained about each property as a result of its due diligence and marketing and leasing activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information.  The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

 

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

 

Other intangible assets acquired include amounts for in-place lease values and tenant relationship values which are based on management’s evaluation of the specific characteristics of each tenant’s lease and the Operating Partnership’s overall relationship with the respective tenant.  Factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases.  In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions.  In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses.  Characteristics considered by management in valuing tenant relationships include the nature and extent of the Operating Partnership’s existing business relationships with the tenant, growth

 

47


 

prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals.

The value of in-place leases are amortized to expense over the remaining initial terms of the respective leases.  The value of tenant relationship intangibles will be amortized to expense over the anticipated life of the relationships.

 

On a periodic basis, management assesses whether there are any indicators that the value of the Operating Partnership’s rental properties may be impaired.  A property’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property.  To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the property over the fair value of the property.  The Operating Partnership’s estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property.  As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved.  Management does not believe that the value of any of the Operating Partnership’s rental properties is impaired.

 

Rental Property Held for Sale and Discontinued Operations:

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 as held for sale is less than the net book value of the assets, a valuation allowance is established.  Properties identified as held for sale and/or sold are presented in discontinued operations for all periods presented.

 

If circumstances arise that previously were considered unlikely and, as a result, the Operating Partnership decides not to sell a property previously classified as held for sale, the property is reclassified as held and used.  A property that is reclassified is measured and recorded individually at the lower of (a) its carrying amount before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.

 

Revenue Recognition:

Base rental revenue is recognized on a straight-line basis over the terms of the respective leases.  Unbilled rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with the lease agreements.  Above-market and below-market lease values for acquired properties are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases. The capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases. Parking and other revenue includes income from parking spaces leased to tenants, income from tenants for additional services provided by the Operating Partnership, income from tenants for early lease terminations and income from managing and/or leasing properties for third parties.  Escalations and recoveries are received from tenants for certain costs as provided in the lease agreements.  These costs generally include real estate taxes, utilities, insurance, common area maintenance and other recoverable costs.

 

Allowance for Doubtful Accounts:

Management periodically performs a detailed review of amounts due from tenants to determine if accounts receivable balances are impaired based on factors affecting the collectibility of those balances.  Management’s estimate of the allowance for doubtful accounts requires management to exercise significant judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income.

 

48


 

Results From Operations

 

The following comparisons for the year ended December 31, 2005 (“2005”), as compared to the year ended December 31, 2004 (“2004”), and for 2004, as compared to the year ended December 31, 2003 (“2003”), make reference to the following:  (i) the effect of the “Same-Store Properties,” which represents all in-service properties owned by the Operating Partnership at December 31, 2003, (for the 2005 versus 2004 comparison) and which represents all in-service properties owned by the Operating Partnership at December 31, 2002, (for the 2004 versus 2003 comparison), excluding properties sold or held for sale through December 31, 2005, and (ii) the effect of the “Acquired Properties,” which represents all properties acquired by the Operating Partnership or commencing initial operations from January 1, 2004 through December 31, 2005 (for the 2005 versus 2004 comparison) and which represent all properties acquired by the Operating Partnership or commencing initial operation from January 1, 2003 through December 31, 2004 (for the 2004 versus 2003 comparison).

 

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

 

 

 

Year Ended

 

 

 

 

 

 

 

December 31,

 

Dollar

 

Percent

 

(dollars in thousands)

 

2005

 

2004

 

Change

 

Change

 

Revenue from rental operations:

 

 

 

 

 

 

 

 

 

Base rents

 

$

541,702

 

$

498,392

 

$

43,310

 

8.7

%

Escalations and recoveries from tenants

 

84,082

 

66,451

 

17,631

 

26.5

 

Parking and other

 

17,621

 

12,906

 

4,715

 

36.5

 

Total revenues

 

643,405

 

577,749

 

65,656

 

11.4

 

 

 

 

 

 

 

 

 

 

 

Property expenses:

 

 

 

 

 

 

 

 

 

Real estate taxes

 

82,056

 

69,085

 

12,971

 

18.8

 

Utilities

 

55,843

 

41,649

 

14,194

 

34.1

 

Operating services

 

89,175

 

75,712

 

13,463

 

17.8

 

Sub-total

 

227,074

 

186,446

 

40,628

 

21.8

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

33,090

 

31,761

 

1,329

 

4.2

 

Depreciation and amortization

 

155,370

 

127,826

 

27,544

 

21.5

 

Interest expense

 

119,337

 

109,649

 

9,688

 

8.8

 

Interest income

 

(856

)

(1,367

)

511

 

37.4

 

Total expenses

 

534,015

 

454,315

 

79,700

 

17.5

 

Income from continuing operations before equity in earnings of unconsolidated joint ventures

 

109,390

 

123,434

 

(14,044

)

(11.4

)

Minority interest in consolidated joint ventures

 

(74

)

—

 

(74

)

(100.0

)

Equity in earnings of unconsolidated joint ventures, net

 

248

 

(3,886

)

4,134

 

106.4

 

Gain on sale of investment in unconsolidated joint ventures

 

35

 

720

 

(685

)

(95.1

)

Income from continuing operations

 

109,599

 

120,268

 

(10,669

)

(8.9

)

Discontinued operations:

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations

 

2,998

 

11,448

 

(8,450

)

(73.8

)

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

 

5,522

 

(726

)

6,248

 

860.6

 

Total discontinued operations, net

 

8,520

 

10,722

 

(2,202

)

(20.5

)

Net income

 

118,119

 

130,990

 

(12,871

)

(9.8

)

Preferred unit distributions

 

(5,909

)

(17,636

)

11,727

 

66.5

 

 

 

 

 

 

 

 

 

 

 

Net income available to common unitholders

 

$

112,210

 

$

113,354

 

$

(1,144

)

(1.0

)%

 

49


 

The following is a summary of the changes in revenue from rental operations and property expenses in 2005 as compared to 2004 divided into Same-Store Properties and Acquired Properties (dollars in thousands):

 

 

 

Total Operating Partnership

 

Same-Store Properties

 

Acquired Properties

 

 

 

Dollar

 

Percent

 

Dollar

 

Percent

 

Dollar

 

Percent

 

 

 

Change

 

Change

 

Change

 

Change

 

Change

 

Change

 

Revenue from rental operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Base rents

 

$

43,310

 

8.7

%

$

(805

)

(0.2

)%

$

44,115

 

8.9

%

Escalations and recoveries from tenants

 

17,631

 

26.5

 

7,039

 

10.6

 

10,592

 

15.9

 

Parking and other

 

4,715

 

36.5

 

2,872

 

22.3

 

1,843

 

14.2

 

Total

 

$

65,656

 

11.4

%

$

9,106

 

1.6

%

$

56,550

 

9.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

$

12,971

 

18.8

%

$

3,923

 

5.7

%

$

9,048

 

13.1

%

Utilities

 

14,194

 

34.1

 

9,003

 

21.6

 

5,191

 

12.5

 

Operating services

 

13,463

 

17.8

 

4,800

 

6.3

 

8,663

 

11.5

 

Total

 

$

40,628

 

21.8

%

$

17,726

 

9.5

%

$

22,902

 

12.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Consolidated Properties

 

267

 

 

 

247

 

 

 

20

 

 

 

Square feet (in thousands)

 

29,494

 

 

 

25,252

 

 

 

4,242

 

 

 

 

Base rents for the Same-Store Properties decreased $0.8 million, or 0.2 percent, due primarily to decreased rental rates for new leases in 2005 as compared to 2004.  Escalations and recoveries from tenants for the Same-Store Properties increased $7.0 million, or 10.6 percent, for 2005 over 2004, due primarily to an increased amount of total property expenses in 2005.  Parking and other income for the Same-Store Properties increased $2.9 million, or 22.3 percent, due primarily to an increase in lease termination fees in 2005 as compared to 2004.

 

Real estate taxes on the Same-Store Properties increased $3.9 million, or 5.7 percent, for 2005 as compared to 2004, due primarily to property tax rate increases in certain municipalities in 2005, partially offset by lower assessments on certain properties in 2005.  Utilities for the Same-Store Properties increased $9.0 million, or 21.6 percent, for 2005 as compared to 2004, due primarily to increased electric rates and increased usage in 2005.  Operating services for the Same-Store Properties increased $4.8 million, or 6.3 percent, due primarily to increases in 2005 as compared to 2004 in snow removal costs of $2.0 million, repairs and maintenance expenses of $1.1 million, property management compensation and related expenses of $0.8 million, and building engineer costs of $0.8 million.

 

General and administrative expense increased by $1.3 million, or 4.2 percent, for 2005 as compared to 2004.  This was due primarily to increases in 2005 as compared to 2004 in compensation costs and related expenses of $0.9 million and state income tax expense of $0.5 million, as well as compensation costs and related expenses in 2005 of $0.6 million in connection with the resignation of a non-executive officer, and a write-down in 2005 of a technology investment of $0.5 million.  These increases were partially offset by compensation costs and related expenses incurred in 2004 in connection with the resignation of the Corporation’s president of $1.3 million.

 

Depreciation and amortization increased by $27.5 million, or 21.5 percent, for 2005 over 2004.  Of this increase, $6.5 million, or 5.1 percent, was attributable to the Same-Store Properties primarily on account of the amortization of additional tenant installation costs in 2005 and $21.0 million, or 16.4 percent, was due to the Acquired Properties.

 

Interest expense increased $9.7 million, or 8.8 percent, for 2005 as compared to 2004.  This increase was primarily as a result of higher average debt balances in 2005, as well as an overall increase in interest rates on the Operating Partnership’s debt.

 

Interest income decreased $0.5 million, or 37.4 percent, for 2005 as compared to 2004.  This decrease was due primarily to lower interest income from mortgage notes receivable in 2005 and lower average cash balances in 2005.

 

50


 

Income from continuing operations before equity in earnings of unconsolidated joint ventures decreased to $109.4 million in 2005 from $123.4 million in 2004.  The decrease of approximately $14.0 million was due to the factors discussed above.

 

Equity in earnings of unconsolidated joint ventures increased $4.1 million, or 106.4 percent, for 2005 as compared to 2004. This increase was due primarily to the following: an increase of $5.2 million in 2005 on account of the Ashford Loop joint venture having a loss in 2004, with no activity in 2005 due to the Company’s sale of its interest in the venture in early 2005; an increase of $0.8 million from increased earnings in 2005 at the Harborside South Pier Hyatt Hotel Venture; and an increase of $0.6 million in 2005 on account of equity in loss in 2004 at the Ramland Realty joint venture, with no equity in earnings in 2005.  These increases were partially offset by a decrease in equity in earnings of $1.9 million at the G&G Martco joint venture on account of equity in loss in 2005; and a decrease of $0.7 million in 2005 on account of equity in earnings in the HPMC joint venture in 2004, with no activity in 2005 due to the joint venture’s sale of the Pacific Plaza I & II complex in 2004.

 

Gain on sale of investment in unconsolidated joint ventures amounted to $35,000 in 2005 due to the sale of the Operating Partnership’s interest in the Ashford Loop joint venture.  Gain on sale of investment in unconsolidated joint venture amounted to $0.7 million in 2004 on account of the receipt of additional contingent purchase consideration from the Harborside North Pier sale.

 

Net income available to common unitholders decreased by approximately $1.2 million, or 1.0 percent, from $113.4 million in 2004 to $112.2 million in 2005.  This decrease was primarily the result of a decrease in 2005 from 2004 in income from continuing operations before equity in earnings of unconsolidated joint ventures of $14.0 million, a decrease in income from discontinued operations of approximately $8.4 million, a gain on sale of investment in unconsolidated joint ventures of $0.7 million in 2004, and minority interest in consolidated joint ventures of $0.1 million in 2005.  These were partially offset by a decrease in preferred unit distributions of $11.7 million in 2005 as compared to 2004, realized gains on disposition of rental property of $5.5 million in 2005, an increase in equity in earnings of unconsolidated joint ventures of $4.1 million, and realized gains and unrealized losses on disposition of rental property of $0.7 million in 2004.

 

51


 

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

 

 

 

Year Ended

 

 

 

 

 

 

 

December 31,

 

Dollar

 

Percent

 

(dollars in thousands)

 

2004

 

2003

 

Change

 

Change

 

Revenue from rental operations:

 

 

 

 

 

 

 

 

 

Base rents

 

$

498,392

 

$

480,292

 

$

18,100

 

3.8

%

Escalations and recoveries from tenants

 

66,451

 

59,885

 

6,566

 

11.0

 

Parking and other

 

12,906

 

18,747

 

(5,841

)

(31.2

)

Total revenues

 

577,749

 

558,924

 

18,825

 

3.4

 

 

 

 

 

 

 

 

 

 

 

Property expenses:

 

 

 

 

 

 

 

 

 

Real estate taxes

 

69,085

 

62,462

 

6,623

 

10.6

 

Utilities

 

41,649

 

40,037

 

1,612

 

4.0

 

Operating services

 

75,712

 

71,295

 

4,417

 

6.2

 

Sub-total

 

186,446

 

173,794

 

12,652

 

7.3

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

31,761

 

31,284

 

477

 

1.5

 

Depreciation and amortization

 

127,826

 

113,202

 

14,624

 

12.9

 

Interest expense

 

109,649

 

115,430

 

(5,781

)

(5.0

)

Interest income

 

(1,367

)

(1,098

)

(269

)

(24.5

)

Loss on early retirement of debt, net

 

—

 

2,372

 

(2,372

)

(100.0

)

Total expenses

 

454,315

 

434,984

 

19,331

 

4.4

 

Income from continuing operations before equity in earnings of unconsolidated joint ventures

 

123,434

 

123,940

 

(506

)

(0.4

)

Equity in earnings of unconsolidated joint ventures, net

 

(3,886

)

13,480

 

(17,366

)

(128.8

)

Gain on sale of investment in unconsolidated joint ventures

 

720

 

23,952

 

(23,232

)

(97.0

)

Income from continuing operations

 

120,268

 

161,372

 

(41,104

)

(25.5

)

Discontinued operations:

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations

 

11,448

 

12,913

 

(1,465

)

(11.3

)

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

 

(726

)

3,541

 

(4,267

)

(120.5

)

Total discontinued operations, net

 

10,722

 

16,454

 

(5,732

)

(34.8

)

Net income

 

130,990

 

177,826

 

(46,836

)

(26.3

)

Preferred unit distributions

 

(17,636

)

(17,340

)

(296

)

(1.7

)

 

 

 

 

 

 

 

 

 

 

Net income available to common unitholders

 

$

113,354

 

$

160,486

 

$

(47,132

)

(29.4

)%

 

52


 

The following is a summary of the changes in revenue from rental operations and property expenses in 2004 as compared to 2003 divided into Same-Store Properties and Acquired Properties (dollars in thousands):

 

 

 

Total Operating Partnership

 

Same-Store Properties

 

Acquired Properties

 

 

 

Dollar

 

Percent

 

Dollar

 

Percent

 

Dollar

 

Percent

 

 

 

Change

 

Change

 

Change

 

Change

 

Change

 

Change

 

Revenue from rental operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Base rents

 

$

18,100

 

3.8

%

$

2,356

 

0.5

%

$

15,744

 

3.3

%

Escalations and recoveries from tenants

 

6,566

 

11.0

 

4,937

 

8.2

 

1,629

 

2.8

 

Parking and other

 

(5,841

)

(31.2

)

(5,834

)

(31.2

)

(7

)

—

 

Total

 

$

18,825

 

3.4

%

$

1,459

 

0.3

%

$

17,366

 

3.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate taxes

 

$

6,623

 

10.6

%

$

4,443

 

7.1

%

$

2,180

 

3.5

%

Utilities

 

1,612

 

4.0

 

1,124

 

2.8

 

488

 

1.2

 

Operating services

 

4,417

 

6.2

 

3,240

 

4.5

 

1,177

 

1.7

 

Total

 

$

12,652

 

7.3

%

$

8,807

 

5.1

%

$

3,845

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Consolidated Properties

 

261

 

 

 

244

 

 

 

17

 

 

 

Square feet (in thousands)

 

27,662

 

 

 

25,050

 

 

 

2,612

 

 

 

 

Base rents for the Same-Store Properties increased $2.4 million, or 0.5 percent, for 2004 as compared to 2003, due primarily to increases in occupancies at the properties in 2004 from 2003.  Escalations and recoveries from tenants for the Same-Store Properties increased $4.9 million, or 8.2 percent, for 2004 over 2003, due primarily to an increased amount of total property expenses in 2004.  Parking and other income for the Same-Store Properties decreased $5.8 million, or 31.2 percent, due primarily to a decrease in lease termination fees of $3.9 million in 2004 as compared to 2003 and a construction management fee of $1.2 million in 2003.

 

Real estate taxes on the Same-Store Properties increased $4.4 million, or 7.1 percent, for 2004 as compared to 2003, due primarily to property tax rate increases in certain municipalities in 2004, partially offset by lower assessments on certain properties in 2004.  Utilities for the Same-Store Properties increased $1.1 million, or 2.8 percent, for 2004 as compared to 2003, due primarily to increased electric rates in 2004.  Operating services for the Same-Store Properties increased $3.2 million, or 4.5 percent, due primarily to increased repairs and maintenance expenses of $2.6 million, increased insurance costs of $2.1 million, and property management salaries and related expenses of $0.6 million in 2004 as compared to 2003, partially offset by a decrease in snow removal costs in 2004 of $2.0 million.

 

General and administrative increased by $0.5 million, or 1.5 percent, for 2004 as compared to 2003.  This increase was due primarily to compensation costs incurred in connection with the 2004 resignation of the Corporation’s president of $1.3 million and an increase in other salaries and related expenses of $0.9 million in 2004, partially offset by costs for transactions not consummated of $1.7 million in 2003.

 

Depreciation and amortization increased by $14.6 million, or 12.9 percent, for 2004 over 2003.  Of this increase, $9.3 million, or 8.3 percent, was attributable to the Same-Store Properties primarily on account of the amortization of additional tenant installation costs and $5.3 million, or 4.6 percent, was due to the Acquired Properties.

 

Interest expense decreased $5.8 million, or 5.0 percent, for 2004 as compared to 2003.  This decrease was primarily as a result of the Operating Partnership’s ability to refinance maturing debt at lower rates, as well as lower average debt balances in 2004.

 

Interest income increased $0.3 million, or 24.5 percent, for 2004 as compared to 2003.  This decrease was due primarily to higher average cash balances in 2004.

 

Loss on early retirement of debt, net, amounted to $2.4 million in 2003, which was due to costs incurred with the exchange in 2003 of $25.0 million face amount of 7.18 percent senior unsecured notes due December 31, 2003 for $26.1

 

53


 

million face amount of 5.82 percent senior unsecured notes due March 15, 2003, with interest payable semi-annually in arrears.

 

Income from continuing operations before equity in earnings of unconsolidated joint ventures decreased to $123.4 million in 2004 from $123.9 million in 2003.  The decrease of approximately $0.5 million was due to the factors discussed above.

 

Equity in earnings of unconsolidated joint ventures decreased $17.4 million, or 128.8 percent, for 2004 as compared to 2003.  This decrease was due primarily to the sale of the Operating Partnership’s investment in the American Financial Exchange in late 2003 resulting in a reduction of $11.3 million in 2004, the Operating Partnership’s share of a valuation allowance taken by the Ashford Loop joint venture of $4.9 million in 2004, and a reduction in 2004 of $1.7 million as a result of the sale in 2003 of a property in Anaheim, California, partially offset by an increase from operations of the Hyatt Hotel at Harborside South Pier of $2.2 million for 2004 as compared to 2003.

 

Gain on sale of investment in unconsolidated joint venture amounted to $0.7 million in 2004 on account of the receipt of additional contingent purchase consideration from the Harborside North Pier sale.  Gain on sale of investment in unconsolidated joint venture amounted to approximately $23.9 million in 2003 on account of the sale of the Operating Partnership’s investment in the American Financial Exchange joint venture in 2003.

 

Net income available to common unitholders decreased by $47.1 million, or 29.4 percent, from $160.5 million in 2003 to $113.4 million in 2004.  This decrease was primarily the result of the Operating Partnership having realized an approximately $23.9 million gain on sale of investment in unconsolidated joint venture in 2003 for the sale of its investment in the American Financial Exchange venture, a decrease in equity in earnings of unconsolidated joint ventures of $17.4 million, realized gains on disposition of rental property of $3.5 million in 2003, a decrease in income from discontinued operations of $1.5 million for 2004 as compared to 2003, realized gains (losses) and unrealized losses on disposition of rental property of $0.7 million in 2004, a decrease in income from continuing operations before equity in earnings of unconsolidated joint ventures of $0.5 million, and an increase in preferred unit distributions of $0.3 million. These were partially offset by a gain on sale of investment in unconsolidated joint venture of $0.7 million in 2004.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Liquidity

 

Overview:

Historically, rental revenue has been the principal source of funds to pay operating expenses, debt service, capital expenditures and dividends, excluding non-recurring capital expenditures.  To the extent that the Operating Partnership’s cash flow from operating activities is insufficient to finance its non-recurring capital expenditures such as property acquisitions, development and construction costs and other capital expenditures, the Operating Partnership has and expects to continue to finance such activities through borrowings under its revolving credit facility and other debt and equity financings.

 

The Operating Partnership believes that with the general downturn in the economy in recent years, and the softening of the Operating Partnership’s markets specifically, it is reasonably likely that vacancy rates may continue to increase, effective rental rates on new and renewed leases may continue to decrease and tenant installation costs, including concessions, may continue to increase in most or all of its markets in 2006.  As a result of the potential negative effects on the Operating Partnership’s revenue from the overall reduced demand for office space, the Operating Partnership’s cash flow could be insufficient to cover increased tenant installation costs over the short-term.  If this situation were to occur, the Operating Partnership expects that it would finance any shortfalls through borrowings under its revolving credit facility and other debt financings of the Operating Partnership and equity financings of the Corporation.

 

The Operating Partnership expects to meet its short-term liquidity requirements generally through its working capital, net cash provided by operating activities and from its revolving credit facility.  The Operating Partnership frequently examines potential property acquisitions and development projects and, at any given time, one or more of such

 

54


 

acquisitions or development projects may be under consideration.  Accordingly, the ability to fund property acquisitions and development 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 and short-term borrowings (including draws on the Operating Partnership’s revolving credit facility) and the issuance of additional debt and/or equity securities.

 

REIT Restrictions:

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 common stockholders which, based upon current policy, in the aggregate would equal approximately $156.6 million on an annualized basis.  However, any such distribution, whether for federal income tax purposes or otherwise, would only be paid out of available cash, including borrowings and other sources, after meeting operating requirements, preferred stock and unit dividends and distributions, and scheduled debt service on the Operating Partnership’s debt.

 

Property Lock-Ups:

The Corporation may not dispose of or distribute certain of its properties, currently comprising 56 properties with an aggregate net book value of approximately $1.3 billion, which were originally contributed by members of either the Mack Group (which includes William L. Mack, Chairman of the Corporation’s Board of Directors; David S. Mack, a director of the Corporation; Earle I. Mack, a former director of the Corporation; and Mitchell E. Hersh, president, chief executive officer and a director of the Corporation), the Robert Martin Group (which includes Martin S. Berger, a director of the Corporation; Robert F. Weinberg, a former director of the Corporation; and Timothy M. Jones, former president of the Corporation), the Cali Group (which includes John R. Cali, a director of the Corporation, and John J. Cali, a former director of the Corporation) or certain other common unitholders, without the express written consent of a representative of the Mack Group, the Robert Martin Group, the Cali Group or the specific certain other common unitholders, as applicable, except in a manner which does not result in recognition of any built-in-gain (which may result in an income tax liability) or which reimburses the appropriate Mack Group, Robert Martin Group, Cali Group members or the specific certain other common unitholders for the tax consequences of the recognition of such built-in-gains (collectively, the “Property Lock-Ups”).  The aforementioned restrictions do not apply in the event that the Operating Partnership sells all of its properties or in connection with a sale transaction which the Corporation’s Board of Directors determines is reasonably necessary to satisfy a material monetary default on any unsecured debt, judgment or liability of the Operating Partnership or the Corporation or to cure any material monetary default on any mortgage secured by a property.  The Property Lock-Ups expire periodically through 2010.  Upon the expiration of the Property Lock-Ups, the Operating Partnership is generally required to use commercially reasonable efforts to prevent any sale, transfer or other disposition of the subject properties from resulting in the recognition of built-in gain to the appropriate Mack Group, Robert Martin Group, Cali Group members or the specific certain other common unitholders.  74 of our properties, with an aggregate net book value of approximately $667.7 million, have lapsed restrictions and are subject to these conditions.

 

Unencumbered Properties:

As of December 31, 2005, the Operating Partnership had 250 unencumbered properties, totaling 24.7 million square feet, representing 83.7 percent of the Operating Partnership’s total portfolio on a square footage basis.

 

Credit Ratings:

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 existing and prospective preferred stock offerings of the Corporation.  Moody’s Investors Service (“Moody’s”) has assigned its Baa2 rating to existing and prospective senior unsecured debt of the Operating Partnership and its Baa3 rating to its existing and prospective preferred stock offerings of the Corporation.

 

Cash Flows

 

Cash and cash equivalents increased by $48.1 million to $60.4 million at December 31, 2005, compared to $12.3 million at December 31, 2004.  This increase is comprised of the following net cash flow items:

 

55


 

1)                                      $242.9 million provided by operating activities.

 

2)                                      $421.5 million used in investing activities, consisting primarily of the following:

(a)                                  $451.3 million used for additions to rental property;

(b)                                 $17.8 million used for investments in unconsolidated joint ventures;

(c)                                  $51.6 million used for the purchase of marketable securities; partially offset by:

(d)                                 $103.0 million received from proceeds from sale of rental properties.

 

(3)                                  $226.7 million provided by financing activities, consisting primarily of the following:

(a)                                  $1.04 billion from borrowings under the unsecured credit facility;

(b)                                 $398.5 million from proceeds from the sale of senior unsecured notes;

(c)                                  $58.5 million from proceeds received from mortgages;

(d)                                 $16.6 million from proceeds received from stock options and warrants exercised; partially offset by:

(e)                                  $921.6 million used for repayments of borrowings under the Operating Partnership’s unsecured credit facility;

(f)                                    $191.9 million used for payments of dividends and distributions; and

(g)                                 $169.9 million used for repayments of mortgages, loans payable and other obligations.

 

Debt Financing

 

Summary of Debt:

The following is a breakdown of the Operating Partnership’s debt between fixed and variable-rate financing as of December 31, 2005:

 

 

 

Balance

 

 

 

Weighted Average

 

Weighted Average Maturity

 

 

 

($000’s)

 

% of Total

 

Interest Rate (a)

 

in Years

 

 

 

 

 

 

 

 

 

 

 

Fixed Rate Unsecured Debt

 

$

1,430,509

 

67.28

%

6.42

%

6.13

 

Fixed Rate Secured Debt and Other Obligations

 

468,672

 

22.04

%

5.96

%

3.67

 

Variable Rate Unsecured Debt

 

227,000

 

10.68

%

4.84

%

3.90

 

 

 

 

 

 

 

 

 

 

 

Totals/Weighted Average:

 

$

2,126,181

 

100.00

 

6.15

%

5.35

 

 

Debt Maturities:

Scheduled principal payments and related weighted average annual interest rates for the Operating Partnership’s debt as of December 31, 2005 are as follows:

 

 

 

Scheduled

 

Principal

 

 

 

Weighted Avg.

 

 

 

Amortization

 

Maturities

 

Total

 

Interest Rate of

 

Period

 

($000’s)

 

($000’s)

 

($000’s)

 

Future Repayments (a)

 

 

 

 

 

 

 

 

 

 

 

2006

 

$

18,276

 

$

160,189

 

$

178,465

 

6.90

%

2007

 

17,098

 

9,364

 

26,462

 

5.69

%

2008

 

16,292

 

—

 

16,292

 

4.97

%

2009

 

7,175

 

527,000

 

534,175

 

6.33

%

2010

 

1,480

 

315,000

 

316,480

 

5.19

%

Thereafter

 

9,781

 

1,050,033

 

1,059,814

 

5.98

%

Sub-total

 

70,102

 

2,061,586

 

2,131,688

 

6.15

%

Adjustment for unamortized debt discount/premium, net, as of December 31, 2005

 

(5,507

)

—

 

(5,507

)

—

 

 

 

 

 

 

 

 

 

 

 

Totals/Weighted Average

 

$

64,595

 

$

2,061,586

 

$

2,126,181

 

6.15

%

 

(a)          Actual weighted average LIBOR contract rates relating to the Operating Partnership’s outstanding debt as of December 31, 2005 of 4.36 percent was used in calculating revolving credit facility.

 

56


 

Senior Unsecured Notes:

On January 25, 2005, the Operating Partnership issued $150 million face amount of 5.125 percent senior unsecured notes due January 15, 2015 with interest payable semi-annually in arrears.  The proceeds from the issuance (net of selling commissions and discount) of approximately $148.1 million was used primarily to reduce outstanding borrowings under the unsecured facility.

 

On April 15, 2005, the Operating Partnership issued $150 million face amount of 5.05 percent senior unsecured notes due April 15, 2010 with interest payable semi-annually in arrears.  The proceeds from the issuance (net of selling commissions and discount) of approximately $148.8 million were used to reduce outstanding borrowings under the 2004 unsecured facility.

 

On November 15, 2005, the Operating Partnership issued $100 million face amount of 5.80 percent senior unsecured notes due January 15, 2016 with interest payable semi-annually in arrears.  The proceeds from the issuance (net of selling commissions and discount) of approximately $99 million were used to reduce outstanding borrowings under the 2004 unsecured facility.

 

On January 24, 2006, the Operating Partnership issued $100 million face amount of 5.80 percent senior unsecured notes due January 15, 2016 with interest payable semi-annually in arrears, and $100 million face amount of 5.25 percent senior unsecured notes due January 15, 2012 with interest payable semi-annually in arrears.  The Operating Partnership’s total proceeds from the issuances, including accrued interest on the 5.80 percent notes of approximately $200.8 million, were used to reduce outstanding borrowings under the total unsecured facility.

 

The terms of the Operating Partnership’s senior unsecured notes (which totaled approximately $1.4 billion as of December 31, 2005) include certain restrictions and covenants which require compliance with financial ratios relating to the maximum amount of debt leverage, the maximum amount of secured indebtedness, the minimum amount of debt service coverage and the maximum amount of unsecured debt as a percent of unsecured assets.

 

Unsecured Revolving Credit Facility:

In 2004, the Operating Partnership obtained an unsecured revolving credit facility with a borrowing capacity of $600 million (expandable to $800 million), which replaced a credit facility of the same size.  The interest rate on outstanding borrowings (not electing the Operating Partnership’s competitive bid feature) under the unsecured facility is currently LIBOR plus 65 basis points.  The facility has a competitive bid feature, which allows the Operating Partnership to solicit bids from lenders under the facility to borrow up to $300 million at interest rates less than the current LIBOR plus 65 basis point spread.  As of December 31, 2005, the Operating Partnership’s outstanding borrowings carried a weighted average interest rate of LIBOR plus 49 points.  The Operating Partnership may also elect an interest rate representing the higher of the lender’s prime rate or the Federal Funds rate plus 50 basis points.  The unsecured facility, which also required a 20 basis point facility fee on the current borrowing capacity payable quarterly in arrears, was scheduled to mature in November 2007.

 

On September 16, 2005, the Operating Partnership extended and modified its unsecured facility with a group of 23 lenders (reduced from 27).  The facility was extended for an additional two years and now matures in November 2009, with an extension option of one year, which would require a payment of 25 basis points of the then borrowing capacity of the facility upon exercise.  In addition, the facility fee was reduced by five basis points to 15 basis points at the BBB/Baa2 pricing level.

 

The interest rate and the facility fee are subject to adjustment, on a sliding scale, based upon the operating partnership’s unsecured debt ratings.  In the event of a change in the Operating Partnership’s unsecured debt rating, the interest and facility fee rates will be adjusted in accordance with the following table:

 

57


 

 

Operating Partnership’s
Unsecured Debt Ratings:
S&P Moody’s/Fitch (a)

 

Interest Rate –
Applicable Basis Points
Above LIBOR

 

Facility Fee
Basis Points

 

No ratings or less than BBB-/Baa3/BBB-

 

112.5

 

25.0

 

BBB-/Baa3/BBB-

 

80.0

 

20.0

 

BBB/Baa2/BBB (current)

 

65.0

 

15.0

 

BBB+/Baa1/BBB+

 

55.0

 

15.0

 

A-/A3/A- or higher

 

50.0

 

15.0

 

 

(a)          If the Operating Partnership has debt ratings from two rating agencies, one of which is Standard & Poor’s Rating Services (“S&P”) or Moody’s Investors Service (“Moody’s”), the rates per the above table shall be based on the lower of such ratings. If the Operating Partnership has debt ratings from three rating agencies, one of which is S&P or Moody’s, the rates per the above table shall be based on the lower of the two highest ratings. If the Operating Partnership has debt ratings from only one agency, it will be considered to have no rating or less than BBB-/Baa3/BBB- per the above table.

 

The terms of the unsecured facility include certain restrictions and covenants which limit, among other things, the payment of dividends (as discussed below), the incurrence of additional indebtedness, the incurrence of liens and the disposition of real estate properties (to the extent that: (i) such property dispositions cause the Operating Partnership to default on any of the financial ratios of the facility described below, or (ii) the property dispositions are completed while the Operating Partnership is under an event of default under the facility, unless, under certain circumstances, such disposition is being carried out to cure such default), and which require compliance with financial ratios relating to the maximum leverage ratio, the maximum amount of secured indebtedness, the minimum amount of tangible net worth, the minimum amount of fixed charge coverage, the maximum amount of unsecured indebtedness, the minimum amount of unencumbered property interest coverage and certain investment limitations.  The dividend restriction referred to above provides that, except to enable the 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 common equity interests in an aggregate amount in excess of 90 percent of funds from operations (as defined in the facility agreement) for such period, subject to certain other adjustments.

 

The lending group for the unsecured facility consists of: JPMorgan Chase Bank, N.A., as administrative agent; Bank of America, N.A., as syndication agent; The Bank of Nova Scotia, New York Agency; Wachovia Bank, National Association; and Wells Fargo Bank, National Association, as documentation agents; SunTrust Bank, as senior managing agent; US Bank National Association; Citicorp North America, Inc.; and PNC Bank National Association, as managing agents; and Bank of China, New York Branch; The Bank of New York; Chevy Chase Bank, F.S.B.; The Royal Bank of Scotland, plc; Mizuho Corporate Bank, Ltd.; UFJ Bank Limited, New York Branch; The Governor and Company of the Bank of Ireland; Bank Hapoalim B.M.; Comerica Bank; Chang Hwa Commercial Bank, Ltd., New York Branch; First Commercial Bank, New York Agency; Chiao Tung Bank Co., Ltd., New York Agency; Deutsche Bank Trust Company Americas; and Hua Nan Commercial Bank, New York Agency.

 

Mortgages, Loans Payable and Other Obligations:

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

 

Debt Strategy:

The Operating Partnership does not intend to reserve funds to retire the Operating Partnership’s senior unsecured notes or its mortgages, loans payable and other obligations 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 on or before the applicable maturity dates.  If it cannot raise sufficient proceeds to retire the maturing debt, the Operating Partnership may draw on its revolving credit facility to retire the maturing indebtedness, which would reduce the future availability of funds under such facility.  As of December 31, 2005, the Operating Partnership had $227 million of outstanding borrowings under its $600 million unsecured revolving credit facility.  The Operating Partnership is reviewing various refinancing options, including the purchase of its senior unsecured notes in privately-negotiated transactions, the issuance of additional, or exchange of current, unsecured debt or equity securities of the Operating Partnership, or preferred stock of the Corporation, and/or obtaining additional mortgage debt, some or

 

58


 

all of which may be completed during 2006.  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 Corporation’s ability to make the expected distributions discussed below may be adversely affected.

 

Equity Financing and Registration Statements

 

Equity Activity:

The following table presents the changes in the Corporation’s issued and outstanding shares of Common Stock and the Operating Partnership’s common units and preferred units (as converted) since December 31, 2004:

 

 

 

Common
Stock

 

Common
Units

 

Preferred Units,
as Converted (a)

 

Total

 

Outstanding at December 31, 2004

 

61,038,875

 

7,616,447

 

6,205,426

 

74,860,748

 

Stock options exercised

 

574,506

 

—

 

—

 

574,506

 

Preferred units converted into common units

 

—

 

6,205,426

 

(6,205,426

)

—

 

Common units redeemed for Common Stock

 

234,762

 

(234,762

)

—

 

—

 

Common units issued

 

—

 

63,328

 

—

 

63,328

 

Shares issued under Dividend Reinvestment and Stock Purchase Plan

 

8,922

 

—

 

—

 

8,922

 

Shares issued under deferred compensation plan

 

4,921

 

—

 

—

 

4,921

 

Restricted shares issued, net of cancellations

 

157,660

 

—

 

—

 

157,660

 

 

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2005

 

62,019,646

 

13,650,439

 

—

 

75,670,085

 

 

(a)          On June 13, 2005, 215,018 Series B preferred units were converted into 6,205,426 common units.

 

Share Repurchase Program:

On September 13, 2000, the Board of Directors of the Corporation authorized an increase to the Corporation’s repurchase program under which the Corporation was permitted to purchase up to an additional $150.0 million of the Corporation’s outstanding common stock (“Repurchase Program”).  From that date through its last purchases on January 10, 2003, the Corporation purchased and retired, under the Repurchase Program, 3.7 million shares of its outstanding common stock for an aggregate cost of approximately $104.5 million.  Concurrent with these purchases, the Corporation sold to the Operating Partnership 3.7 million of its outstanding common units for an aggregate cost of approximately $104.5 million.  The Corporation has a remaining authorization to repurchase up to an additional $45.5 million of its outstanding common stock, which it may repurchase from time to time in open market transactions at prevailing prices or through privately negotiated transactions.

 

Shelf Registration Statements:

The Corporation has an effective shelf registration statement on Form S-3 filed with the Securities and Exchange Commission (“SEC”) for an aggregate amount of $2.0 billion in common stock, preferred stock, depositary shares and/or warrants of the Corporation, under which no securities have been sold.

 

The Corporation and the Operating Partnership also have an effective shelf registration statement on Form S-3 filed with the SEC for an aggregate amount of $2.5 billion in common stock, preferred stock, depositary shares and guarantees of the Corporation and debt securities of the Operating Partnership, under which $600 million of securities have been sold through February 17, 2006 and $1.9 billion remains available for future issuances.

 

59


 

Off-Balance Sheet Arrangements

 

Unconsolidated Joint Venture Debt:

The debt of the Operating Partnership’s unconsolidated joint ventures aggregating $118.8 million, at December 31, 2005, is non-recourse to the Operating Partnership except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions and material misrepresentations.  The Operating Partnership has severally guaranteed repayment of approximately $3.8 million on a mortgage at the Harborside South Pier joint venture.  The Operating Partnership has also posted a $7.6 million letter of credit in support of the Harborside South Pier joint venture, $3.8 million of which is indemnified by Hyatt.

 

The Operating Partnership’s off-balance sheet arrangements are further discussed in Note 4: Investments in Unconsolidated Joint Ventures to the Financial Statements.

 

Contractual Obligations

 

The following table outlines the timing of payment requirements related to the Operating Partnership’s debt (principal and interest), PILOT agreements, and ground lease agreements as of December 31, 2005 (dollars in thousands):

 

 

 

Payments Due by Period

 

 

 

 

 

Less than 1

 

1 – 3

 

4 – 5

 

6 – 10

 

After 10

 

 

 

Total

 

year

 

years

 

years

 

years

 

years

 

Senior unsecured notes

 

$

1,790,776

 

$

89,444

 

$

178,889

 

$

607,476

 

$

812,067

 

$

102,900

 

Revolving credit facility (1)

 

270,068

 

10,996

 

21,992

 

237,080

 

—

 

—

 

Mortgages, loans payable and other obligations

 

538,793

 

193,516

 

59,696

 

173,722

 

56,574

 

55,285

 

Payments in lieu of taxes (PILOT)

 

71,064

 

8,228

 

12,580

 

8,587

 

22,514

 

19,155

 

Ground lease payments

 

22,216

 

530

 

1,544

 

1,020

 

2,606

 

16,516

 

Total

 

$

2,692,917

 

$

302,714

 

$

274,701

 

$

1,027,885

 

$

893,761

 

$

193,856

 

 

(1)          Interest payments assume current credit facility borrowings and interest rate remain at the December 31, 2005 level until maturity.

 

Other Commitments and Contingencies

 

Legal Proceedings:

On February 12, 2003, the NJSEA selected The Mills Corporation and the Operating Partnership to redevelop the Continental Airlines Arena site (“Arena Site”) for mixed uses, including retail.  In March 2003, Hartz Mountain Industries, Inc., (“Hartz”), filed a lawsuit in the Superior Court of New Jersey, Law Division, for Bergen County, seeking to enjoin NJSEA from entering into a contract with the Meadowlands Venture for the redevelopment of the Continental Airlines Arena site.  In May 2003, the court denied Hartz’s request for an injunction and dismissed its suit for failure to exhaust administrative remedies.  In June 2003, the NJSEA held hearings on Hartz’s protest, and on a parallel protest filed by another rejected developer, Westfield, Inc. (“Westfield”).  On September 10, 2003, the NJSEA ruled against Hartz’s and Westfield’s protests, Hartz and Westfield, as well as Elliot Braha and three other taxpayers (collectively “Braha”), thereafter filed appeals from the NJSEA’s final decision.  By decision dated May 14, 2004, the Appellate Division of the Superior Court of New Jersey rejected the appellants’ contention that the NJSEA lacks statutory authority to allow retail development of its property.  The Appellate Division also remanded Hart’s claim under the Open Public Records Acts, seeking disclosure of additional documents from NJSEA, to the Law Division for further proceedings. The Supreme Court of New Jersey declined to review the Appellate Division’s decision.  On August 19, 2004, the Law Division issued a decision resolving Hartz’s Open Public Records Act claim and ordered NJSEA to disclose some, but not all, of the documents Hartz was seeking.  The Appellate Division, in a decision rendered on November 24, 2004, upheld the findings of the Law Division in the remand proceeding.  The Supreme Court of New Jersey declined to review the Appellate Division’s decision.  At Hartz’s request, the NJSEA thereafter held further hearings on December 15 and

 

60


 

16, 2004, to review certain additional facts in support of Hartz’s and Westfield’s bid protest.  Braha, as a taxpayer, did not have standing to participate in the supplemental protest hearing.  On March 4, 2005, the Hearing Officer rendered his Supplemental Report and Recommendation to the NJSEA, finding no merit in the protests presented by Hartz and Westfield.  The NJSEA accepted the Hearing Officer’s Supplemental Report and Recommendation on March 30, 2005 and Hartz and Braha have appealed that decision to the Appellate Division.

 

In January 2004, Hartz and Westfield also appealed to the Appellate Division of the Supreme Court of New Jersey from the NJSEA’s December 2003 approval and execution of the Redevelopment Agreement with the Meadowlands Venture.

 

In November 2004, Hartz and Westfield filed additional appeals in the Appellate Division challenging NJSEA’s resolution authorizing the execution of the First Amendment to the Redevelopment Agreement with Meadowlands Venture and the ground lease with the Meadowlands Venture.

 

All of the above appeals have been consolidated by the Appellate Division and are pending.

 

On September 30, 2004, the Borough of Carlstadt filed an action in the Superior Court of New Jersey Law Division, challenging Meadowlands Xanadu, which asserts claims that are substantially the same as claims asserted by Hartz and Braha in the above appeals.  By Order dated November 19, 2004, the Law Division transferred that matter to the Superior Court of New Jersey, Appellate Division.  The matter is pending.

 

Several appeals filed by Hartz, Westfield and others, including certain environmental groups, that challenge certain approvals received by the Meadowlands Venture from the NJSEA, the New Jersey Meadowlands Commission (“NJMC”) and the New Jersey Department of Environmental Protection (“NJDEP”) remain pending before the Appellate Division. Some of these appeals challenge NJDEP’s issuance of a stream encroachment permit, waterfront development permit, and coastal zone consistency determination for Meadowlands Xanadu.  Other of these appeals are from NJDEP’s and NJMC’s issuance of reports in connection with a consultation process the NJSEA was statutorily required to undertake in connection with any NJSEA-development project.

 

A Hartz affiliate and a trade association have filed an appeal from an advisory opinion favorable to the Meadowlands Venture issued by the Director of the Division of Alcoholic Beverage Control concerning the availability of special concessionaire permits.  That appeal is also pending in the Appellate Division of the Superior Court of New Jersey.

 

Three separate lawsuits have been filed in the United States District Court for the District of New Jersey, challenging a permit issued by the U.S. Army Corps of Engineers (“USACE”) in connection with the project.  The first suit was filed on March 30, 2005, by the Sierra Club, the New Jersey Public Interest Group, Citizen Lobby, Inc. and the New Jersey Environmental Federation.  Additional suits were filed on May 16 and May 31, 2005, respectively, by Hartz (together with one of its officers as an individual named plaintiff) and the Borough of Carlstadt.  The Sierra Club also filed a motion for a preliminary injunction to stop certain construction activities on the project, which the Court denied on July 6, 2005.  The parties are currently briefing cross motions for summary judgment on the merits of the Sierra Club’s claims. A decision is expected sometime in the latter part of 2006.  On October 26, 2005, the court granted the motions of the Meadowlands Venture and the USACE to dismiss the Hartz complaint for lack of standing.  The deadline for appealing that decision has passed, so the Hartz action is ended.  On October 31, 2005, the USACE filed a motion to dismiss the complaint filed by the Borough of Carlstadt for lack of standing.  On February 7, 2006 the Court granted the motion and dismissed the Borough of Carlstadt complaint in its entirety.  Subject to any appeal that may be brought within 60 days after this order of dismissal, the Borough of Carlstadt action is ended.

 

On April 5, 2005, the New York Football Giants (“Giants”) filed an emergent application with the Supreme Court of New Jersey, Chancery Division, seeking an injunction stopping all work on the Meadowlands Xanadu as being in violation of its existing lease with the NJSEA.  The court heard an oral argument on the application on August 5, 2005, and denied the Giants’ motion for preliminary injunctive relief.  The Giants’ claim for permanent injunction relief remains pending.  However, the parties to this dispute have reached a tentative settlement.  In September 2005, the Giants and Meadowlands Venture executed a settlement agreement.  NJSEA subsequently proposed modifications to the settlement agreement, and the parties have not yet executed a final agreement.  The proposed settlement agreement provides, among other things, for the Meadowlands Venture to pay the Giants approximately $15 million as

 

61


 

compensation for claims of construction interference and for the Giants to otherwise withdraw the assertion of the right to object to the project.

 

The New Jersey Builders’ Association (“NJBA”) has commenced an action, which is pending in the Appellate Division, alleging that the NJSEA has failed to meet a purported obligation to provide affordable housing at the Meadowlands Complex and seeking, among other relief, an order enjoining the construction of Meadowlands Xanadu.  NJBA filed an application for preliminary injunctive relief seeking to enjoin further construction of Meadowlands Xanadu, which the Appellate Division denied on July 28, 2005.  The Meadowlands Venture is not a party to that action.

 

On January 25, 2006, the Bergen Cliff Hawks Baseball Club, LLC (the “Cliff Hawks”), filed a complaint against the Operating Partnership and Mills, alleging that the Operating Partnership and Mills breached an agreement to provide the Cliff Hawks with a minor league baseball park as part of the Xanadu Project.  This matter remains pending.

 

The Operating Partnership believes that the Meadowlands Venture’s proposal and the planned project comply with applicable laws, and the Meadowlands Venture intends to continue its vigorous defense of its rights under the Redevelopment Agreement and Ground Lease.  Although there can be no assurance, the Operating Partnership does not believe that the pending lawsuits will have any material affect on its ability to develop the Meadowlands Xanadu project.

 

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

 

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.

 

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

 

We consider portions of this information, including the documents incorporated by reference, to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.  We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of such act.  Such forward-looking statements relate to, without limitation, our future economic performance, plans and objectives for future operations and projections of revenue and other financial items.  Forward-looking statements can be identified by the use of words such as “may,” “will,” “plan,” “should,” “expect,” “anticipate,” “estimate,” “continue” or comparable terminology.  Forward-looking statements are inherently subject to risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate.  Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, we can give no assurance that such expectations will be achieved.  Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

 

Among the factors about which we have made assumptions are:

 

•                  changes in the general economic climate and conditions, including those affecting industries in which our principal tenants compete;

 

•                  any failure of the general economy to recover from the current economic downturn;

 

•                  the extent of any tenant bankruptcies or of any early lease terminations;

 

•                  our ability to lease or re-lease space at current or anticipated rents;

 

62


 

•                  changes in the supply of and demand for office, office/flex and industrial/warehouse properties;

 

•                  changes in interest rate levels;

 

•                  changes in operating costs;

 

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

 

•                  the availability of financing;

 

•                  changes in governmental regulation, tax rates and similar matters; and

 

•                  other risks associated with the development and acquisition of properties, including risks that the development may not be completed on schedule, that the tenants will not take occupancy or pay rent, or that development or operating costs may be greater than anticipated.

 

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

 

ITEM 7A.                    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, commodity prices and equity prices.  In pursuing its business plan, the primary market risk to which the 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, its ability to make distributions or payments to its investors.

 

Approximately $1.9 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 December 31, 2005 was LIBOR plus 65 basis points.

 

December 31, 2005
Debt,
including current portion

 

2006

 

2007

 

2008

 

2009

 

2010

 

Thereafter

 

Total

 

Fair Value

 

($’s in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Rate

 

$

177,487

 

$

25,485

 

$

15,314

 

$

306,383

 

$

315,775

 

$

1,058,737

 

$

1,899,181

 

$

1,938,567

 

Average Interest Rate

 

6.90

%

5.69

%

4.97

%

7.43

%

5.19

%

6.13

%

6.30

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable Rate

 

 

 

 

 

 

 

$

227,000

 

 

 

 

 

$

227,000

 

$

227,000

 

 

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 could adversely affect its operating results and liquidity.

 

The Operating Partnership has also invested in the marketable securities of another REIT and is primarily exposed to equity price risk from adverse changes in market rates and conditions.  All marketable securities are classified as available for sale and are carried at fair value.

 

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ITEM 8.                             FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

The information required by Item 8 is contained in the Consolidated Financial Statements, together with the notes to the Consolidated Financial Statements and the report of independent registered public accounting firm.

 

ITEM 9.                             CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A.                    CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures. The Operating Partnership’s management, with the participation of the Corporation’s chief executive officer and chief financial officer, has evaluated the effectiveness of the Operating Partnership’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Corporation’s chief executive officer and chief financial officer have concluded that, as of the end of such period, the Operating Partnership’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Operating Partnership in the reports that it files or submits under the Exchange Act.

 

Management’s Report on Internal Control Over Financial Reporting.  Internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, is a process designed by, or under the supervision of, the Corporation’s chief executive officer and chief financial officer, or persons performing similar functions, and effected by the Corporation’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  The Operating Partnership’s management, with the participation of the Corporation’s chief executive officer and chief financial officer, has established and maintained policies and procedures designed to maintain the adequacy of the Operating Partnership’s internal control over financial reporting, and includes those policies and procedures that:

 

(1)                      Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Operating Partnership;

 

(2)                      Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Operating Partnership are being made only in accordance with authorizations of management and directors of the Corporation; and

 

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

 

The Operating Partnership’s management has evaluated the effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2005 based on the criteria established in a report entitled Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment and those criteria, the Operating Partnership’s management has concluded that the Operating Partnership’s internal control over financial reporting was effective as of December 31, 2005.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become

 

64


 

inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

 

Management’s assessment of the effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2005 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

 

Changes In Internal Control Over Financial Reporting.  There have not been any changes in the Operating Partnership’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.

 

ITEM 9B.                    OTHER INFORMATION

 

Not Applicable.

 

PART III

 

ITEM 10.                      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

 

The information required by Item 10 is incorporated by reference to the Corporation’s definitive proxy statement for its annual meeting of shareholders expected to be held on May 24, 2006.

 

ITEM 11.                      EXECUTIVE COMPENSATION

 

The information required by Item 11 is incorporated by reference to the Corporation’s definitive proxy statement for its annual meeting of shareholders expected to be held on May 24, 2006.

 

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

 

The information required by Item 12 is incorporated by reference to the Corporation’s definitive proxy statement for its annual meeting of shareholders expected to be held on May 24, 2006.

 

ITEM 13.                      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

The information required by Item 13 is incorporated by reference to the Corporation’s definitive proxy statement for its annual meeting of shareholders expected to be held on May 24, 2006.

 

ITEM 14.                      PRINCIPAL ACCOUNTING FEES AND SERVICES

 

The information required by Item 14 is incorporated by reference to the Corporation’s definitive proxy statement for its annual meeting of shareholders expected to be held on May 24, 2006.

 

65


 

PART IV

 

ITEM 15.                      EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

(a) 1.

 

Financial Statements and Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm

 

 

 

 

 

Consolidated Balance Sheets as of December 31, 2005 and 2004

 

 

 

 

 

Consolidated Statements of Operations for the Years Ended December 31, 2005, 2004 and 2003

 

 

 

 

 

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2005, 2004 and 2003

 

 

 

 

 

Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003

 

 

 

 

 

Notes to Consolidated Financial Statements

 

 

 

(a) 2.

 

Financial Statement Schedules

 

 

 

 

 

Schedule III - Real Estate Investments and Accumulated Depreciation as of December 31, 2005

 

 

 

 

 

All other schedules are omitted because they are not required or the required information is shown in the financial statements or notes thereto.

 

 

 

(a) 3.

 

Exhibits

 

 

 

 

 

The exhibits required by this item are set forth on the Exhibit Index attached hereto.

 

66


 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Partners of Mack-Cali Realty, L.P.:

 

We have completed integrated audits of Mack-Cali Realty, L.P.’s 2005 and 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2005, and an audit of its 2003 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Our opinions, based on our audits, are presented below.

 

Consolidated financial statements and financial statement schedule

 

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Mack-Cali Realty, L.P. and its subsidiaries (collectively, the “Operating Partnership”) at December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America.  In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.  These financial statements and financial statement schedule are the responsibility of the Operating Partnership’s management.  Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.  We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

 

Internal control over financial reporting

 

Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A, that the Operating Partnership maintained effective internal control over financial reporting as of December 31, 2005 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Operating Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control - Integrated Framework issued by the COSO. The Operating Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting.  Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Operating Partnership’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.  An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinions.

 

67


 

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

 

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

 

/s/ PricewaterhouseCoopers LLP

New York, New York

February 22, 2006

 

68


 

MACK-CALI REALTY, L.P. AND SUBSIDIARIES

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

 

 

 

December 31,

 

 

 

2005

 

2004

 

ASSETS

 

 

 

 

 

Rental property

 

 

 

 

 

Land and leasehold interests

 

$

637,653

 

$

593,606

 

Buildings and improvements

 

3,539,003

 

3,296,789

 

Tenant improvements

 

307,664

 

262,626

 

Furniture, fixtures and equipment

 

7,432

 

7,938

 

 

 

4,491,752

 

4,160,959

 

Less – accumulated depreciation and amortization

 

(722,980

)

(641,626

)

 

 

3,768,772

 

3,519,333

 

Rental property held for sale, net

 

—

 

19,132

 

Net investment in rental property

 

3,768,772

 

3,538,465

 

Cash and cash equivalents

 

60,397

 

12,270

 

Marketable securities available for sale at fair value

 

50,847

 

—

 

Investments in unconsolidated joint ventures

 

62,138

 

46,743

 

Unbilled rents receivable, net

 

92,692

 

82,586

 

Deferred charges and other assets, net

 

197,634

 

155,060

 

Restricted cash

 

9,221

 

10,477

 

Accounts receivable, net of allowance for doubtful accounts of $1,088 and $1,235

 

5,801

 

4,564

 

 

 

 

 

 

 

Total assets

 

$

4,247,502

 

$

3,850,165

 

 

 

 

 

 

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

Senior unsecured notes

 

$

1,430,509

 

$

1,031,102

 

Revolving credit facilities

 

227,000

 

107,000

 

Mortgages, loans payable and other obligations

 

468,672

 

564,198

 

Distributions payable

 

48,178

 

47,712

 

Accounts payable, accrued expenses and other liabilities

 

85,481

 

57,002

 

Rents received in advance and security deposits

 

47,685

 

47,938

 

Accrued interest payable

 

27,871

 

22,144

 

Total liabilities

 

2,335,396

 

1,877,096

 

 

 

 

 

 

 

Minority interest in consolidated joint ventures

 

—

 

11,103

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Partners’ capital:

 

 

 

 

 

General Partner, 10,000 and 10,000 preferred units outstanding

 

24,836

 

24,836

 

Limited partners, 0 and 215,018 preferred units outstanding

 

—

 

220,547

 

General Partner, 62,019,646 and 61,038,875 common units outstanding

 

1,487,241

 

1,520,275

 

Limited partners, 13,650,439 and 7,616,447 common units outstanding

 

400,819

 

196,308

 

Accumulated other comprehensive loss

 

(790

)

—

 

Total partners’ capital

 

1,912,106

 

1,961,966

 

 

 

 

 

 

 

Total liabilities and partners’ capital

 

$

4,247,502

 

$

3,850,165

 

 

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

 

69


 

MACK-CALI REALTY, L.P. AND SUBSIDIARIES

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

 

 

 

Year Ended December 31,

 

 

 

2005

 

2004

 

2003

 

REVENUES

 

 

 

 

 

 

 

Base rents

 

$

541,702

 

$

498,392

 

$

480,292

 

Escalations and recoveries from tenants

 

84,082

 

66,451

 

59,885

 

Parking and other

 

17,621

 

12,906

 

18,747

 

Total revenues

 

643,405

 

577,749

 

558,924

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

Real estate taxes

 

82,056

 

69,085

 

62,462

 

Utilities

 

55,843

 

41,649

 

40,037

 

Operating services

 

89,175

 

75,712

 

71,295

 

General and administrative

 

33,090

 

31,761

 

31,284

 

Depreciation and amortization

 

155,370

 

127,826

 

113,202

 

Interest expense

 

119,337

 

109,649

 

115,430

 

Interest income

 

(856

)

(1,367

)

(1,098

)

Loss on early retirement of debt, net

 

—

 

—

 

2,372

 

Total expenses

 

534,015

 

454,315

 

434,984

 

Income from continuing operations before equity in earnings of unconsolidated joint ventures

 

109,390

 

123,434

 

123,940

 

Minority interest in consolidated joint ventures

 

(74

)

—

 

—

 

Equity in earnings of unconsolidated joint ventures, net

 

248

 

(3,886

)

13,480

 

Gain on sale of investment in unconsolidated joint ventures

 

35

 

720

 

23,952

 

Income from continuing operations

 

109,599

 

120,268

 

161,372

 

Discontinued operations:

 

 

 

 

 

 

 

Income from discontinued operations

 

2,998

 

11,448

 

12,913

 

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

 

5,522

 

(726

)

3,541

 

Total discontinued operations, net

 

8,520

 

10,722

 

16,454

 

Net income

 

118,119

 

130,990

 

177,826

 

Preferred unit distributions

 

(5,909

)

(17,636

)

(17,340

)

Net income available to common unitholders

 

$

112,210

 

$

113,354

 

$

160,486

 

 

 

 

 

 

 

 

 

Basic earnings per common unit:

 

 

 

 

 

 

 

Income from continuing operations

 

$

1.41

 

$

1.50

 

$

2.20

 

Discontinued operations

 

0.11

 

0.16

 

0.25

 

Net income available to common unitholders

 

$

1.52

 

$

1.66

 

$

2.45

 

 

 

 

 

 

 

 

 

Diluted earnings per common unit:

 

 

 

 

 

 

 

Income from continuing operations

 

$

1.40

 

$

1.49

 

$

2.18

 

Discontinued operations

 

0.11

 

0.16

 

0.25

 

Net income available to common unitholders

 

$

1.51

 

$

1.65

 

$

2.43

 

 

 

 

 

 

 

 

 

Distributions declared per common unit

 

$

2.52

 

$

2.52

 

$

2.52

 

 

 

 

 

 

 

 

 

Basic weighted average units outstanding

 

73,729

 

68,110

 

65,526

 

 

 

 

 

 

 

 

 

Diluted weighted average units outstanding

 

74,189

 

68,743

 

65,980

 

 

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

 

70


 

MACK-CALI REALTY, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS= CAPITAL (in thousands)

 

 

 

General

 

Limited

 

General

 

Limited

 

General

 

Limited

 

General

 

Limited

 

Accumulated

 

 

 

 

 

 

 

Partner

 

Partners

 

Partner

 

Partners

 

Partner

 

Partners

 

Partner

 

Partners

 

Others

 

Total

 

 

 

 

 

Preferred

 

Preferred

 

Common

 

Common

 

Preferred

 

Preferred

 

Common

 

Common

 

Comprehensive

 

Partners’

 

Comprehensive

 

 

 

Units

 

Units

 

Units

 

Units

 

Unitholders

 

Unitholders

 

Unitholders

 

Unitholders

 

Income/(Loss)

 

Capital

 

Income

 

Balance at January 1, 2003

 

—

 

216

 

57,318

 

7,813

 

$

—

 

$

221,445

 

$

1,454,194

 

$

208,591

 

—

 

$

1,884,230

 

 

 

Net income

 

—

 

—

 

—

 

—

 

1,672

 

15,668

 

141,381

 

19,105

 

—

 

177,826

 

$

177,826

 

Distributions

 

—

 

—

 

—

 

—

 

(1,672

)

(15,668

)

(147,136

)

(19,657

)

—

 

(184,133

)

—

 

Issuance of preferred units

 

10

 

—

 

—

 

—

 

24,836

 

—

 

—

 

—

 

—

 

24,836

 

—

 

Redemption of preferred units for common units

 

—

 

(1

)

—

 

25

 

—

 

(898

)

—

 

898

 

—

 

—

 

—

 

Redemption of limited partner common units for shares of common stock

 

—

 

—

 

44

 

(44

)

—

 

—

 

1,385

 

(1,385

)

—

 

—

 

—

 

Units issued under Dividend Reinvestment & Stock Repurchase Plan

 

—

 

—

 

4

 

—

 

—

 

—

 

148

 

—

 

—

 

148

 

—

 

Contributions – proceeds from stock options exercised

 

—

 

—

 

1,421

 

—

 

—

 

—

 

47,196

 

—

 

—

 

47,196

 

—

 

Contributions – proceeds from Stock Warrants exercised

 

—

 

—

 

443

 

—

 

—

 

—

 

16,581

 

—

 

—

 

16,581

 

—

 

Stock options expense

 

—

 

—

 

—

 

—

 

—

 

—

 

189

 

—

 

—

 

189

 

—

 

Directors Deferred comp. plan

 

—

 

—

 

—

 

—

 

—

 

—

 

227

 

—

 

—

 

227

 

—

 

Issuance of Restricted Stock Awards

 

—

 

—

 

225

 

—

 

—

 

—

 

1,586

 

—

 

—

 

1,586

 

—

 

Amortization of stock comp.

 

—

 

—

 

—

 

—

 

—

 

—

 

1,931

 

—

 

—

 

1,931

 

—

 

Cancellation of restricted stock

 

—

 

—

 

(35

)

—

 

—

 

—

 

(1,030

)

—

 

—

 

(1,030

)

—

 

Balance at December 31, 2003

 

10

 

215

 

59,420

 

7,795

 

$

24,836

 

$

220,547

 

$

1,516,652

 

$

207,552

 

—

 

$

1,969,587

 

$

177,826

 

Net income

 

—

 

—

 

—

 

—

 

2,000

 

15,636

 

100,453

 

12,901

 

—

 

130,990

 

130,990

 

Distributions

 

—

 

—

 

—

 

—

 

(2,000

)

(15,636

)

(153,097

)

(19,501

)

—

 

(190,234

)

—

 

Redemption of limited partners common units for shares of common stock

 

—

 

—

 

179

 

(179

)

—

 

—

 

4,644

 

(4,644

)

—

 

—

 

—

 

Units issued under Dividend Reinvestment and Stock Purchase Plan

 

—

 

—

 

12

 

—

 

—

 

—

 

481

 

—

 

—

 

481

 

—

 

Contributions – proceeds from stock options exercised

 

—

 

—

 

1,251

 

—

 

—

 

—

 

40,520

 

—

 

—

 

40,520

 

—

 

Contributions – proceeds from Stock Warrants exercised

 

—

 

—

 

149

 

—

 

—

 

—

 

4,925

 

—

 

—

 

4,925

 

—

 

Stock options expense

 

—

 

—

 

—

 

—

 

—

 

—

 

415

 

—

 

—

 

415

 

—

 

Directors Deferred comp. plan

 

—

 

—

 

—

 

—

 

—

 

—

 

265

 

—

 

—

 

265

 

—

 

Issuance of Restricted Stock Awards

 

—

 

—

 

47

 

—

 

—

 

—

 

1,528

 

—

 

—

 

1,528

 

—

 

Amortization of stock comp.

 

—

 

—

 

—

 

—

 

—

 

—

 

3,489

 

—

 

—

 

3,489

 

—

 

Cancellation of restricted stock

 

—

 

—

 

(19

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

Balance at December 31, 2004

 

10

 

215

 

61,039

 

7,616

 

$

24,836

 

$

220,547

 

$

1,520,275

 

$

196,308

 

—

 

$

1,961,966

 

$

130,990

 

Net income

 

—

 

—

 

—

 

—

 

2,000

 

3,909

 

93,488

 

18,722

 

—

 

118,119

 

118,119

 

Distributions

 

—

 

—

 

—

 

—

 

(2,000

)

(3,909

)

(155,702

)

(30,754

)

—

 

(192,365

)

—

 

Conversion of limited partners preferred units into limited partners common units

 

—

 

(215

)

—

 

6,206

 

—

 

(220,547

)

—

 

220,547

 

—

 

—

 

—

 

Redemption of limited partners common units for shares of common stock

 

—

 

—

 

235

 

(235

)

—

 

—

 

6,790

 

(6,790

)

—

 

—

 

—

 

Issuance of limited partner common units

 

—

 

—

 

—

 

63

 

—

 

—

 

—

 

2,786

 

—

 

2,786

 

—-

 

Units issued under Dividend Reinvestment and Stock Purchase Plan

 

—

 

—

 

9

 

—

 

—

 

—

 

390

 

—

 

—

 

390

 

—

 

Contributions – proceeds from stock options exercised

 

—

 

—

 

574

 

—

 

—

 

—

 

16,603

 

—

 

—

 

16,603

 

-

 

Stock options expense

 

—

 

—

 

—

 

—

 

—

 

—

 

448

 

—

 

—

 

448

 

—

 

Comprehensive Loss: Unrealized holding loss on marketable securities available for sale

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

$

(790

)

(790

)

(790

)

Directors Deferred comp. plan

 

—

 

—

 

5

 

—

 

—

 

—

 

288

 

—

 

—

 

288

 

—

 

Issuance of Restricted Stock Awards

 

—

 

—

 

166

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

Amortization of stock comp.

 

—

 

—

 

—

 

—

 

—

 

—

 

4,661

 

—

 

—

 

4,661

 

—

 

Cancellation of restricted stock

 

—

 

—

 

(8

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2005

 

10

 

—

 

62,020

 

13,650

 

$

24,836

 

—

 

$

1,487,241

 

$

400,819

 

$

(790

)

$

1,912,106

 

$

117,329

 

 

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

 

71


 

MACK-CALI REALTY, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

 

 

 

Year Ended December 31,

 

 

 

2005

 

2004

 

2003

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

 

$

118,119

 

$

130,990

 

$

177,826

 

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

 

 

 

 

 

 

 

Depreciation and amortization

 

155,370

 

127,826

 

113,202

 

Depreciation and amortization on discontinued operations

 

729

 

4,748

 

6,558

 

Stock options expense

 

448

 

415

 

189

 

Amortization of stock compensation

 

4,661

 

3,489

 

1,931

 

Amortization of deferred financing costs and debt discount

 

3,271

 

4,163

 

4,713

 

Write-off of unamortized interest rate contract

 

—

 

—

 

1,540

 

Discount on early retirement of debt

 

—

 

—

 

(2,008

)

Equity in earnings of unconsolidated joint venture, net

 

(248

)

3,886

 

(13,480

)

Gain on sale of investment in unconsolidated joint ventures

 

(35

)

(720

)

(23,952

)

(Realized gains) unrealized losses on disposition of rental property

 

(5,522

)

726

 

(3,541

)

Minority interest in consolidated joint ventures

 

74

 

—

 

—

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Increase in unbilled rents receivable, net

 

(13,283

)

(11,230

)

(10,120

)

Increase in deferred charges and other assets, net

 

(40,566

)

(48,305

)

(23,679

)

(Increase) decrease in accounts receivable, net

 

(1,237

)

(106

)

1,832

 

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

 

15,674

 

15,579

 

(9,351

)

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

 

(253

)

7,839

 

1,061

 

Increase (decrease) in accrued interest payable

 

5,727

 

(860

)

(1,944

)

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

242,929

 

$

238,440

 

$

220,777

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

Additions to rental property

 

$

(451,335

)

$

(200,033

)

$

(113,926

)

Repayment of mortgage note receivable

 

81

 

850

 

3,542

 

Investment in unconsolidated joint ventures

 

(17,788

)

(27,945

)

(13,472

)

Distributions from unconsolidated joint ventures

 

—

 

25,942

 

14,624

 

Proceeds from sale of investment in unconsolidated joint venture

 

2,676

 

720

 

164,867

 

Acquisition of minority interest in consolidated joint venture

 

(7,713

)

—

 

—

 

Proceeds from sales of rental property

 

102,980

 

110,141

 

18,690

 

Purchase of marketable securities available for sale

 

(51,637

)

—

 

—

 

Funding of note receivable

 

—

 

(13,042

)

—

 

Decrease (increase) in restricted cash

 

1,256

 

(2,388

)

(312

)

 

 

 

 

 

 

 

 

Net cash (used in) provided by investing activities

 

$

(421,480

)

$

(105,755

)

$

74,013

 

 

 

 

 

 

 

 

 

CASH FLOW FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

Proceeds from senior unsecured notes

 

$

398,480

 

$

202,363

 

$

124,714

 

Borrowings from revolving credit facility

 

1,041,560

 

612,475

 

297,852

 

Repayment of senior unsecured notes

 

—

 

(300,000

)

(95,284

)

Repayment of revolving credit facility

 

(921,560

)

(505,475

)

(370,852

)

Repayment of mortgages, loans payable and other obligations

 

(169,935

)

(58,553

)

(78,687

)

Net proceeds from preferred units issuance

 

—

 

—

 

24,836

 

Repurchase of common units

 

—

 

—

 

(1,030

)

Payment of financing costs

 

(5,071

)

(5,648

)

(577

)

Proceeds from mortgages

 

58,500

 

—

 

—

 

Proceeds from stock options exercised

 

16,603

 

40,520

 

47,196

 

Proceeds from stock warrants exercised

 

—

 

4,925

 

16,581

 

Payment of distributions

 

(191,899

)

(189,397

)

(182,331

)

 

 

 

 

 

 

 

 

Net cash provided by (used in) financing activities

 

$

226,678

 

$

(198,790

)

$

(217,582

)

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

$

48,127

 

$

(66,105

)

$

77,208

 

Cash and cash equivalents, beginning of period

 

12,270

 

78,375

 

$

1,167

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

60,397

 

$

12,270

 

$

78,375

 

 

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

 

72


 

MACK-CALI REALTY, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share/unit amounts)

 

1.              ORGANIZATION AND BASIS OF PRESENTATION

 

ORGANIZATION

Mack-Cali Realty, L.P., a Delaware limited partnership, together with 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”) is the entity through which all of the General Partner’s operations are conducted.

 

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 82.0 percent and 88.9 percent common unit interest in the Operating Partnership as of December 31, 2005 and December 31, 2004, 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.

 

As of December 31, 2005, the Operating Partnership owned or had interests in 270 properties plus developable land (collectively, the “Properties”).  The Properties aggregate approximately 30.0 million square feet, which are comprised of 162 office buildings and 97 office/flex buildings, totaling approximately 29.6 million square feet (which include one office building and one office/flex building aggregating 538,000 square feet owned by unconsolidated joint ventures in which the Operating Partnership has investment interests), six industrial/warehouse buildings totaling approximately 387,400 square feet, two retail properties totaling approximately 17,300 square feet, one hotel (which is owned by an unconsolidated joint venture in which the Operating Partnership has an investment interest) and two parcels of land leased to others.  The Properties are located in seven states, primarily in the Northeast, plus the District of Columbia.

 

BASIS OF PRESENTATION

The accompanying consolidated financial statements include all accounts of the Operating Partnership, its majority-owned and/or controlled subsidiaries, which consist principally of Mack-Cali Realty, L.P. (the “Operating Partnership”) and variable interest entities for which the Operating Partnership has determined itself to be the primary beneficiary, if any.  See Note 2: Significant Accounting Policies – Investments in Unconsolidated Joint Ventures, Net for the Operating Partnership’s treatment of unconsolidated joint venture interests.  Intercompany accounts and transactions have been eliminated.

 

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

 

Certain reclassifications have been made to prior period amounts in order to conform with current period presentation.

 

2.              SIGNIFICANT ACCOUNTING POLICIES

 

Rental

Property                                                                        Rental properties are stated at cost less accumulated depreciation and amortization.  Costs directly related to the acquisition, development and construction of rental properties are capitalized.  Capitalized development and construction costs include pre-construction costs essential to the

 

73


 

development of the property, development and construction costs, interest, property taxes, insurance, salaries and other project costs incurred during the period of development.  Included in total rental property is construction and development in-progress of $118,816 and $86,916 (including land of $58,883 and $53,705) as of December 31, 2005 and 2004, respectively. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives.  Fully-depreciated assets are removed from the accounts.

 

The Operating Partnership considers a construction project as substantially completed and held available for occupancy upon the completion of tenant improvements, but no later than one year from cessation of major construction activity (as distinguished from activities such as routine maintenance and cleanup).  If portions of a rental project are substantially completed and occupied by tenants, or held available for occupancy, and other portions have not yet reached that stage, the substantially completed portions are accounted for as a separate project.  The Operating Partnership allocates costs incurred between the portions under construction and the portions substantially completed and held available for occupancy, and capitalizes only those costs associated with the portion under construction.

 

Properties are depreciated using the straight-line method over the estimated useful lives of the assets.  The estimated useful lives are as follows:

 

Leasehold interests

 

Remaining lease term

 

Buildings and improvements

 

5 to 40 years

 

Tenant improvements

 

The shorter of the term of the related lease or useful life

 

Furniture, fixtures and equipment

 

5 to 10 years

 

 

Upon acquisition of rental property, the Operating Partnership estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities, generally consisting of the fair value of (i) above and below market leases, (ii) in-place leases and (iii) tenant relationships.  The Operating Partnership allocates the purchase price to the assets acquired and liabilities assumed based on their relative fair values.  In estimating the fair value of the tangible and intangible assets acquired, the Operating Partnership considers information obtained about each property as a result of its due diligence and marketing and leasing activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information.  The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

 

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

 

Other intangible assets acquired include amounts for in-place lease values and tenant relationship values, which are based on management’s evaluation of the specific characteristics of each tenant’s lease and the Operating Partnership’s overall relationship with the respective tenant.  Factors to be considered by management in its analysis of in-place lease values include an

 

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estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases.  In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions.  In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses.  Characteristics considered by management in valuing tenant relationships include the nature and extent of the Operating Partnership’s existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals.  The value of in-place leases are amortized to expense over the remaining initial terms of the respective leases.  The value of tenant relationship intangibles are amortized to expense over the anticipated life of the relationships.

 

On a periodic basis, management assesses whether there are any indicators that the value of the Operating Partnership’s real estate properties held for use may be impaired.  A property’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the property over the fair value of the property.  The Operating Partnership’s estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property.  As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved.  Management does not believe that the value of any of the Operating Partnership’s rental properties is impaired.

 

Rental Property

Held for Sale and

Discontinued

Operations                                                           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 as held for sale is less than the net book value of the assets, a valuation allowance is established.  Properties identified as held for sale and/or sold are presented in discontinued operations for all periods presented.  See Note 7: Discontinued Operations.

 

If circumstances arise that previously were considered unlikely and, as a result, the Operating Partnership decides not to sell a property previously classified as held for sale, the property is reclassified as held and used.  A property that is reclassified is measured and recorded individually at the lower of (a) its carrying amount before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.

 

Investments in

Unconsolidated

Joint Ventures, Net               The Operating Partnership accounts for its investments in unconsolidated joint ventures for which Financial Accounting Standards Board (“FASB”) Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities (“FIN 46”) does not apply under the equity method of accounting as the 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.

 

FIN 46 provides guidance on the identification of entities for which control is achieved through

 

75


 

means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIE (the “primary beneficiary”).  Generally, FIN 46 applies when either (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest, (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest.

 

The Operating Partnership has evaluated its joint ventures with regards to FIN 46.  As of December 31, 2005, the Operating Partnership has identified its Meadowlands Xanadu joint venture with the Mills Corporation as a VIE, but is not consolidating such venture as the Operating Partnership is not the primary beneficiary.  Disclosure about this VIE is included in Note 4: Investments in Unconsolidated Joint Ventures.

 

On a periodic basis, management assesses whether there are any indicators that the value of the Operating Partnership’s investments in unconsolidated joint ventures may be impaired.  An investment is impaired only if management’s estimate of the value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary.  To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the value of the investment.  Management does not believe that the value of any of the Operating Partnership’s investments in unconsolidated joint ventures is impaired.  See Note 4: Investments in Unconsolidated Joint Ventures.

 

Cash and Cash

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

 

Marketable

Securities                                                                  The Operating Partnership classifies its marketable securities among three categories: Held-to-maturity, trading and available-for-sale.  Unrealized holding gains and losses are excluded from earnings and reported as other comprehensive income (loss) in stockholders’ equity until realized.

 

A decline in the market value of any marketable security below cost that is deemed to be other than temporary results in a reduction in the carrying amount to fair value.  Any impairment would be charged to earnings and a new cost basis for the security established.

 

The Operating Partnership’s marketable securities at December 31, 2005 carried a value of $50,847 and consisted of 1,468,300 shares of common stock in CarrAmerica Realty Corporation, which were all acquired in 2005.  From January 1, 2006 through January 25, 2006, the Operating Partnership purchased an additional 336,500 shares of common stock in CarrAmerica for a total purchase price of $11,912.

 

The Operating Partnership’s marketable securities at December 31, 2005 are all classified as available-for-sale and are carried at fair value based on quoted market prices.  The Operating Partnership recorded an unrealized holding loss of $790 as other comprehensive loss in 2005.

 

Deferred

Financing Costs                             Costs incurred in obtaining financing are capitalized and amortized on a straight-line basis, which approximates the effective interest method, over the term of the related indebtedness. Amortization of such costs is included in interest expense and was $3,271, $4,163 and $4,713 for the years ended December 31, 2005, 2004 and 2003, respectively.

 

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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 are compensated for providing leasing services to the Properties.  The portion of such compensation, which is capitalized and amortized, approximated $3,855, $3,907 and $3,783 for the years ended December 31, 2005, 2004 and 2003, respectively.

 

Derivative

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

 

Revenue

Recognition                                                    Base rental revenue is recognized on a straight-line basis over the terms of the respective leases. Unbilled rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with the lease agreements.  Above-market and below-market lease values for acquired properties are recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed-rate renewal options for below-market leases.  The capitalized above-market lease values for acquired properties are amortized as a reduction of base rental revenue over the remaining term of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed-rate renewal options of the respective leases.  Escalations and recoveries from tenants are received from tenants for certain costs as provided in the lease agreements.  These costs generally include real estate taxes, utilities, insurance, common area maintenance and other recoverable costs.  See Note 16: Tenant Leases.  Parking and other revenue includes income from parking spaces leased to tenants, income from tenants for additional services arranged for the Operating Partnership, income from tenants for early lease terminations and income from managing and/or leasing properties for third parties

 

Allowance for

Doubtful Accounts                 Management periodically performs a detailed review of amounts due from tenants to determine if accounts receivable balances are impaired based on factors affecting the collectibility of those balances.  Management’s estimate of the allowance for doubtful accounts requires management to exercise significant judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income.

 

Income and

Other Taxes                    The 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.

 

77


 

As of December 31, 2005, the estimated net basis of the rental property for Federal income tax purposes was lower than the net assets as reported in the Operating Partnership’s financial statements by approximately $914,030.  The Operating Partnership’s taxable income for the year ended December 31, 2005 was estimated to be approximately $176,224 and for the years ended December 31, 2004 and 2003 was approximately $174,249 and $182,178, respectively.  The differences between book income and taxable income primarily result from differences in depreciation expense, the recording of rental income, differences in the deductibility of certain expenses for tax purposes, differences in revenue recognition and the rules for tax purposes of a property exchange

 

Earnings

Per Unit                                                                          The Operating Partnership presents both basic and diluted earnings per unit (“EPU”).  Basic EPU excludes dilution and is computed by dividing net income available to common unitholders by the weighted average number of units outstanding for the period.  Diluted EPU reflects the potential dilution that could occur if securities or other contracts to issue common units were exercised or converted into common units, where such exercise or conversion would result in a lower EPU amount.

 

Distributions

Payable                                                                           The distributions payable at December 31, 2005 represents distributions payable to preferred unitholders (10,000 Series C preferred units) and common unitholders (75,678,745 common units) for all such holders of record as of January 5, 2006 with respect to the fourth quarter 2005.  The fourth quarter 2005 Series C preferred unit distributions of $50.00 per preferred unit and common unit distributions of $0.63 per common unit were approved by the Corporation’s Board of Directors on December 6, 2005.  The common unit distributions payable were paid on January 13, 2006.  The preferred unit distributions payable were paid on January 17, 2006.

 

The distributions payable at December 31, 2004 represents distributions payable to preferred unitholders (10,000 Series C preferred units) common unitholders (68,734,472 common units) and preferred distributions payable to preferred unitholders (215,018 Series B preferred units) for all such holders of record as of January 5, 2005 with respect to the fourth quarter 2004.  The fourth quarter 2004 Series C preferred unit distributions of $50.00 per preferred unit, common unit distributions of $0.63 per common unit, as well as the fourth quarter 2004 Series B preferred unit distributions of $18.1818 per preferred unit, were approved by the Corporation’s Board of Directors on December 7, 2004.  The Series C preferred unit distribution and common and Series B preferred unit distributions payable were paid on January 18, 2005

 

Costs Incurred

For Preferred

Stock Issuances                                 Costs incurred in connection with the Corporation’s preferred stock issuances are reflected as a reduction of General Partner’s capital.

 

Stock

Compensation                                        The Operating Partnership accounts for stock options and restricted stock awards granted prior to 2002 using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,  “Accounting for Stock Issued to Employees,” and related Interpretations (“APB No. 25”). Under APB No. 25, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Corporation’s stock at the date of grant over the exercise price of the option granted.  Compensation cost for stock options is recognized ratably over the vesting period.  The 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 made prior to 2002.  Restricted stock awards granted prior to 2002 are valued at the vesting dates of such awards with compensation cost for such awards recognized ratably over the vesting period.

 

78


 

In 2002, the Operating Partnership adopted the provisions of FASB No. 123, which requires, on a prospective basis, that the estimated fair value of restricted stock (“Restricted Stock Awards”) and stock options at the grant date be amortized ratably into expense over the appropriate vesting period.  For the years ended December 31, 2005, 2004 and 2003, the Operating Partnership recorded restricted stock and stock options expense of $5,109, $5,432 and $4,353, respectively. FASB No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, was issued in December 2002 and amends FASB No. 123, Accounting for Stock Based Compensation.  FASB No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock based compensation.  In addition, this Statement amends the disclosure requirements of FASB No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results.  FASB No. 148 disclosure requirements are presented below:

 

The following table illustrates the effect on net income and earnings per unit if the fair value based method had been applied to all outstanding and unvested stock awards in each period:

 

 

 

2005

 

2004

 

2003

 

 

 

Basic EPS

 

Basic EPS

 

Basic EPS

 

Net income, as reported

 

$

118,119

 

$

130,990

 

$

177,826

 

Add:

Stock-based compensation expense included in reported net income

 

5,109

 

5,432

 

4,353

 

Deduct:

Total stock-based compensation expense determined under fair value based method for all awards

 

(5,391

)

(6,308

)

(5,094

)

Pro forma net income

 

117,837

 

130,114

 

177,085

 

Deduct:

Preferred unit distributions

 

(5,909

)

(17,636

)

(17,340

)

Pro forma net income available to common unitholders – basic

 

$

111,928

 

$

112,478

 

$

159,745

 

 

 

 

 

 

 

 

 

Earnings Per Unit:

 

 

 

 

 

 

 

Basic – as reported

 

$

1.52

 

$

1.66

 

$

2.45

 

Basic – pro forma

 

$

1.52

 

$

1.65

 

$

2.44

 

 

 

 

 

 

 

 

 

Diluted – as reported

 

$

1.51

 

$

1.65

 

$

2.43

 

Diluted – pro forma

 

$

1.51

 

$

1.64

 

$

2.42

 

 

Other

Comprehensive

Income                                                                               Other comprehensive income (loss) includes items that are recorded in equity, such as unrealized holding gains or losses on marketable securities available for sale.

 

79


 

3.              REAL ESTATE PROPERTY TRANSACTIONS

 

2005 TRANSACTIONS

Property Acquisitions

The Operating Partnership acquired the following office properties during the year ended December 31, 2005:

 

Acquisition
Date

 

Property/Address

 

Location

 

# of
Bldgs.

 

Rentable
Square Feet

 

Investment by
Operating
Partnership
(in thousands)

 

03/02/05

 

101 Hudson Street (a)

 

Jersey City, Hudson County, NJ

 

1

 

1,246,283

 

$

330,302

 

03/29/05

 

23 Main Street (a) (b)

 

Holmdel, Monmouth County, NJ

 

1

 

350,000

 

23,948

 

07/12/05

 

Monmouth Executive Center (c)

 

Freehold, Monmouth County, NJ

 

4

 

235,968

 

33,561

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Office Property Acquisitions:

 

 

 

6

 

1,832,251

 

$

387,811

 

 

(a)          Transaction was funded primarily through borrowing on the Operating Partnership’s revolving credit facility.

(b)         In addition to its initial investment, the Operating Partnership presently intends to make additional investments related to the property of approximately $12.1 million, of which the Operating Partnership spent $6.2 million through December 31, 2005.

(c)          Transaction was funded primarily through available cash and assumption of mortgage debt.

 

In November 2005, the Operating Partnership announced that it entered into a contract to acquire all the interests in Capital Office Park, a seven-building office complex totaling approximately 842,300 square feet in Greenbelt, Maryland for aggregate purchase consideration of approximately $161,700.  The purchase consideration for the acquisition, which is expected to close in the first quarter of 2006, will consist of the issuance of approximately $97,900 of common units in the Operating Partnership and the assumption of approximately $63,800 of mortgage debt. At closing, the sellers may elect to receive approximately $27,900 in cash in lieu of common operating partnership units.

 

Property Sales

The Operating Partnership sold the following operating properties during the year ended December 31, 2005:

 

Sale 
Date

 

Property/Address

 

Location

 

# of
Bldgs.

 

Rentable
Square
Feet

 

Net
Sales
Proceeds
(in thousands)

 

Net
Book
Value
(in thousands)

 

Realized
Gain/
(Loss)
(in thousands)

 

02/04/05

 

210 South 16th Street

 

Omaha, Douglas County, Nebraska

 

1

 

318,224

 

$

8,464

 

$

8,210

 

$

254

 

02/11/05

 

1122 Alma Road

 

Richardson, Dallas County, Texas

 

1

 

82,576

 

2,075

 

2,344

 

(269

)

02/15/05

 

3 Skyline Drive

 

Hawthorne, Westchester County, New York

 

1

 

75,668

 

9,587

 

8,856

 

731

 

05/11/05

 

201 Willowbrook Blvd.

 

Wayne, Passaic County, New Jersey (a)

 

1

 

178,329

 

17,696

 

17,705

 

(9

)

06/03/05

 

600 Community Drive/111 East Shore Road

 

North Hempstead, Nassau County, New York

 

2

 

292,849

 

71,593

 

59,609

 

11,984

 

12/29/05

 

3600 South Yosemite

 

Denver, Denver County, Colorado

 

1

 

133,743

 

5,566

 

11,121

 

(5,555

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Office Property Sales:

 

 

 

7

 

1,081,389

 

$

114,981

 

$

107,845

 

$

7,136

 

 

(a)          In connection with the sale, the Operating Partnership provided a mortgage loan to the buyer of $12,000 which bears interest at 5.74 percent, matures in five years with a five year renewal option, and requires monthly payments of principal and interest.

 

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2004 TRANSACTIONS

Property Acquisitions

The Operating Partnership acquired the following office properties during the year ended December 31, 2004:

 

Acquisition
Date

 

Property/Address

 

Location

 

# of
Bldgs.

 

Rentable
Square Feet

 

Investment by
Operating
Partnership
(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

04/14/04

 

5 Wood Hollow Road (a)

 

Parsippany, Morris County, NJ

 

1

 

317,040

 

$

34,187

 

05/12/04

 

210 South 16th Street (b)

 

Omaha, Douglas County, NE

 

1

 

318,224

 

8,507

 

06/01/04

 

30 Knightsbridge Road (c)

 

Piscataway, Middlesex County, NJ

 

4

 

680,350

 

49,205

 

06/01/04

 

412 Mt. Kemble Avenue (c)

 

Morris Township, Morris County, NJ

 

1

 

475,100

 

39,743

 

10/21/04

 

232 Strawbridge Road (a)

 

Moorestown, Burlington County, NJ

 

1

 

74,258

 

8,761

 

11/23/04

 

One River Centre (d)

 

Middletown, Monmouth County, NJ

 

3

 

457,472

 

69,015

 

12/20/04

 

4, 5 & 6 Century Drive (a)

 

Parsippany, Morris County, NJ

 

3

 

279,811

 

30,860

 

12/30/04

 

150 Monument Road (a)

 

Bala Cynwyd, Montgomery County, PA

 

1

 

125,783

 

18,904

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Office Property Acquisitions:

 

 

 

15

 

2,728,038

 

$

259,182

 

 

(a)          Transaction was funded primarily through borrowing on the Operating Partnership’s revolving credit facility.

(b)         Property was acquired through Operating Partnership’s receipt of a deed in lieu of foreclosure in satisfaction of the Operating Partnership’s mortgage note receivable, which was collateralized by the acquired property.  The property was subsequently sold on February 4, 2005.

(c)          Properties were acquired from AT&T Corporation (“AT&T”), a tenant of the Operating Partnership, for cash and assumed obligations, as follows:

(1)                      Acquired 30 Knightsbridge Road, a four-building office complex, aggregating 680,350 square feet and located in Piscataway, New Jersey.  AT&T, which occupied the entire complex, has leased back from the Operating Partnership two of the buildings in the complex, totaling 275,000 square feet, for 10 years and seven months, and leased back the remaining 405,350 square feet of the complex through October 2004;

(2)                      Acquired Kemble Plaza II, a 475,100 square foot office building located in Morris Township, New Jersey, which the Operating Partnership had previously sold to AT&T in June of 2000.  AT&T, which occupied the entire building, leased back the entire property from the Operating Partnership for one year from the date of acquisition;

(3)                      Signed a lease extension at the Operating Partnership’s Kemble Plaza I property in Morris Township, New Jersey, extending AT&T’s lease for the entire 387,000 square foot building for an additional five years to August 2014.  Under the lease extension, the Operating Partnership agreed, among other things, to fund up to $2.1 million of tenant improvements to be performed by AT&T at the property; which was subsequently sold on October 5, 2004;

(4)                      Paid cash consideration of approximately $12.9 million to AT&T; and

(5)                      Assumed AT&T’s lease obligations with third-party landlords at seven office buildings, aggregating 922,674 square feet, which carry a weighted average remaining term of 4.5 years as of the date of acquisition.  At acquisition the Operating Partnership estimated that the obligations, net of estimated sub-lease income, total approximately $84.8 million, with a net present value of approximately $76.2 million utilizing a weighted average discount rate of 4.85 percent.  The net present value of the assumed obligations as of December 31, 2005 is included in mortgages, loans payable and other obligations (see Note 10: Mortgages, Loans Payable and Other Obligations).

(d)         The Operating Partnership acquired a 62.5 percent interest in the property through the Operating Partnership’s conversion of its note receivable with a balance of $13.0 million into a controlling equity interest.  The property was subject to a $45.5 million mortgage, which was subsequently paid off on April 1, 2005.  The Operating Partnership acquired the remaining 37.5 percent interest in March 2005 for $10.5 million (not included in Investment by Operating Partnership amount presented).

 

Land Acquisitions

On May 14, 2004, the Operating Partnership acquired approximately five acres of land in Plymouth Meeting, Pennsylvania.  Previously, the Operating Partnership leased this land parcel, upon which the Operating Partnership owns a 167,748 square foot office building. The land was acquired for approximately $6,094.

 

On June 25, 2004, the Operating Partnership acquired approximately 59.9 acres of developable land located in West Windsor, New Jersey for approximately $20,572.

 

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Property Sales

The Operating Partnership sold the following operating properties during the year ended December 31, 2004:

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

Net Book

 

Realized

 

Sale

 

 

 

 

 

# of

 

Rentable

 

Proceeds

 

Value

 

Gain/(Loss)

 

Date

 

Property/Address

 

Location

 

Bldgs.

 

Square Feet

 

(in thousands)

 

(in thousands)

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10/05/04

 

340 Mt. Kemble Avenue

 

Morris Township, Morris County, NJ

 

1

 

387,000

 

$

75,017

 

$

62,787

 

$

12,230

 

11/23/04

 

Texas Portfolio (a)

 

Dallas and San Antonio, TX

 

2

 

554,330

 

35,124

 

36,224

 

(1,100

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Office Property Sales:

 

 

 

3

 

941,330

 

$

110,141

 

$

99,011

 

$

11,130

 

 

(a)          On November 23, 2004, the Operating Partnership sold 3030 LBJ Freeway, Dallas, Dallas County and 84 N.E. Loop 410, San Antonio, Bexar County in a single transaction with one buyer.

 

4.              INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

 

The debt of the Operating Partnership’s unconsolidated joint ventures aggregating $118,758 as of December 31, 2005 is non-recourse to the Operating Partnership, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions and material misrepresentations, and except as otherwise indicated below.

 

MEADOWLANDS XANADU

On November 25, 2003, the Operating Partnership and affiliates of The Mills Corporation (“Mills”) entered into a joint venture agreement (“Meadowlands Xanadu Venture Agreement”) to form Meadowlands Mills/Mack-Cali Limited Partnership (“Meadowlands Venture”) for the purpose of developing a $1.3 billion family entertainment, recreation and retail complex with an office and hotel component to be built at the Meadowlands sports complex in East Rutherford, New Jersey (“Meadowlands Xanadu”).  The First Amendment to the Meadowlands Xanadu Venture Agreement was entered into as of June 30, 2005.  Meadowlands Xanadu’s approximately 4.76 million-square-foot complex is expected to feature a family entertainment, recreation and retail destination comprising five themed zones: sports; entertainment; children’s education; fashion; and food and home, in addition to four office buildings, aggregating approximately 1.8 million square feet, and a 520-room hotel.

 

On December 3, 2003, the Meadowlands Venture entered into a redevelopment agreement (the “Redevelopment Agreement”) with the New Jersey Sports and Exposition Authority (“NJSEA”) for the redevelopment of the area surrounding the Continental Airlines Arena in East Rutherford, New Jersey and the construction of the Meadowlands Xanadu project.  The Redevelopment Agreement provides for a 75-year ground lease and requires the Meadowlands Venture to pay the NJSEA a $160,000 development rights fee and fixed rent over the term.  Fixed rent will be in the amount of $1 per year for the first 15 years, increasing to $7,500 from the 16th to the 18th years, increasing to $8,447 in the 19th year, increasing to $8,700 in the 20th year, increasing to $8,961 in the 21st year, then to $9,200 in the 23rd to 26th years, with additional increases over the remainder of the term, as set forth in the ground lease.  The ground lease also allows for the potential for participation rent payments by the Meadowlands Venture, as described in the ground lease agreement.  The First Amendment to the Redevelopment Agreement and the ground lease, itself, were signed on October 5, 2004.  The Meadowlands Venture received all necessary permits and approvals from the NJSEA and U.S. Army Corps of Engineers in March 2005 and commenced construction in the same month.  As a condition to the commencement of work to fill wetlands pursuant to the permit issued by the U.S. Army Corps of Engineers and pursuant to the Redevelopment Agreement, as amended, the Meadowlands Venture conveyed certain vacant land, known as the Empire Tract, to a conservancy trust.  On June 30, 2005, the $160,000 development rights fee was deposited into an escrow account by the Meadowlands Venture in accordance with the terms of the First Amendment to the Redevelopment Agreement.  On such date, the following amounts were paid from escrow:  (i) approximately $37,197 to defease certain debt obligations of the NJSEA; and (ii) $26,800 to the NJSEA, which, in turn, paid such amount to the Meadowlands Venture for the Empire Tract.  Subsequently, additional monies were released from the escrow account to the NJSEA, such that a total of $130,000 has been released to the NJSEA.  The escrow balance of $30,000 is to be released and paid in accordance with the terms of the First Amendment to the Redevelopment Agreement.

 

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The Operating Partnership and Mills own a 20 percent and 80 percent interest, respectively, in the Meadowlands Venture.  These interests were subject to certain participation rights by The New York Giants, which were subsequently terminated in April 2004.  The Meadowlands Xanadu Venture Agreement required the Operating Partnership to make an equity contribution up to a maximum of $32,500, which it fulfilled in April 2005.  Pursuant to the Meadowlands Xanadu Venture Agreement, Mills has received subordinated capital credit in the venture of approximately $118,000, which represents certain costs incurred by Mills in connection with the Empire Tract prior to the creation of the Meadowlands Venture.  However, under the First Amendment to the Meadowlands Xanadu Venture Agreement, the Operating Partnership and Mills agreed that due to the expected receipt by the Meadowlands Venture of certain other sums and certain development costs savings in connection with Meadowlands Xanadu, Mills’ subordinated capital credit in the venture for the Empire Tract should be reduced to $60,000 as of the date of the First Amendment to the Meadowlands Xanadu Venture Agreement.  The Meadowlands Xanadu Venture Agreement requires Mills to contribute the balance of the capital required to complete the entertainment phase, subject to certain limitations.  The Operating Partnership will receive a 9 percent preferred return on its equity investment, only after Mills receives a 9 percent preferred return on its equity investment.  Residual returns, subject to participation by other parties, will be in proportion to each partner’s respective percentage interest.

 

Mills will develop, lease and operate the entertainment phase of the Meadowlands Xanadu project.  The Meadowlands Venture has formed and owns, directly and indirectly, all of the partnership interests in and to the component ventures which were formed for the future development of the office and hotel phases, which the Operating Partnership will develop, lease and operate.  Upon the Operating Partnership’s exercise of its rights under the Meadowlands Xanadu Venture Agreement to develop the office and hotel phases, the Meadowlands Venture will convey ownership of the component ventures to the Operating Partnership and Mills or its affiliate, and the Operating Partnership or its affiliate will own an 80 percent interest and Mills or its affiliate will own a 20 percent interest in such component ventures.  However, under the First Amendment to the Meadowlands Xanadu Venture Agreement, if the Meadowlands Venture develops a hotel that has video lottery terminals (or “slots”), or any other legalized form of gaming on or in its premises, then the Operating Partnership or its affiliate will own a 50 percent interest in such component venture and Mills or its affiliate will own a 50 percent interest.  The Meadowlands Xanadu Venture Agreement requires that the Operating Partnership must exercise its rights with respect to the first office and hotel phase no later than four years after the grand opening of the entertainment phase, and requires that the Operating Partnership exercise all of its rights with respect to the office and hotel phases no later than 10 years from such date, but does not require that any or all components be developed.  However, under the Meadowlands Xanadu Venture Agreement, Mills has the right to accelerate such exercise schedule, subject to certain conditions.  Should the Operating Partnership fail to meet the time schedule described above for the exercise of its rights with respect to the office and hotel phases, the Operating Partnership will forfeit its rights to control future development.  If this occurs, Mills will have the right to develop the additional phases, subject to the Operating Partnership’s right to participate, or to cause the Meadowlands Venture to sell such components to a third party, subject to a sales price limitation of 95 percent of the value that would have been required to form such component ventures.

 

Commencing three years after the grand opening of the entertainment phase of the Meadowlands Xanadu project, either Mills or the Operating Partnership may sell its partnership interest to a third party subject to the following provisions:

 

•                  Mills has certain “drag-along” rights and the Operating Partnership has certain “tag-along” rights in connection with such sale of interest to a third party; and

 

•                  Mills has a right of first refusal with respect of a sale by the Operating Partnership of its partnership interests.

 

In addition, commencing on the sixth anniversary of the opening, the Operating Partnership may cause Mills to purchase, and Mills may cause the Operating Partnership to sell to Mills, all of the Operating Partnership’s partnership interests at a price based on the then fair market value of the project.  Notwithstanding the exercise by Mills or the Operating Partnership of any of the foregoing rights with respect to the sale of the Operating Partnership’s partnership interest to Mills or a third party, the Operating Partnership will retain its right to component ventures for the future development of the office and hotel phases.

 

On February 12, 2003, the NJSEA selected The Mills Corporation and the Operating Partnership to redevelop the Continental Airlines Arena site (“Arena Site”) for mixed uses, including retail.  In March 2003, Hartz Mountain Industries, Inc., (“Hartz”), filed a lawsuit in the Superior Court of New Jersey, Law Division, for Bergen County, seeking

 

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to enjoin NJSEA from entering into a contract with the Meadowlands Venture for the redevelopment of the Continental Airlines Arena site.  In May 2003, the court denied Hartz’s request for an injunction and dismissed its suit for failure to exhaust administrative remedies.  In June 2003, the NJSEA held hearings on Hartz’s protest, and on a parallel protest filed by another rejected developer, Westfield, Inc. (“Westfield”).  On September 10, 2003, the NJSEA ruled against Hartz’s and Westfield’s protests, Hartz and Westfield, as well as Elliot Braha and three other taxpayers (collectively “Braha”), thereafter filed appeals from the NJSEA’s final decision.  By decision dated May 14, 2004, the Appellate Division of the Superior Court of New Jersey rejected the appellants’ contention that the NJSEA lacks statutory authority to allow retail development of its property.  The Appellate Division also remanded Hart’s claim under the Open Public Records Acts, seeking disclosure of additional documents from NJSEA, to the Law Division for further proceedings. The Supreme Court of New Jersey declined to review the Appellate Division’s decision.  On August 19, 2004, the Law Division issued a decision resolving Hartz’s Open Public Records Act claim and ordered NJSEA to disclose some, but not all, of the documents Hartz was seeking.  The Appellate Division, in a decision rendered on November 24, 2004, upheld the findings of the Law Division in the remand proceeding.  The Supreme Court of New Jersey declined to review the Appellate Division’s decision.  At Hartz’s request, the NJSEA thereafter held further hearings on December 15 and 16, 2004, to review certain additional facts in support of Hartz’s and Westfield’s bid protest.  Braha, as a taxpayer, did not have standing to participate in the supplemental protest hearing.  On March 4, 2005, the Hearing Officer rendered his Supplemental Report and Recommendation to the NJSEA, finding no merit in the protests presented by Hartz and Westfield.  The NJSEA accepted the Hearing Officer’s Supplemental Report and Recommendation on March 30, 2005 and Hartz and Braha have appealed that decision to the Appellate Division.

 

In January 2004, Hartz and Westfield also appealed to the Appellate Division of the Supreme Court of New Jersey from the NJSEA’s December 2003 approval and execution of the Redevelopment Agreement with the Meadowlands Venture.

 

In November 2004, Hartz and Westfield filed additional appeals in the Appellate Division challenging NJSEA’s resolution authorizing the execution of the First Amendment to the Redevelopment Agreement with Meadowlands Venture and the ground lease with the Meadowlands Venture.

 

All of the above appeals have been consolidated by the Appellate Division and are pending.

 

On September 30, 2004, the Borough of Carlstadt filed an action in the Superior Court of New Jersey Law Division, challenging Meadowlands Xanadu, which asserts claims that are substantially the same as claims asserted by Hartz and Braha in the above appeals.  By Order dated November 19, 2004, the Law Division transferred that matter to the Superior Court of New Jersey, Appellate Division.  The matter is pending.

 

Several appeals filed by Hartz, Westfield and others, including certain environmental groups, that challenge certain approvals received by the Meadowlands Venture from the NJSEA, the New Jersey Meadowlands Commission (“NJMC”) and the New Jersey Department of Environmental Protection (“NJDEP”) remain pending before the Appellate Division. Some of these appeals challenge NJDEP’s issuance of a stream encroachment permit, waterfront development permit, and coastal zone consistency determination for Meadowlands Xanadu.  Other of these appeals are from NJDEP’s and NJMC’s issuance of reports in connection with a consultation process the NJSEA was statutorily required to undertake in connection with any NJSEA-development project.

 

A Hartz affiliate and a trade association have filed an appeal from an advisory opinion favorable to the Meadowlands Venture issued by the Director of the Division of Alcoholic Beverage Control concerning the availability of special concessionaire permits.  That appeal is also pending in the Appellate Division of the Superior Court of New Jersey.

 

Three separate lawsuits have been filed in the United States District Court for the District of New Jersey, challenging a permit issued by the U.S. Army Corps of Engineers (“USACE”) in connection with the project.  The first suit was filed on March 30, 2005, by the Sierra Club, the New Jersey Public Interest Group, Citizen Lobby, Inc. and the New Jersey Environmental Federation.  Additional suits were filed on May 16 and May 31, 2005, respectively, by Hartz (together with one of its officers as an individual named plaintiff) and the Borough of Carlstadt.  The Sierra Club also filed a motion for a preliminary injunction to stop certain construction activities on the project, which the Court denied on July 6, 2005.  The parties are currently briefing cross motions for summary judgment on the merits of the Sierra Club’s claims. A decision is expected sometime in the latter part of 2006.  On October 26, 2005, the court granted the motions of the Meadowlands Venture and the USACE to dismiss the Hartz complaint for lack of standing.  The deadline for appealing

 

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that decision has passed, so the Hartz action is ended.  On October 31, 2005, the USACE filed a motion to dismiss the complaint filed by the Borough of Carlstadt for lack of standing.  On February 7, 2006 the Court granted the motion and dismissed the Borough of Carlstadt complaint in its entirety.  Subject to any appeal that may be brought within 60 days after this order of dismissal, the Borough of Carlstadt action is ended.

 

On April 5, 2005, the New York Football Giants (“Giants”) filed an emergent application with the Supreme Court of New Jersey, Chancery Division, seeking an injunction stopping all work on the Meadowlands Xanadu as being in violation of its existing lease with the NJSEA.  The court heard an oral argument on the application on August 5, 2005, and denied the Giants’ motion for preliminary injunctive relief.  The Giants’ claim for permanent injunction relief remains pending.  However, the parties to this dispute have reached a tentative settlement.  In September 2005, the Giants and Meadowlands Venture executed a settlement agreement.  NJSEA subsequently proposed modifications to the settlement agreement, and the parties have not yet executed a final agreement.  The proposed settlement agreement provides, among other things, for the Meadowlands Venture to pay the Giants approximately $15 million as compensation for claims of construction interference and for the Giants to otherwise withdraw the assertion of the right to object to the project.

 

The New Jersey Builders’ Association (“NJBA”) has commenced an action, which is pending in the Appellate Division, alleging that the NJSEA has failed to meet a purported obligation to provide affordable housing at the Meadowlands Complex and seeking, among other relief, an order enjoining the construction of Meadowlands Xanadu.  NJBA filed an application for preliminary injunctive relief seeking to enjoin further construction of Meadowlands Xanadu, which the Appellate Division denied on July 28, 2005.  The Meadowlands Venture is not a party to that action.

 

On January 25, 2006, the Bergen Cliff Hawks Baseball Club, LLC (the “Cliff Hawks”), filed a complaint against the Operating Partnership and Mills, alleging that the Operating Partnership and Mills breached an agreement to provide the Cliff Hawks with a minor league baseball park as part of the Xanadu Project.  This matter remains pending.

 

The Operating Partnership believes that the Meadowlands Venture’s proposal and the planned project comply with applicable laws, and the Meadowlands Venture intends to continue its vigorous defense of its rights under the Redevelopment Agreement and Ground Lease.  Although there can be no assurance, the Operating Partnership does not believe that the pending lawsuits will have any material affect on its ability to develop the Meadowlands Xanadu project.

 

HPMC

On July 21, 1998, the Operating Partnership entered into a joint venture with HCG Development, L.L.C. and Summit Partners I, L.L.C. to form HPMC Development Partners II, L.P. (formerly known as HPMC Lava Ridge Partners, L.P.). HPMC Development Partners II, L.P.’s efforts focused on three development projects, commonly referred to as Lava Ridge, Pacific Plaza I & II and Stadium Gateway.  Lava Ridge was sold in 2002.

 

Stadium Gateway was a development joint venture project, located in Anaheim, California between HPMC Development Partners II, L.P. and a third-party entity.  The venture constructed a six-story, 273,194 square foot office building, which commenced initial operations in January 2002.  On April 1, 2003, the venture sold the office property for approximately $52,500.

 

Pacific Plaza I & II was a two-phase development joint venture project, located in Daly City, California between, HPMC Development Partners II, L.P. and a third-party entity.  Phase I of the project, which commenced initial operations in August 2001, consisted of a nine-story office building, aggregating 364,384 square feet.  Phase II, which comprised a three-story retail and theater complex, commenced initial operations in June 2002.  On August 27, 2004, the venture sold the Pacific Plaza I & II complex for approximately $143,000.  The Operating Partnership performed management services for the property while it was owned by the venture and recognized $0, $203 and $318 in fees for such services in the years ended December 31, 2005, 2004 and 2003, respectively.

 

The Operating Partnership has a 50 percent ownership interest and HCG Development, L.L.C. and Summit Partners I, L.L.C. (both of which are not affiliated with the Operating Partnership) collectively have a 50 percent ownership interest in HPMC Development Partners II, L.P.  Significant terms of the applicable partnership agreements, among other things, call for the Operating Partnership to provide 80 percent and HCG Development, L.L.C. and Summit Partners I, L.L.C. to collectively provide 20 percent of the development equity capital.  As the Operating Partnership agreed to fund

 

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development equity capital disproportionate to its ownership interest, it was granted a preferred return of 10 percent on its invested capital as a priority.  Profits and losses are allocated to the partners based upon the priority of distributions specified in the respective agreements and entitle the Operating Partnership to a preferred return, as well as 50 percent of residual profits above the preferred returns.  Equity in earnings recognized by the Operating Partnership consists of preferred returns and the Operating Partnership’s equity in earnings (loss) after giving effect to the payment of such preferred returns.

 

G&G MARTCO (Convention Plaza)

The Operating Partnership holds a 50 percent interest in G&G Martco, which owns Convention Plaza, a 305,618 square foot office building, located in San Francisco, California.  The venture has a mortgage loan with a $46,588 balance at December 31, 2005 collateralized by its office property.  The loan also provides the venture the ability to increase the balance of the loan up to an additional $1,050 for the funding of qualified leasing costs.  The loan bears interest at a rate of the London Inter-Bank Offered Rate (“LIBOR”) (4.39 percent at December 31, 2005) plus 162.5 basis points and matures in August 2006.  The Operating Partnership performs management and leasing services for the property owned by the joint venture and recognized $161, $143 and $225 in fees for such services in the years ended December 31, 2005, 2004 and 2003, respectively.

 

PLAZA VIII AND IX ASSOCIATES, L.L.C./AMERICAN FINANCIAL EXCHANGE L.L.C.

On May 20, 1998, the Operating Partnership entered into a joint venture with Columbia Development Company, L.L.C. (“Columbia”) to form American Financial Exchange L.L.C. (“AFE”).  The venture was formed to acquire land for future development, located on the Hudson River waterfront in Jersey City, New Jersey, adjacent to the Operating Partnership’s Harborside Financial Center office complex.  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 initially constructed a parking facility.  In the fourth quarter 2000, the joint venture started construction of Plaza 10, a 577,575 square foot office building, which was 100 percent pre-leased to Charles Schwab & Co. Inc. (“Schwab”) for a 15-year term, on certain of the land owned by the venture.  The lease agreement with Schwab obligated the venture, among other things, to deliver space to the tenant by required timelines and offers expansion options, at the tenant’s election.

 

On September 29, 2003, the Operating Partnership sold its interest in AFE, in which it held a 50 percent interest, and received approximately $162,145 in net sales proceeds from the transaction, which the Operating Partnership used primarily to repay outstanding borrowings under its revolving credit facility.  The Operating Partnership recognized a gain on the sale of approximately $23,952, which is recorded in gain on sale of investment in unconsolidated joint venture for the year ended December 31, 2003.  Following completion of the sale of its interest, the Operating Partnership no longer has any remaining obligations to Schwab.

 

In advance of the transaction, AFE distributed its interests in Plaza VIII and IX Associates, L.L.C., which owned the undeveloped land currently used as a parking facility, to its then partners, the Operating Partnership and Columbia.  The Operating Partnership and Columbia subsequently entered into a new joint venture to own and manage the undeveloped land and related parking operations through Plaza VIII and IX Associates, L.L.C.  The Operating Partnership and Columbia each hold a 50 percent interest in the new venture.

 

The Operating Partnership performed management, leasing and development services for the Plaza 10 property when it was owned by the venture and recognized $0, $0 and $2,692 in fees from the venture for such services in the years ended December 31, 2005, 2004 and 2003, respectively.

 

RAMLAND REALTY ASSOCIATES L.L.C. (One Ramland Road)

On August 20, 1998, the Operating Partnership entered into a joint venture with S.B. New York Realty Corp. to form Ramland Realty Associates L.L.C.  The venture was formed to own, manage and operate One Ramland Road, a 232,000 square foot office/flex building and adjacent developable land, located in Orangeburg, New York.  In August 1999, the joint venture completed redevelopment of the property and placed the office/flex building in service.  The Operating Partnership holds a 50 percent interest in the joint venture.  The venture has a mortgage loan with a $14,936 balance at December 31, 2005 secured by its office/flex property.  The mortgage bears interest at a rate of LIBOR plus 175 basis points and matures in January 2007, with two one-year extension options, subject to certain conditions.

 

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In 2001, the property’s then principal tenant, Superior Bank, was closed by the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation (“FDIC”) was named receiver.  The tenant continued to meet its rental payment obligations through June 2002.  In July 2002, the tenant vacated the premises and the FDIC notified the joint venture that it was rejecting the lease as of July 16, 2002.  As a result of the uncertainty regarding the tenant’s ability to meet its obligations through the remainder of the term of its lease, the joint venture wrote off unbilled rents receivable of $1,573 and deferred lease costs of $705, which was included in the Operating Partnership’s equity in earnings for the year ended December 31, 2002.  Subsequently, the venture’s management determined it was unlikely a prospective tenant would retain tenant improvements previously made to Superior Bank’s space and, accordingly, the venture accelerated amortization of those tenant improvements and recorded a charge of $3,586, which is included in the Operating Partnership’s equity in earnings for the year ended December 31, 2003.

 

The Operating Partnership performs management, leasing and other services for the property owned by the joint venture and recognized $93, $165 and $12 in fees for such services in the years ended December 31, 2005, 2004 and 2003 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 with Prudential to form Ashford Loop Associates L.P. The venture was formed to own, manage and operate 1001 South Dairy Ashford, a 130,000 square foot office building acquired on September 18, 1998, and 2100 West Loop South, a 168,000 square foot office building acquired on November 25, 1998, both located in Houston, Texas.  The Operating Partnership held a 20 percent interest in the joint venture.  Included in depreciation and amortization in the results of operations for the year ended December 31, 2004 presented herein for the joint venture is a valuation allowance of $24,575 on account of the carrying value of the venture’s assets exceeding the net realizable value as of December 31, 2004.  Included in the Operating Partnership’s equity in earnings (loss) of unconsolidated joint venture for the year ended December 31, 2004 was a $4,915 loss representing the Operating Partnership’s share of the valuation allowance.  On February 25, 2005, the Operating Partnership sold its interest in the venture to Prudential for $2,664 and recognized a gain on the sale of $35.

 

SOUTH PIER AT HARBORSIDE – HOTEL DEVELOPMENT

On November 17, 1999, the Operating Partnership entered into a joint venture with Hyatt Corporation (“Hyatt”) to develop a 350-room hotel on the South Pier at Harborside Financial Center, Jersey City, New Jersey, which was completed and commenced initial operations in July 2002.  The Operating Partnership owns a 50 percent interest in the venture.

 

The venture had a mortgage loan with a commercial bank with a $62,902 balance at December 31, 2003 collateralized by its hotel property.  The debt bore interest at a rate of LIBOR plus 275 basis points, which was scheduled to mature in December 2003, and was extended through January 29, 2004.  On that date, the venture repaid the mortgage loan using the proceeds from a new $40,000 mortgage loan, (with a balance as of December 31, 2005 of $39,590) collateralized by the hotel property, as well as capital contributions from the Operating Partnership and Hyatt of $10,750 each.  The new loan carries an interest rate of LIBOR plus 200 basis points and matures in February 2007.  The loan provides for three one-year extension options subject to certain conditions.  The final two one-year extension options require payment of a fee.  On May 25, 2004, the venture obtained a second mortgage loan with a commercial bank for $20,000 (with a balance as of December 31, 2005 of $7,500) collateralized by the hotel property, in which each partner, including the Operating Partnership, has severally guaranteed repayment of approximately $3,785.  The loan carries an interest rate of LIBOR plus 175 basis points and matures in February 2006.  The loan provides for three one-year extension options subject to certain conditions.  The final two one-year extension options require payment of a fee.  The proceeds from this loan were used to make distributions to the Operating Partnership and Hyatt in the amount of $10,000 each.  Additionally, the venture has a loan with a balance as of December 31, 2005 of $7,570 with the City of Jersey City, provided by the U.S. Department of Housing and Urban Development.  The loan currently bears interest at fixed rates ranging from 6.09 percent to 6.62 percent and matures in August 2020.  The Operating Partnership has posted a $7,570 letter of credit in support of this loan, $3,785 of which is indemnified by Hyatt.

 

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NORTH PIER AT HARBORSIDE – RESIDENTIAL DEVELOPMENT

On April 3, 2001, the Operating Partnership sold its North Pier at Harborside Financial Center, Jersey City, New Jersey to an entity which planned on developing residential housing on the site.  At the time, the Operating Partnership received net sales proceeds of approximately $3,357 (which included a note receivable of $2,027 subsequently repaid in 2002), and recognized a gain of $439 from the transaction.  On March 31, 2004, the Operating Partnership received additional purchase consideration of $720, for which the Operating Partnership recorded a gain of $720 in gain on sale of investment in unconsolidated joint ventures for the year ended December 31, 2004.

 

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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 December 31, 2005 and 2004:

 

 

 

December 31, 2005

 

 

 

Meadowlands
Xanadu

 

HPMC

 

G&G
Martco

 

American
Financial
Exchange

 

Plaza
VIII & IX
Associates

 

Ramland
Realty

 

Ashford
Loop

 

Harborside
South Pier

 

Combined
Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Property, net

 

$

407,322

 

—

 

$

10,632

 

—

 

$

12,024

 

$

12,511

 

—

 

$

74,306

 

$

516,795

 

Other assets

 

171,029

 

—

 

6,427

 

—

 

1,662

 

1,188

 

—

 

11,772

 

192,078

 

Total assets

 

$

578,351

 

—

 

$

17,059

 

—

 

$

13,686

 

$

13,699

 

—

 

$

86,078

 

$

708,873

 

Liabilities and partners/members’ capital (deficit):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgages and loans payable

 

$

—

 

—

 

$

46,588

 

—

 

$

—

 

$

14,936

 

—

 

$

57,234

 

$

118,758

 

Other liabilities

 

76,875

 

—

 

875

 

—

 

1,361

 

220

 

—

 

4,170

 

83,501

 

Partners’/members’ capital

 

501,476

 

—

 

(30,404

)

—

 

12,325

 

(1,457

)

—

 

24,674

 

506,614

 

Total liabilities and partners/ members’ capital

 

$

578,351

 

—

 

$

17,059

 

—

 

$

13,686

 

$

13,699

 

—

 

$

86,078

 

$

708,873

 

Operating Partnership’s net investment in unconsolidated joint ventures

 

$

34,640

 

—

 

$

6,438

 

—

 

$

6,084

 

—

 

—

 

$

14,976

 

$

62,138

 

 

 

 

December 31, 2004

 

 

 

Meadowlands
Xanadu

 

HPMC

 

G&G
Martco

 

American
Financial
Exchange

 

Plaza
VIII & IX
Associates

 

Ramland
Realty

 

Ashford
Loop

 

Harborside
South Pier

 

Combined
Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Property, net

 

$

235,254

 

—

 

$

8,571

 

—

 

$

12,629

 

$

13,030

 

$

11,256

 

$

79,721

 

$

360,461

 

Other assets

 

1,420

 

—

 

4,589

 

—

 

1,463

 

1,559

 

539

 

12,034

 

21,604

 

Total assets

 

$

236,674

 

—

 

$

13,160

 

—

 

$

14,092

 

$

14,589

 

$

11,795

 

$

91,755

 

$

382,065

 

Liabilities and partners/members’ capital (deficit):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgages and loans payable

 

$

—

 

—

 

$

43,236

 

—

 

$

—

 

$

14,936

 

$

—

 

$

66,191

 

$

124,363

 

Other liabilities

 

8,205

 

—

 

963

 

—

 

1,376

 

334

 

670

 

4,009

 

15,557

 

Partners’/members’ capital

 

228,469

 

—

 

(31,039

)

—

 

12,716

 

(681

)

11,125

 

21,555

 

242,145

 

Total liabilities and partners/
members’ capital

 

$

236,674

 

—

 

$

13,160

 

—

 

$

14,092

 

$

14,589

 

$

11,795

 

$

91,755

 

$

382,065

 

Operating Partnership’s net investment in unconsolidated joint ventures

 

$

17,359

 

—

 

$

7,157

 

—

 

$

6,279

 

$

—

 

$

2,664

 

$

13,284

 

$

46,743

 

 

89


 

The following is a summary of the results of operations of the unconsolidated joint ventures in which the Operating Partnership had investment interests for the years ended December 31, 2005, 2004 and 2003:

 

 

 

Year Ended December 31, 2005

 

 

 

Meadowlands
Xanadu

 

HPMC

 

G&G
Martco

 

American
Financial
Exchange

 

Plaza
VIII & IX
Associates

 

Ramland
Realty

 

Ashford
Loop

 

Harborside
South Pier

 

Combined
Total

 

Total revenues

 

—

 

—

 

$

6,767

 

—

 

$

396

 

$

2,028

 

—

 

$

35,101

 

$

44,292

 

Operating and Other expenses

 

—

 

—

 

(3,662

)

—

 

(172

)

(1,407

)

—

 

(22,147

)

(27,388

)

Depreciation and amortization

 

—

 

—

 

(1,200

)

—

 

(616

)

(638

)

—

 

(5,484

)

(7,938

)

Interest expense

 

—

 

—

 

(2,270

)

—

 

—

 

(759

)

—

 

(4,198

)

(7,227

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

—

 

—

 

$

(365

)

—

 

$

(392

)

$

(776

)

—

 

$

3,272

 

$

1,739

 

Operating Partnership’s equity in earnings (loss) of unconsolidated joint ventures

 

—

 

—

 

$

(1,219

)

—

 

$

(196

)

—

 

$

(30

)

$

1,693

 

$

248

 

 

 

 

Year Ended December 31, 2004

 

 

 

Meadowlands
Xanadu

 

HPMC

 

G&G
Martco

 

American
Financial
Exchange

 

Plaza
VIII & IX
Associates

 

Ramland
Realty

 

Ashford
Loop

 

Harborside
South Pier

 

Combined
Total

 

Total revenues

 

—

 

$

10,755

 

$

7,113

 

—

 

$

91

 

$

1,981

 

$

2,937

 

$

30,345

 

$

53,222

 

Operating and Other expenses

 

—

 

(259

)

(3,676

)

—

 

(166

)

(1,539

)

(3,403

)

(19,613

)

(28,656

)

Depreciation and amortization

 

—

 

—

 

(1,002

)

—

 

(616

)

(630

)

(25,550

)

(6,501

)

(34,299

)

Interest expense

 

—

 

—

 

(1,342

)

—

 

—

 

(479

)

—

 

(2,412

)

(4,233

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

—

 

$

10,496

 

$

1,093

 

—

 

$

(691

)

$

(667

)

$

(26,016

)

$

1,819

 

$

(13,966

)

Operating Partnership’s equity in earnings (loss) of unconsolidated joint ventures

 

—

 

$

661

 

$

730

 

—

 

$

(346

)

$

(600

)

$

(5,203

)

$

872

 

$

(3,886

)

 

 

 

Year Ended December 31, 2003

 

 

 

Meadowlands
Xanadu

 

HPMC

 

G&G
Martco

 

American
Financial
Exchange (a)

 

Plaza
VIII & IX
Associates

 

Ramland
Realty

 

Ashford
Loop

 

Harborside
South Pier

 

Combined
Total

 

Total revenues

 

—

 

$

3,995

 

$

12,411

 

$

17,398

 

$

1,730

 

$

249

 

$

3,801

 

$

23,933

 

$

63,517

 

Operating and Other expenses

 

—

 

(71

)

(4,017

)

(3,040

)

(44

)

(981

)

(3,062

)

(16,326

)

(27,541

)

Depreciation and amortization

 

—

 

—

 

(1,533

)

(2,912

)

(228

)

(555

)

(974

)

(6,262

)

(12,464

)

Interest expense

 

—

 

—

 

(1,497

)

—

 

—

 

(451

)

—

 

(3,174

)

(5,122

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

—

 

$

3,924

 

$

5,364

 

$

11,446

 

$

1,458

 

$

(1,738

)

$

(235

)

$

(1,829

)

$

18,390

 

Operating Partnership’s equity in earnings (loss) of unconsolidated joint ventures

 

—

 

$

2,325

 

$

2,559

 

$

11,342

 

$

(83

)

$

(1,332

)

$

(47

)

$

(1,284

)

$

13,480

 

 

(a)          Represents results of operations for period in which Operating Partnership had ownership interest of January 1, 2003 through September 28, 2003.

 

90


 

5.              DEFERRED CHARGES AND OTHER ASSETS

 

 

 

December 31,

 

 

 

2005

 

2004

 

Deferred leasing costs

 

$

182,975

 

$

152,525

 

Deferred financing costs

 

21,764

 

17,137

 

 

 

204,739

 

169,662

 

Accumulated amortization

 

(73,410

)

(58,170

)

Deferred charges, net

 

131,329

 

111,492

 

Notes receivable

 

11,919

 

—

 

In-place lease values and related intangible assets, net

 

37,028

 

17,560

 

Prepaid expenses and other assets, net

 

17,358

 

26,008

 

 

 

 

 

 

 

Total deferred charges and other assets, net

 

$

197,634

 

$

155,060

 

 

6.              RESTRICTED CASH

 

Restricted cash includes security deposits for certain of the Operating Partnership’s properties, and escrow and reserve funds for debt service, real estate taxes, property insurance, capital improvements, tenant improvements, and leasing costs established pursuant to certain mortgage financing arrangements, and is comprised of the following:

 

 

 

December 31,

 

 

 

2005

 

2004

 

Security deposits

 

$

8,398

 

$

8,976

 

Escrow and other reserve funds

 

823

 

1,501

 

 

 

 

 

 

 

Total restricted cash

 

$

9,221

 

$

10,477

 

 

7.              DISCONTINUED OPERATIONS

 

There were no properties identified as held for sale as of December 31, 2005.

 

When the Operating Partnership identified its 178,329 square foot office building located at 201 Willowbrook Boulevard in Wayne, New Jersey as held for sale on March 31, 2005, it determined that the carrying amount of this property was not expected to be recovered from estimated net sales proceeds and recognized a valuation allowance of $1,614 during the three months ended March 31, 2005.  On May 11, 2005, the Operating Partnership subsequently sold the building for net sales proceeds of approximately $17,696.

 

As the Operating Partnership sold 111 East Shore Road and 600 Community Drive in North Hempstead, New York; 210 South 16th Street in Omaha, Nebraska; 3600 South Yosemite in Denver, Colorado; 201 Willowbrook Boulevard in Wayne, New Jersey; 1122 Alma Road in Richardson, Texas; and 3 Skyline Drive in Hawthorne, New York during the year ended December 31, 2005; 3030 L.B.J. Freeway in Dallas, Texas; 84 N.E. Loop 410 in San Antonio, Texas; and 340 Mt. Kemble Avenue in Morris Township, New Jersey during the year ended December 31, 2004; 1770 St. James Place in Houston, Texas; 111 Soledad in San Antonio, Texas; and land in Hamilton Township, New Jersey during the year ended December 31, 2003, the Operating Partnership has presented these assets as discontinued operations in the statement of operations for all periods presented.

 

91


 

The following tables summarize income from discontinued operations and the related realized gains (losses) and unrealized losses on disposition of rental property, net for the years ended December 31, 2005, 2004 and 2003:

 

 

 

Year Ended December 31,

 

 

 

2005

 

2004

 

2003

 

Total revenues

 

$

5,253

 

$

25,404

 

$

29,865

 

Operating and other expenses

 

(1,568

)

(8,800

)

(9,519

)

Depreciation and amortization

 

(729

)

(4,748

)

(6,558

)

Interest expense (net of interest income)

 

42

 

(408

)

(875

)

 

 

 

 

 

 

 

 

Income from discontinued operations

 

$

2,998

 

$

11,448

 

$

12,913

 

 

 

 

Year Ended December 31,

 

 

 

2005

 

2004

 

2003

 

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

 

$

7,136

 

$

11,130

 

$

3,541

 

Unrealized losses on disposition of rental property

 

(1,614

)

(11,856

)

—

 

 

 

 

 

 

 

 

 

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

 

$

5,522

 

$

(726

)

$

3,541

 

 

8.              SENIOR UNSECURED NOTES

 

A summary of the Operating Partnership’s senior unsecured notes as of December 31, 2005 and 2004 is as follows:

 

 

 

December 31,

 

Effective

 

 

 

2005

 

2004

 

Rate (1)

 

7.250% Senior Unsecured Notes, due March 15, 2009

 

$

299,246

 

$

299,012

 

7.49

%

5.050% Senior Unsecured Notes, due April 15, 2010

 

149,765

 

—

 

5.27

%

7.835% Senior Unsecured Notes, due December 15, 2010

 

15,000

 

15,000

 

7.95

%

7.750% Senior Unsecured Notes, due February 15, 2011

 

299,122

 

298,948

 

7.93

%

6.150% Senior Unsecured Notes, due December 15, 2012

 

91,488

 

90,998

 

6.89

%

5.820% Senior Unsecured Notes, due March 15, 2013

 

25,309

 

25,199

 

6.45

%

4.600% Senior Unsecured Notes, due June 15, 2013

 

99,787

 

99,758

 

4.74

%

5.125% Senior Unsecured Notes, due February 15, 2014

 

201,948

 

202,187

 

5.11

%

5.125% Senior Unsecured Notes, due January 15, 2015

 

149,164

 

—

 

5.30

%

5.800% Senior Unsecured Notes, due January 15, 2016

 

99,680

 

—

 

5.87

%

 

 

 

 

 

 

 

 

Total Senior Unsecured Notes

 

$

1,430,509

 

$

1,031,102

 

6.42

%

 

(1)   Includes the cost of terminated treasury lock agreements (if any), offering and other transaction costs and the discount on the notes, as applicable.

 

On January 24, 2006, the Operating Partnership issued $100,000 face amount of 5.80 percent senior unsecured notes due January 15, 2016 with interest payable semi-annually in arrears, and $100,000 face amount of 5.25 percent senior unsecured notes due January 15, 2012 with interest payable semi-annually in arrears.  The total proceeds from the issuances, including accrued interest on the 5.80 percent notes, of approximately $200,784 were used to reduce outstanding borrowings under the Operating Partnership’s unsecured facility.

 

92


 

On November 15, 2005, the Operating Partnership issued $100,000 face amount of 5.80 percent senior unsecured notes due January 15, 2016 with interest payable semi-annually in arrears.  The proceeds from the issuance (net of selling commissions and discount) of approximately $99,027 were used to reduce outstanding borrowings under the Operating Partnership’s unsecured facility.

 

On April 15, 2005, the Operating Partnership issued $150,000 face amount of 5.05 percent senior unsecured notes due April 15, 2010 with interest payable semi-annually in arrears.  The proceeds from the issuance (net of selling commissions and discount) of approximately $148,826 were used to reduce outstanding borrowings under the Operating Partnership’s unsecured facility.

 

On January 25, 2005, the Operating Partnership issued $150,000 face amount of 5.125 percent senior unsecured notes due January 15, 2015 with interest payable semi-annually in arrears.  The proceeds from the issuance (including premium and net of selling commissions) of approximately $148,103 were used primarily to reduce outstanding borrowings under the Operating Partnership’s unsecured facility.

 

On March 22, 2004, the Operating Partnership issued $100,000 face amount of 5.125 percent senior unsecured notes due February 15, 2014 with interest payable semi-annually in arrears.  The total proceeds from the issuance (including premium and net of selling commissions) of approximately $103,137 were used primarily to reduce outstanding borrowings under the Operating Partnership’s unsecured facility.

 

On March 15, 2004, the Operating Partnership retired $300,000 face amount of 7.00 percent senior unsecured notes due on that date.  Funds used for the retirement were obtained from proceeds from the February 2004 $100,000 senior unsecured notes offering, borrowings under the Operating Partnership’s unsecured facility and available cash.

 

On February 9, 2004, the Operating Partnership issued $100,000 face amount of 5.125 percent senior unsecured notes due February 15, 2014 with interest payable semi-annually in arrears.  The total proceeds from the issuance (net of selling commissions and discount) of approximately $98,538 were held until March 15, 2004, when the Operating Partnership used the net proceeds from the sale, together with borrowings under the unsecured facility and available cash, to repay the $300,000 7.00 percent notes due March 15, 2004.

 

9.              UNSECURED REVOLVING CREDIT FACILITY

 

On November 23, 2004, the Operating Partnership obtained an unsecured revolving credit facility with a borrowing capacity of $600,000 (expandable to $800,000), which replaced a credit facility of the same size.  The interest rate on outstanding borrowings (not electing the Operating Partnership’s competitive bid feature) under the unsecured facility is currently LIBOR plus 65 basis points.  The facility has a competitive bid feature, which allows the Operating Partnership to solicit bids from lenders under the facility to borrow up to $300,000 at interest rates less than the current LIBOR plus 65 basis point spread.  As of December 31, 2005, the Operating Partnership’s outstanding borrowings carried a weighted average interest rate of LIBOR plus 49 points.  The Operating Partnership may also elect an interest rate representing the higher of the lender’s prime rate or the Federal Funds rate plus 50 basis points.  The unsecured facility, which also required a 20 basis point facility fee on the current borrowing capacity payable quarterly in arrears, was scheduled to mature in November 2007.

 

On September 16, 2005, the Operating Partnership extended and modified the unsecured facility with a group of 23 lenders (reduced from 27).  The facility was extended for an additional two years and now matures in November 2009, with an extension option of one year, which would require a payment of 25 basis points of the then borrowing capacity of the facility upon exercise.  In addition, the facility fee was reduced by five basis points to 15 basis points at the BBB/Baa2 pricing level.

 

The interest rate and the facility fee are subject to adjustment, on a sliding scale, based upon the operating partnership’s unsecured debt ratings.  In the event of a change in the Operating Partnership’s unsecured debt rating, the interest and facility fee rates will be adjusted in accordance with the following table:

 

93


 

Operating Partnership’s
Unsecured Debt Ratings:
S&P Moody’s/Fitch (a)

 

Interest Rate –
Applicable Basis Points
Above LIBOR

 

Facility Fee
Basis Points

 

No ratings or less than BBB-/Baa3/BBB-

 

112.5

 

25.0

 

BBB-/Baa3/BBB-

 

80.0

 

20.0

 

BBB/Baa2/BBB (current)

 

65.0

 

15.0

 

BBB+/Baa1/BBB+

 

55.0

 

15.0

 

A-/A3/A- or higher

 

50.0

 

15.0

 

 

(a)          If the Operating Partnership has debt ratings from two rating agencies, one of which is Standard & Poor’s Rating Services (“S&P”) or Moody’s Investors Service (“Moody’s”), the rates per the above table shall be based on the lower of such ratings. If the Operating Partnership has debt ratings from three rating agencies, one of which is S&P or Moody’s, the rates per the above table shall be based on the lower of the two highest ratings.  If the Operating Partnership has debt ratings from only one agency, it will be considered to have no rating or less than BBB-/Baa3/BBB- per the above table.

 

The terms of the unsecured facility include certain restrictions and covenants which limit, among other things, the payment of dividends (as discussed below), the incurrence of additional indebtedness, the incurrence of liens and the disposition of real estate properties (to the extent that: (i) such property dispositions cause the Operating Partnership to default on any of the financial ratios of the facility described below, or (ii) the property dispositions are completed while the Operating Partnership is under an event of default under the facility, unless, under certain circumstances, such disposition is being carried out to cure such default), and which require compliance with financial ratios relating to the maximum leverage ratio, the maximum amount of secured indebtedness, the minimum amount of tangible net worth, the minimum amount of fixed charge coverage, the maximum amount of unsecured indebtedness, the minimum amount of unencumbered property interest coverage and certain investment limitations.  The dividend restriction referred to above provides that, except to enable the 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 common equity interests in an aggregate amount in excess of 90 percent of funds from operations (as defined in the facility agreement) for such period, subject to certain other adjustments.

 

The lending group for the credit facility consists of: JPMorgan Chase Bank, N.A., as administrative agent; Bank of America, N.A., as syndication agent; The Bank of Nova Scotia, New York Agency; Wachovia Bank, National Association; and Wells Fargo Bank, National Association, as documentation agents; SunTrust Bank, as senior managing agent; US Bank National Association; Citicorp North America, Inc.; and PNC Bank National Association, as managing agents; and Bank of China, New York Branch; The Bank of New York; Chevy Chase Bank, F.S.B.; The Royal Bank of Scotland, plc; Mizuho Corporate Bank, Ltd.; UFJ Bank Limited, New York Branch; The Governor and Company of the Bank of Ireland; Bank Hapoalim B.M.; Comerica Bank; Chang Hwa Commercial Bank, Ltd., New York Branch; First Commercial Bank, New York Agency; Chiao Tung Bank Co., Ltd., New York Agency; Deutsche Bank Trust Company Americas; and Hua Nan Commercial Bank, New York Agency.

 

SUMMARY

As of December 31, 2005 and 2004, the Operating Partnership had outstanding borrowings of $227,000 and $107,000, respectively, under its unsecured revolving credit facility.

 

10.       MORTGAGES, LOANS PAYABLE AND OTHER OBLIGATIONS

 

The Operating Partnership has mortgages, loans payable and other obligations which primarily consist of various loans collateralized by certain of the Operating Partnership’s rental properties.  As of December 31, 2005, 17 of the Operating Partnership’s properties, with a total book value of approximately $652,925, are encumbered by the Operating Partnership’s mortgages and loans payable.  Payments on mortgages, loans payable and other obligations are generally due in monthly installments of principal and interest, or interest only.

 

94


 

A summary of the Operating Partnership’s mortgages, loans payable and other obligations as of December 31, 2005 and 2004 is as follows:

 

Property Name

 

Lender

 

Effective
Interest
Rate (a)

 

Principal Balance at
December 31,

 

Maturity

 

 

2005

 

2004

Harborside – Plaza 2 and 3

 

Northwestern/Principal

 

7.37

%

$

144,642

 

$

149,473

 

01/01/06

(b)

Monmouth Executive Center

 

Lehman Brothers CMBS

 

4.98

%

16,044

 

—

 

09/01/06

 

Mack-Cali Airport

 

Allstate Life Insurance Co.

 

7.05

%

9,644

 

9,852

 

04/01/07

 

Various (c)

 

Prudential Insurance Co.

 

4.84

%

150,000

 

150,000

 

01/15/10

 

2200 Renaissance Boulevard

 

TIAA

 

5.89

%

18,174

 

18,509

 

12/01/12

 

Soundview Plaza

 

TIAA

 

6.02

%

18,427

 

18,816

 

01/01/13

 

Assumed obligations(d)

 

various

 

4.86

%

53,241

 

67,269

 

05/01/09

 

500 West Putnam Avenue

 

New York Life Ins. Co.

 

5.52

%

25,000

 

—

 

01/10/16

 

23 Main Street

 

JP Morgan CMBS

 

5.59

%

33,500

 

—

 

09/01/18

 

Mack-Cali Centre VI

 

Principal Life Insurance Co.

 

6.87

%

—

 

35,000

 

—

 

One River Center

 

New York Life Ins. Co.

 

5.50

%

—

 

45,490

 

—

 

Mack-Cali Bridgewater I

 

New York Life Ins. Co.

 

7.00

%

—

 

23,000

 

—

 

Mack-Cali Woodbridge II

 

New York Life Ins. Co.

 

7.50

%

—

 

17,500

 

—

 

Mack-Cali Short Hills

 

Prudential Insurance Co.

 

7.74

%

—

 

22,789

 

—

 

500 West Putnam Avenue

 

New York Life Ins. Co.

 

6.52

%

—

 

6,500

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Total mortgages, loans payable and other obligations

 

 

 

$

468,672

 

$

564,198

 

 

 

 

(a)          Effective interest rate for mortgages, loans payable and other obligations reflects effective rate of debt, including deferred financing costs, comprised of the cost of terminated treasury lock agreements (if any), debt initiation costs and other transaction costs, as applicable.

(b)         On January 3, 2006, the Operating Partnership paid off this mortgage loan through borrowings on the Operating Partnership’s revolving credit facility.

(c)          Mortgage is collateralized by seven properties.

(d)         The obligations mature at various times between May 2006 and May 2009.

 

SCHEDULED PRINCIPAL PAYMENTS

Scheduled principal payments and related weighted average annual interest rates for the Operating Partnership’s senior unsecured notes (see Note 8), unsecured revolving credit facility and mortgages, loans payable and other obligations as of December 31, 2005 are as follows:

 

Period

 

Scheduled
Amortization

 

Principal
Maturities

 

Total

 

Weighted Avg.
Interest Rate of
Future Repayments (a)

 

2006

 

$

18,276

 

$

160,189

 

$

178,465

 

6.90

%

2007

 

17,098

 

9,364

 

26,462

 

5.69

%

2008

 

16,292

 

—

 

16,292

 

4.97

%

2009

 

7,175

 

527,000

 

534,175

 

6.33

%

2010

 

1,480

 

315,000

 

316,480

 

5.19

%

Thereafter

 

9,781

 

1,050,033

 

1,059,814

 

5.98

%

Sub-total

 

70,102

 

2,061,586

 

2,131,688

 

6.15

%

Adjustment for unamortized debt discount/premium, net, as of December 31, 2005

 

(5,507

)

—

 

(5,507

)

—

 

 

 

 

 

 

 

 

 

 

 

Totals/Weighted Average

 

$

64,595

 

$

2,061,586

 

$

2,126,181

 

6.15

%

 

(a)          Actual weighted average LIBOR contract rates relating to the Operating Partnership’s outstanding debt as of December 31, 2005 of 4.36 percent was used in calculating revolving credit facility and other variable rate debt interest rates.

 

95


 

CASH PAID FOR INTEREST AND INTEREST CAPITALIZED

Cash paid for interest for the years ended December 31, 2005, 2004 and 2003 was $115,359, $110,092 and $120,095, respectively.  Interest capitalized by the Operating Partnership for the years ended December 31, 2005, 2004 and 2003 was $5,518, $3,920 and $7,285, respectively.

 

SUMMARY OF INDEBTEDNESS

As of December 31, 2005, the Operating Partnership’s total indebtedness of $2,126,181 (weighted average interest rate of 6.15 percent) was comprised of $227,000 of revolving credit facility borrowings (weighted average rate of 4.84 percent) and fixed rate debt and other obligations of $1,899,181 (weighted average rate of 6.30 percent).

 

As of December 31, 2004, the Operating Partnership’s total indebtedness of $1,702,300 (weighted average interest rate of 6.32 percent) was comprised of $107,000 of revolving credit facility borrowings (weighted average rate of 2.77 percent) and fixed rate debt and other obligations of $1,595,300 (weighted average rate of 6.55 percent).

 

11.       PARTNERS’ CAPITAL

 

Partners’ capital in the accompanying consolidated financial statements relates to: (a) General Partner’s capital, consisting of common units and Series C preferred units held by the Corporation in the Operating Partnership, and (b) Limited Partners’ capital, consisting of common units held by the limited partners and Series B preferred units.

 

Any transactions resulting in the issuance of additional common and preferred stock of the Corporation result in a corresponding issuance by the Operating Partnership of an equivalent amount of common and preferred units to the Corporation.

 

GENERAL PARTNER:

 

PREFERRED STOCK

On March 14, 2003, in a publicly registered transaction with a single institutional buyer, the Corporation completed the sale and issuance of 10,000 shares of eight-percent Series C cumulative redeemable perpetual preferred stock (“Series C Preferred Stock”) in the form of 1,000,000 depositary shares ($25 stated value per depositary share).  Each depositary share represents 1/100th of a share of Series C Preferred Stock.  The Corporation received net proceeds of approximately $24,836 from the sale.

 

The Series C Preferred Stock has preference rights with respect to liquidation and distributions over the common stock. Holders of the Series C Preferred Stock, except under certain limited conditions, will not be entitled to vote on any matters.  In the event of a cumulative arrearage equal to six quarterly dividends, holders of the Series C Preferred Stock will have the right to elect two additional members to serve on the Corporation’s Board of Directors until dividends have been paid in full.  At December 31, 2005, there were no dividends in arrears.  The Corporation may issue unlimited additional preferred stock ranking on a parity with the Series C Preferred Stock but may not issue any preferred stock senior to the Series C Preferred Stock without the consent of two-thirds of its holders.  The Series C Preferred Stock is essentially on an equivalent basis in priority with the Series C Preferred Units of the Operating Partnership.

 

Except under certain conditions relating to the Corporation’s qualification as a REIT, the Series C Preferred Stock is not redeemable prior to March 14, 2008.  On and after such date, the Series C Preferred Stock will be redeemable at the option of the Corporation, in whole or in part, at $25 per depositary share, plus accrued and unpaid dividends.

 

In connection with the Corporation’s issuance of $25,000 of Series C cumulative redeemable perpetual preferred stock, the Corporation acquired from the Operating Partnership $25,000 of Series C Preferred Units (the “Series C Preferred Units”), which have terms essentially identical to the Series C preferred stock.

 

REPURCHASE OF GENERAL PARTNER

On September 13, 2000, the Board of Directors of the Corporation authorized an increase to the Corporation’s repurchase program under which the Corporation was permitted to purchase up to an additional $150,000 of the Corporation’s outstanding common stock (“Repurchase Program”).  From that date through its last purchases on January

 

96


 

10, 2003, the Corporation purchased and retired, under the Repurchase Program, 3,746,400 shares of its outstanding common stock for an aggregate cost of approximately $104,512.  Concurrent with these purchases, the Corporation sold to the Operating Partnership 3,746,400 of its outstanding common units for an aggregate cost of approximately $104,512. The Corporation has a remaining authorization to repurchase up to an additional $45,488 of its outstanding common stock, which it may repurchase from time to time in open market transactions at prevailing prices or through privately negotiated transactions.

 

DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN

The Corporation has a dividend reinvestment and stock purchase plan, which commenced in March 1999.

 

SHAREHOLDER RIGHTS PLAN

On June 10, 1999, the Board of Directors of the Corporation authorized a dividend distribution of one preferred share purchase right (“Right”) for each outstanding share of common stock which were distributed to all holders of record of the common stock on July 6, 1999.  Each Right entitles the registered holder to purchase from the Corporation one one-thousandth of a share of Series A junior participating preferred stock, par value $0.01 per share (“Preferred Shares”), at a price of $100.00 per one one-thousandth of a Preferred Share (“Purchase Price”), subject to adjustment as provided in the rights agreement.  The Rights expire on July 6, 2009, unless the expiration date is extended or the Right is redeemed or exchanged earlier by the Corporation.

 

The Rights are attached to each share of common stock.  The Rights are generally exercisable only if a person or group becomes the beneficial owner of 15 percent or more of the outstanding common stock or announces a tender offer for 15 percent or more of the outstanding common stock (“Acquiring Person”).  In the event that a person or group becomes an Acquiring Person, each holder of a Right will have the right to receive, upon exercise, common stock having a market value equal to two times the Purchase Price of the Right.

 

STOCK OPTION PLANS

In May 2004, the Corporation established the 2004 Incentive Stock Plan under which a total of 2,500,000 shares have been reserved for issuance.  No options have been granted through December 31, 2005 under this plan.  In September 2000, the Corporation established the 2000 Employee Stock Option Plan (“2000 Employee Plan”) and the Amended and Restated 2000 Director Stock Option Plan (“2000 Director Plan”).  In May 2002, shareholders of the Corporation approved amendments to both plans to increase the total shares reserved for issuance under both of the 2000 plans from 2,700,000 to 4,350,000 shares of the Corporation’s common stock (from 2,500,000 to 4,000,000 shares under the 2000 Employee Plan and from 200,000 to 350,000 shares under the 2000 Director Plan).  In 1994, and as subsequently amended, the 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 had been reserved for issuance (4,980,188 shares under the Employee Plan and 400,000 shares under the Director Plan).  As the Employee Plan and Director Plan expired in 2004, stock options may no longer be issued under those plans.  Stock options granted under the Employee Plan in 1994 and 1995 became exercisable over a three-year period.  Stock options granted under the 2000 Employee Plan and those options granted subsequent to 1995 under the Employee Plan become exercisable over a five-year period.  All stock options granted under both the 2000 Director Plan and Director Plan become exercisable in one year.  All options were granted at the fair market value at the dates of grant and have terms of ten years.  As of December 31, 2005 and December 31, 2004, the stock options outstanding had a weighted average remaining contractual life of approximately 5.7 and 6.5 years, respectively.

 

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Information regarding the Corporation’s stock option plans is summarized below:

 

 

 

Shares Under Options

 

Weighted Average
Exercise Price

 

Outstanding at January 1, 2003

 

3,585,930

 

$

32.19

 

Granted

 

954,800

 

$

28.50

 

Exercised

 

(1,421,455

)

$

33.21

 

Lapsed or canceled

 

(129,140

)

$

30.54

 

Outstanding at December 31, 2003

 

2,990,135

 

$

30.56

 

Granted

 

10,000

 

$

38.07

 

Exercised

 

(1,250,864

)

$

32.40

 

Lapsed or canceled

 

(45,640

)

$

28.49

 

Outstanding at December 31, 2004

 

1,703,631

 

$

29.31

 

Granted

 

5,000

 

$

45.47

 

Exercised

 

(574,506

)

$

28.92

 

Lapsed or canceled

 

(50,540

)

$

28.60

 

Outstanding at December 31, 2005 ($24.63 – $45.47)

 

1,083,585

 

$

29.63

 

Options exercisable at December 31, 2004

 

1,048,691

 

$

29.67

 

Options exercisable at December 31, 2005

 

782,905

 

$

29.96

 

Available for grant at December 31, 2004

 

4,728,358

 

 

 

Available for grant at December 31, 2005

 

4,590,098

 

 

 

 

The weighted average fair value of options granted during 2005, 2004 and 2003 was $3.62, $3.28 and $0.76 per option. The fair value of each significant option grant is estimated on the date of grant using the Black-Scholes model.  The following weighted average assumptions are included in the Corporation’s fair value calculations of stock options granted in 2005, 2004 and 2003:

 

 

 

2005

 

2004

 

2003

 

Expected life (in years)

 

6

 

6

 

6

 

Risk-free interest rate

 

3.97

%

3.74

%

3.65

%

Volatility

 

15.00

%

19.50

%

14.02

%

Dividend yield

 

5.54

%

6.65

%

8.85

%

 

The Operating Partnership recognized stock options expense of $448, $415 and $189 for the years ended December 31, 2005, 2004 and 2003, respectively.

 

STOCK WARRANTS

Information regarding the Corporation’s stock warrants (“Stock Warrants”), which enable the holders to purchase an equal number of shares of the Corporation’s common stock at the respective exercise price, is summarized below:

 

 

 

Shares Under Warrants

 

Weighted Average
Exercise Price

 

Outstanding at January 1, 2003

 

642,476

 

$

36.49

 

Exercised

 

(443,226

)

$

37.41

 

Lapsed or canceled

 

(50,000

)

$

38.75

 

Outstanding at December 31, 2003

 

149,250

 

$

33.00

 

Exercised

 

(149,250

)

$

33.00

 

Outstanding at December 31, 2004

 

—

 

—

 

 

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STOCK COMPENSATION

The Corporation has granted stock awards to officers, certain other employees, and non-employee members of the Board of Directors of the Corporation, which allow the holders to each receive a certain amount of shares of the Corporation’s common stock generally over a one to five-year vesting period.  Certain Restricted Stock Awards are contingent upon the Corporation meeting certain performance and/or stock price appreciation objectives.  All Restricted Stock Awards provided to the officers and certain other employees were granted under the 2000 Employee Plan and the Employee Plan. Restricted Stock Awards granted to directors were granted under the 2000 Director Plan.

 

Information regarding the Restricted Stock Awards is summarized below:

 

 

 

Shares

 

Outstanding at January 1, 2003

 

153,736

 

Granted (a)

 

225,549

 

Vested

 

(97,916

)

Canceled

 

(500

)

Outstanding at December 31, 2003

 

280,869

 

Granted (b)

 

47,056

 

Vested

 

(109,938

)

Canceled

 

(19,284

)

Outstanding at December 31, 2004

 

198,703

 

Granted (c)

 

165,660

 

Vested

 

(109,419

)

Canceled

 

(8,000

)

 

 

 

 

Outstanding at December 31, 2005

 

246,944

 

 

(a)          Included in the 225,549 Restricted Stock Awards granted in 2003 were:

1)              168,000 awards granted to the Corporation’s five executive officers, Mitchell E. Hersh, Timothy M. Jones, Barry Lefkowitz, Roger W. Thomas and Michael Grossman on January 2, 2003.

2)              39,710 awards granted to the Corporation’s five executive officers, Mitchell E. Hersh, Timothy M. Jones, Barry Lefkowitz, Roger W. Thomas and Michael Grossman on December 2, 2003.

(b)         Included in the 47,056 Restricted Stock Awards granted in 2004 were 34,056 awards granted to the Corporation’s four executive officers, Mitchell E. Hersh, Barry Lefkowitz, Roger W. Thomas and Michael Grossman.

(c)          Included in the 165,660 Restricted Stock Awards granted in 2005 were 37,960 awards granted to the Corporation’s four executive officers, Mitchell E. Hersh, Barry Lefkowitz, Roger W. Thomas and Michael Grossman.

 

DEFERRED STOCK COMPENSATION PLAN FOR DIRECTORS

The Deferred Compensation Plan for Directors, which commenced January 1, 1999, allows non-employee directors of the Corporation to elect to defer up to 100 percent of their annual retainer fee into deferred stock units.  The deferred stock units are convertible into an equal number of shares of common stock upon the directors’ termination of service from the Board of Directors or a change in control of the Corporation, as defined in the plan.  Deferred stock units are credited to each director quarterly using the closing price of the Corporation’s common stock on the applicable dividend record date for the respective quarter.  Each participating director’s account is also credited for an equivalent amount of deferred stock units based on the dividend rate for each quarter.

 

During the years ended December 31, 2005, 2004 and 2003, 6,655, 6,230 and 6,256 deferred stock units were earned, respectively.  As of December 31, 2005 and 2004, there were 30,903 and 29,222 director stock units outstanding, respectively.

 

LIMTED PARTNERS CAPITAL:

 

SERIES B PREFERRED UNITS

The Series B Preferred Units had a stated value of $1,000 per unit and were preferred as to assets over any class of common units or other class of preferred units of the Operating Partnership, based on circumstances per the applicable unit certificates.  The quarterly distribution on each Series B Preferred Unit was an amount equal to the greater of (i)

 

99


 

$16.875 (representing 6.75 percent of the Series B Preferred Unit stated value of an annualized basis) or (ii) the quarterly distribution attributable to a Series B Preferred Unit determined as if such unit had been converted into common units, subject to adjustment for customary anti-dilution rights.

 

On June 13, 2005, the Operating Partnership caused the mandatory conversion (the “Conversion”) of all 215,018 outstanding Series B Preferred Units into 6,205,425.72 Common Units.  Each Series B Preferred Unit was converted into whole and fractional Common Units equal to (x) the $1,000 stated value, divided by (y) the conversion price of $34.65.  A description of the rights, preferences and privileges of the Common Units is set forth below.

 

COMMON UNITS

Certain individuals and entities own common units in the Operating Partnership.  A common unit and a share of common stock of the Corporation have substantially the same economic characteristics in as much as they effectively share equally in the net income or loss of the Operating Partnership.  Common units are redeemable by the common unitholders at their option, subject to certain restrictions, on the basis of one common unit for either one share of common stock or cash equal to the fair market value of a share at the time of the redemption.  The Corporation has the option to deliver shares of common stock in exchange for all or any portion of the cash requested.  The common unitholders may not put the units for cash to the Corporation or the Operating Partnership.  When a unitholder redeems a common unit for common stock of the Corporation, limited partners’ capital is reduced and the General Partner’s capital is increased.

 

As of December 31, 2005, 2004 and 2003, the Operating Partnership had 13,650,439, 7,616,447 and 7,795,498 common units outstanding, respectively.

 

EARNINGS PER UNIT

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.

 

100


 

The following information presents the Operating Partnership’s results for the years ended December 31, 2005, 2004 and 2003 in accordance with FASB No. 128:

 

 

 

Year Ended December 31,

 

Computation of Basic EPU

 

2005

 

2004

 

2003

 

Income from continuing operations

 

$

109,599

 

$

120,268

 

$

161,372

 

Deduct: Preferred unit distributions

 

(5,909

)

(17,636

)

(17,340

)

Income from continuing operations available to common unitholders

 

103,690

 

102,632

 

144,032

 

Income from discontinued operations

 

8,520

 

10,722

 

16,454

 

Net income available to common unitholders

 

$

112,210

 

$

113,354

 

$

160,486

 

 

 

 

 

 

 

 

 

Weighted average common units

 

73,729

 

68,110

 

65,526

 

 

 

 

 

 

 

 

 

Basic EPU:

 

 

 

 

 

 

 

Income from continuing operations

 

$

1.41

 

$

1.50

 

$

2.20

 

Income from discontinued operations

 

0.11

 

0.16

 

0.25

 

Net income available to common unitholders

 

$

1.52

 

$

1.66

 

$

2.45

 

 

 

 

Year Ended December 31,

 

Computation of Diluted EPU

 

2005

 

2004

 

2003

 

Income from continuing operations available to common unitholders

 

$

103,690

 

$

102,632

 

$

144,032

 

Income from discontinued operations for diluted earnings per unit

 

8,520

 

10,722

 

16,454

 

Net income available to common unitholders

 

$

112,210

 

$

113,354

 

$

160,486

 

 

 

 

 

 

 

 

 

Weighted average common units

 

74,189

 

68,743

 

65,980

 

 

 

 

 

 

 

 

 

Diluted EPU:

 

 

 

 

 

 

 

Income from continuing operations

 

$

1.40

 

$

1.49

 

$

2.18

 

Income from discontinued operations

 

0.11

 

0.16

 

0.25

 

Net income available to common unitholders

 

$

1.51

 

$

1.65

 

$

2.43

 

 

The following schedule reconciles the shares used in the basic EPU calculation to the units used in the diluted EPU calculation:

 

 

 

Year Ended December 31,

 

 

 

2005

 

2004

 

2003

 

Basic

EPU units

 

73,729

 

68,110

 

65,526

 

Add:

Stock options

 

401

 

569

 

436

 

 

Restricted Stock Awards

 

59

 

58

 

10

 

 

Stock Warrants

 

—

 

6

 

8

 

Diluted EPU Units

 

74,189

 

68,743

 

65,980

 

 

Not included in the computations of diluted EPU were 1,507, 0, and 738,003 stock options and 1,530,105, 6,205,426 and 6,219,001 Series B Preferred Units, on an as converted basis into common units, as such securities were anti-dilutive during the years ended December 31, 2005, 2004 and 2003, respectively.  Unvested restricted stock outstanding as of December 31, 2005, 2004 and 2003 were 246,944, 198,703 and 280,869, respectively.

 

12.       CONSOLIDATED JOINT VENTURES

 

On November 23, 2004, the Operating Partnership acquired a 62.5 percent interest in One River Centre, a three-building 457,472 square-foot office complex located in Middletown, New Jersey, through the Operating Partnership’s conversion of its note receivable into a controlling equity interest.  Minority interests: Consolidated joint ventures as of December 31, 2004 consisted of the 37.5 percent non-controlling interest owned by the third party.  In March 2005, the Operating

 

101


 

Partnership acquired the remaining 37.5 percent non-controlling interest in One River Centre for $10,499, comprised of $7,713 in cash and the issuance of 63,328 common units in the Operating Partnership.

 

13.       EMPLOYEE BENEFIT 401(k) 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.  Total expense recognized by the Operating Partnership for the years ended December 31, 2005, 2004 and 2003 was $400, $400 and $336, respectively.

 

14.       DISCLOSURE OF FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The following disclosure of estimated fair value was determined by management using available market information and appropriate valuation methodologies.  However, considerable judgment is necessary to interpret market data and develop estimated fair value.  Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Operating Partnership could realize on disposition of the financial instruments at December 31, 2005 and 2004.  The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

 

Cash equivalents, marketable securities, receivables, accounts payable, and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of December 31, 2005 and 2004.

 

The fair value of the fixed-rate mortgage debt and unsecured notes as of December 31, 2005 was approximately $39.4 million higher than the book value of approximately $1.9 billion primarily due to the general decrease in market interest rates on secured and unsecured debt.  As of December 31, 2004, the fair value of fixed-rate mortgage debt and unsecured notes was approximately $104.2 million higher than the book value of approximately $1.6 billion.  The fair value of the mortgage debt and the unsecured notes was determined by discounting the future contractual interest and principal payments by a market rate.

 

Disclosure about fair value of financial instruments is based on pertinent information available to management as of December 31, 2005 and 2004.  Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since December 31, 2005 and current estimates of fair value may differ significantly from the amounts presented herein.

 

15.       COMMITMENTS AND CONTINGENCIES

 

TAX ABATEMENT AGREEMENTS
Harborside Financial Center

Pursuant to agreements with the City of Jersey City, New Jersey, the Operating Partnership is required to make payments in lieu of property taxes (“PILOT”) on certain of its properties located in Jersey City, as follows:

 

The Harborside Plaza 5 agreement, as amended, which commenced in 2002 upon substantial completion of the property, as defined, is for a term of 20 years.  The PILOT is equal to two percent of Total Project Costs.  Total Project Costs, as defined, are $159,625.  The PILOT totaled $3,193, $3,193 and $3,329 for the years ended December 31, 2005, 2004 and 2003.

 

The Harborside Plaza 4-A agreement, which commenced in 2000, is for a term of 20 years.  The PILOT is equal to two percent of Total Project costs, as defined, and increases by 10 percent in years 7, 10 and 13 and by 50 percent in year 16.  Total Project costs, as defined, are $45,497.  The PILOT totaled $910 for each of the years ended December 31, 2005, 2004 and 2003.

 

102


 

The 101 Hudson Street agreement commenced in 1991 for a term of 15 years and expires in 2006.  The PILOT currently provides for the payment of a minimum annual service charge of approximately $4,193, subject to certain adjustments as provided in the PILOT agreement.  The PILOT totaled $3,518 for the period of time during the year ended December 31, 2005 for which the Operating Partnership owned the property.

 

The Harborside Plaza 2 and 3 agreement commenced in 1990 and expired on August 31, 2005.  Such PILOT was equal to two percent of Total Project Costs, as defined, in year one and increased by $75 per annum through year 15.  Total Project Costs, as defined, are $145,644.  The PILOT totaled $2,642, $3,913 and $3,838 for the years ended December 31, 2005, 2004 and 2003, respectively.

 

At the conclusion of the above-referenced PILOT agreements, it is expected that the properties will be assessed by the municipality and be subject to real estate taxes at the then prevailing rates.

 

LITIGATION

The Operating Partnership is a defendant in litigation arising in the normal course of its business activities.  Management does not believe that the ultimate resolution of these matters will have a materially adverse effect upon the Operating Partnership’s financial condition taken as whole.

 

GROUND LEASE AGREEMENTS

Future minimum rental payments under the terms of all non-cancelable ground leases under which the Operating Partnership is the lessee, as of December 31, 2005, are as follows:

 

Year

 

Amount

 

2006

 

$

530

 

2007

 

528

 

2008

 

506

 

2009

 

510

 

2010

 

510

 

2011 through 2080

 

19,632

 

 

 

 

 

Total

 

$

22,216

 

 

Ground lease expense incurred by the Operating Partnership during the years ended December 31, 2005, 2004 and 2003 amounted to $606, $583 and $1,017, respectively.

 

OTHER

The Operating Partnership may not dispose of or distribute certain of its properties, currently comprising 56 properties with an aggregate net book value of approximately $1.3 billion, which were originally contributed by members of either the Mack Group (which includes William L. Mack, Chairman of the Corporation’s Board of Directors; David S. Mack, a director of the Corporation; Earle I. Mack, a former director of the Corporation; and Mitchell E. Hersh, president, chief executive officer and a director of the Corporation), the Robert Martin Group (which includes Martin S. Berger, a director of the Corporation; Robert F. Weinberg, a former director of the Corporation; and Timothy M. Jones, former president of the Corporation), the Cali Group (which includes John R. Cali, a director of the Corporation, and John J. Cali, a former director of the Corporation) or certain other common unitholders, without the express written consent of a representative of the Mack Group, the Robert Martin Group, the Cali Group or the specific certain other common unitholders, as applicable, except in a manner which does not result in recognition of any built-in-gain (which may result in an income tax liability) or which reimburses the appropriate Mack Group, Robert Martin Group, Cali Group members or the specific certain other common unitholders for the tax consequences of the recognition of such built-in-gains (collectively, the “Property Lock-Ups”).  The aforementioned restrictions do not apply in the event that the Operating Partnership sells all of its properties or in connection with a sale transaction which the Corporation’s Board of Directors determines is reasonably necessary to satisfy a material monetary default on any unsecured debt, judgment or liability of the Operating Partnership or the Corporation or to cure any material monetary default on any mortgage secured by a property.  The Property Lock-Ups expire periodically through 2010.  Upon the expiration of the Property Lock-Ups, the

 

103


 

Operating Partnership is generally required to use commercially reasonable efforts to prevent any sale, transfer or other disposition of the subject properties from resulting in the recognition of built-in gain to the appropriate Mack Group, Robert Martin Group, Cali Group members or the specific certain other common unitholders.  74 of our properties, with an aggregate net book value of approximately $667.7 million, have lapsed restrictions and are subject to these conditions.

 

16.       TENANT LEASES

 

The Properties are leased to tenants under operating leases with various expiration dates through 2021.  Substantially all of the leases provide for annual base rents plus recoveries and escalation charges based upon the tenant’s proportionate share of and/or increases in real estate taxes and certain operating costs, as defined, and the pass-through of charges for electrical usage.

 

Future minimum rentals to be received under non-cancelable operating leases at December 31, 2005 are as follows:

 

Year

 

Amount

 

2006

 

$

527,783

 

2007

 

500,305

 

2008

 

448,527

 

2009

 

398,318

 

2010

 

346,888

 

2011 and thereafter

 

1,044,254

 

 

 

 

 

Total

 

$

3,266,075

 

 

17.       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.

 

The Operating Partnership evaluates performance based upon net operating income from the combined properties in the segment.

 

104


 

Selected results of operations for the years ended December 31, 2005, 2004 and 2003 and selected asset information as of December 31, 2005 and 2004 regarding the Operating Partnership’s operating segment are as follows:

 

 

 

Total Segment

 

Corporate & Other (d)

 

Total
Operating
Partnership

 

Total revenues:

 

 

 

 

 

 

 

2005

 

$

640,656

 

$

2,749

 

$

643,405

 

2004

 

573,868

 

3,881

 

577,749

 

2003

 

554,003

 

4,921

 

558,924

 

 

 

 

 

 

 

 

 

Total operating and interest expenses (a):

 

 

 

 

 

 

 

2005

 

$

227,696

 

$

150,949

 

$

378,645

(e)

2004

 

184,504

 

141,985

 

326,489

(f)

2003

 

173,830

 

147,952

 

321,782

(g)

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated joint ventures:

 

 

 

 

 

 

 

2005

 

$

248

 

$

—

 

$

248

 

2004

 

(3,886

)

—

 

(3,886

)

2003

 

13,480

 

—

 

13,480

 

 

 

 

 

 

 

 

 

Net operating income (b):

 

 

 

 

 

 

 

2005

 

$

413,208

 

$

(148,200

)

$

265,008

(e)

2004

 

385,478

 

(138,104

)

247,374

(f)

2003

 

393,653

 

(143,031

)

250,622

(g)

 

 

 

 

 

 

 

 

Total assets:

 

 

 

 

 

 

 

2005

 

$

4,097,098

 

$

150,404

 

$

4,247,502

 

2004

 

3,809,320

 

40,845

 

3,850,165

 

 

 

 

 

 

 

 

 

Total long-lived assets (c):

 

 

 

 

 

 

 

2005

 

$

3,921,536

 

$

2,066

 

$

3,923,602

 

2004

 

3,663,618

 

4,176

 

3,667,794

 

 

(a)          Total operating and interest expenses represent the sum of real estate taxes, utilities, operating services, general and administrative and interest expense (net of interest income).  All interest expense, net of interest income, (including for property-level mortgages) is excluded from segment amounts and classified in Corporate & Other for all periods.

(b)         Net operating income represents total revenues less total operating and interest expenses [as defined in Note (a)], plus equity in earnings (loss) of unconsolidated joint ventures, for the period.

(c)          Long-lived assets are comprised of net investment in rental property, unbilled rents receivable and investments in unconsolidated joint ventures.

(d)         Corporate & Other represents all corporate-level items (including interest and other investment income, interest expense and non-property general and administrative expense) as well as intercompany eliminations necessary to reconcile to consolidated Operating Partnership totals.

(e)          Excludes $155,370 of depreciation and amortization.

(f)            Excludes $127,826 of depreciation and amortization.

(g)         Excludes $113,202 of depreciation and amortization.

 

105


 

18.       RELATED PARTY TRANSACTIONS

 

William L. Mack, Chairman of the Board of Directors of the Corporation (“W. Mack”), David S. Mack, a director of the Corporation, and Earle I. Mack, a former director of the Corporation (“E. Mack”), are the executive officers, directors and stockholders of a corporation that leases approximately 7,801 square feet at one of the Operating Partnership’s office properties, which is scheduled to expire in November 2008.  The Operating Partnership has recognized $242, $227 and $218 in revenue under this lease for the years ended December 31, 2005, 2004 and 2003, respectively, and had no accounts receivable from the corporation as of December 31, 2005 and 2004.

 

The Operating Partnership has conducted business with certain entities (“RMC Entity” or “RMC Entities”), whose principals include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg, each of whom are affiliated with the Operating Partnership as the former president of the Corporation, a current member of the Board of Directors of the Corporation and a former member of the Board of Directors of the Corporation, respectively.  In connection with the Operating Partnership’s acquisition of 65 Class A properties from The Robert Martin Company (“Robert Martin”) on January 31, 1997, as subsequently modified, the Operating Partnership granted Robert Martin the right to designate one seat on the Corporation’s Board of Directors (“RM Board Seat”), which right has since expired.  Robert Martin designated Martin S. Berger and Robert F. Weinberg to jointly share the RM Board Seat, as follows: Mr. Weinberg served as a member of the Board of Directors of the Corporation from 1997 until December 1, 1998, at which time Mr. Weinberg resigned and Mr. Berger was appointed to serve in such capacity.  Mr. Berger served as a member of the Board of Directors of the Corporation from December 1, 1998 until March 6, 2001, at which time Mr. Berger resigned and Mr. Weinberg was appointed to serve in such capacity until the Corporation’s 2003 annual meeting of stockholders.  The Corporation elected to nominate for re-election to its Board of Directors Mr. Berger at the Corporation’s 2003 annual meeting of stockholders.  Mr. Berger was elected to the Board of Directors of the Corporation and Mr. Berger and Mr. Weinberg have agreed that the seat will be rotated among Mr. Berger and Mr. Weinberg annually at the time of each annual meeting of stockholders.  Mr. Berger currently serves in this capacity.  Upon the death of Mr. Berger or Mr. Weinberg, the surviving person shall solely fill the remainder of the term of the RM Board Seat.  Such business was as follows:

 

(1)                                  The Operating Partnership provides management, leasing and construction-related services to properties in which RMC Entities have an ownership interest.  The Operating Partnership recognized approximately $1,095, $1,996 and $1,831in revenue from RMC Entities for the years ended December 31, 2005, 2004 and 2003, respectively.  As of December 31, 2005 and 2004, respectively, the Operating Partnership had no accounts receivable from RMC Entities.

(2)                                  An RMC Entity leased space at one of the Operating Partnership’s office properties for approximately 3,330 square feet, which, after a three-year renewal and expansion signed with the Operating Partnership in 2005, now leases 4,860 square feet which is scheduled to expire in October 2008.  The Operating Partnership has recognized $89, $91 and $89, in revenue under this lease for the years ended December 31, 2005, 2004 and 2003, respectively, and had no accounts receivable due from the RMC Entity, as of December 31, 2005 and 2004.

 

Mr. Berger holds a 24 percent interest, acts as chairman and chief executive officer, Mr. Weinberg also holds a 24 percent interest and is a director, and W. Mack holds a nine percent interest and is a director of City and Suburban Federal Savings Bank and/or one of its affiliates, which leases a total of 15,879 square feet of space at two of the Operating Partnership’s office properties, comprised of 3,037 square feet scheduled to expire in June 2008 and 12,842 square feet scheduled to expire in April 2013.  As of February 13, 2004, City and Suburban assigned its lease with respect to 3,037 square feet of office space to an unaffiliated third party and has no continuing obligations under such lease.  The Operating Partnership recognized $396, $398 and $429 in revenue under the leases for the years ended December 31, 2005, 2004 and 2003, respectively, and had no accounts receivable from the company as of December 31, 2005 and 2004.

 

Vincent Tese, a director of the Corporation, is currently a director of Cablevision, Inc. who, through its affiliates, leases an aggregate of 58,885 square feet of office space, as well as has several telecom licensing agreements at the Operating Partnership’s properties.  The Operating Partnership recognized approximately $1,594, $1,695 and $1,645 in total revenue from affiliates of Cablevision for the years ended December 31, 2005, 2004 and 2003, respectively, and had accounts receivable from the affiliates of none and $2, respectively, as of December 31, 2005 and 2004.

 

106


 

Vincent Tese is also currently a member of the Board of Directors of Bear, Stearns & Co. Inc.  W. Mack had been a member of the Board of Bear Stearns until October 2004.  Bear Stearns acted as underwriter on several of the Operating Partnership’s previously-completed public debt offerings.

 

The son of Mr. Berger, a former officer of the Corporation, served as an officer and had a financial interest which was sold in 2004 in a company which provides cleaning and other related services to certain of the Operating Partnership’s properties.  The Operating Partnership has incurred costs from this company of approximately $5,906 and $6,177 for the years ended December 31, 2004 and 2003, respectively.  As of December 31, 2004, the Operating Partnership had no accounts payable to this company.

 

Pursuant to an agreement between the Corporation and certain members and associates of the Cali family executed June 27, 2000, John J. Cali served as the Chairman Emeritus and a Board member of the Corporation, and as a consultant to the Operating Partnership and was paid an annual salary of $150 from June 27, 2000 through June 27, 2003.  Additionally, the Operating Partnership provided office space and administrative support to John J. Cali, Angelo Cali, his brother, and Ed Leshowitz, his business partner (the “Cali Group”).  Such services were in effect from June 27, 2000 through June 27, 2004.  From June 27, 2004 through June 26, 2005, the Operating Partnership agreed to provide office space at no cost to the Cali Group, as well as provide administrative support and related services for which it was reimbursed $115 and $55 from the Cali Group for the years ended December 31, 2005 and 2004, respectively.  On June 27, 2005, an affiliate of the Cali Group entered into a three-year lease for 1,825 square feet of space at one of the Operating Partnership’s office properties, which is scheduled to expire in June 2008.  The Operating Partnership recognized approximately $24 in total revenue under this lease for the year ended December 31, 2005, and had no accounts receivable from the affiliate as of December 31, 2005.

 

19.       IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

 

SFAS No. 123 (revised 2004), Share-Based Payment

In October 2004, the FASB issued SFAS No. 123R (revised 2004), “Share-Based Payment” (“SFAS 123R”).  SFAS 123R requires companies to categorize share-based payments as either liability or equity awards.  For liability awards, companies will remeasure the award at fair value at each balance sheet date until the award is settled.  Equity classified awards are measured at the grant-date fair value and are not remeasured.  SFAS 123R will be effective for annual periods beginning after June 15, 2005.  Awards issued, modified, or settled after the effective date will be measured and recorded in accordance with SFAS 123R.  The Operating Partnership does not expect that the implementation of this standard will have a material effect on the Operating Partnership’s consolidated financial position or results of operations.

 

SFAS No. 153, Accounting for Non-monetary Transactions

In December 2004, the FASB issued SFAS No. 153, “Accounting for Non-monetary Transactions” (“SFAS 153”).  SFAS 153 requires non-monetary exchanges to be accounted for at fair value, recognizing any gain or loss, if the transactions meet a commercial-substance criterion and fair value is determinable.  SFAS No. 153 is effective for non-monetary transactions occurring in fiscal years beginning after June 15, 2005.  The Operating Partnership does not expect that the implementation of this standard will have a material effect on the Operating Partnership’s consolidated financial position or results of operations.

 

Emerging Issues Task Force (“EITF”) Issue No. 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights At its June 2005 meeting, the EITF reached a consensus that a sole general partner is presumed to control a limited partnership (or similar entity like an LLC) and should consolidate the limited partnership unless one of the following two conditions exist:

 

•                  Kick-out rights – when the limited partners have the substantive ability to remove the sole general partner without cause or otherwise dissolve (liquidate) the limited partnership; or

 

107


 

•                  Substantive participating rights – when the limited partners have the substantive right to participate in certain financial and operating decisions of the limited partnership that are made in the ordinary course of business.

 

EITF 04-5 is effective for all agreements entered into or modified after June 29, 2005.  For pre-existing agreements that are not modified, the consensus is effective as of the beginning of the first fiscal reporting period beginning after December 15, 2005.  The Operating Partnership does not expect that the implementation of this standard will have a material effect on the Operating Partnership’s consolidated financial position or results of operations.

 

Interpretation of FASB Statement No. 143 (“FIN 47”), Accounting for Conditional Asset Retirement Obligations

Issued in March 2005, FIN 47 clarifies that the term conditional asset retirement obligation as used in FASB Statement No. 143, Accounting for Asset Retirement Obligations (“SFAS No. 143”), refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity.  The obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and/or method of settlement.  Thus, the timing and/or method of settlement may be conditional on a future event.  Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated.  The fair value of a liability for the conditional asset retirement obligation should be recognized when incurred – generally upon acquisition, construction, or development and/or through the normal operation of the asset.  Uncertainty about the timing and/or method of settlement of a conditional asset retirement obligation should be factored into the measurement of the liability when sufficient information exists.  SFAS No. 143 acknowledges that in some cases, sufficient information may not be available to reasonably estimate the fair value of an asset retirement obligation.  FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation.  FIN 47 is effective for the year ended December 31, 2005 and did not have a material effect on the Operating Partnership’s consolidated financial position or results of operations for 2005.

 

108


 

20.       CONDENSED QUARTERLY FINANCIAL INFORMATION (unaudited)

 

The following summarizes the condensed quarterly financial information for the Operating Partnership:

 

Quarter Ended 2005:

 

December 31

 

September 30

 

June 30

 

March 31

 

Total revenues

 

$

163,346

 

$

163,968

 

$

163,064

 

$

153,027

 

Operating and other expenses

 

59,407

 

59,771

 

55,469

 

52,427

 

General and administrative

 

9,245

 

8,109

 

8,310

 

7,426

 

Depreciation and amortization

 

40,502

 

40,665

 

38,450

 

35,753

 

Interest expense

 

30,418

 

30,158

 

30,363

 

28,398

 

Interest income

 

(364

)

(308

)

(120

)

(64

)

Total expenses

 

139,208

 

138,395

 

132,472

 

123,940

 

Income from continuing operations before equity in earnings of unconsolidated joint ventures

 

24,138

 

25,573

 

30,592

 

29,087

 

Minority interest in consolidated joint ventures

 

—

 

—

 

—

 

(74

)

Equity in earnings of unconsolidated joint ventures, net

 

(304

)

322

 

542

 

(312

)

Gain on sale of investment in unconsolidated joint ventures

 

—

 

—

 

—

 

35

 

Income from continuing operations

 

23,834

 

25,895

 

31,134

 

28,736

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

Income from discontinued operations

 

(181

)

(191

)

1,561

 

1,809

 

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

 

(5,556

)

—

 

11,975

 

(897

)

Total discontinued operations, net

 

(5,737

)

(191

)

13,536

 

912

 

Net income

 

18,097

 

25,704

 

44,670

 

29,648

 

Preferred unit distributions

 

(500

)

(500

)

(500

)

(4,409

)

Net income available to common unitholders

 

$

17,597

 

$

25,204

 

$

44,170

 

$

25,239

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per unit:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.31

 

$

0.34

 

$

0.41

 

$

0.36

 

Discontinued operations

 

(0.08

)

(0.01

)

0.18

 

0.01

 

Net income available to common unitholders

 

$

0.23

 

$

0.33

 

$

0.59

 

$

0.37

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per unit:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.31

 

$

0.34

 

$

0.40

 

$

0.35

 

Discontinued operations

 

(0.08

)

(0.01

)

0.18

 

0.01

 

Net income available to common unitholders

 

$

0.23

 

$

0.33

 

$

0.58

 

$

0.36

 

 

 

 

 

 

 

 

 

 

 

Distributions declared per common unit

 

$

0.63

 

$

0.63

 

$

0.63

 

$

0.63

 

 

109


 

Quarter Ended 2004:

 

December 31

 

September 30

 

June 30

 

March 31

 

Total revenues

 

$

149,069

 

$

147,618

 

$

141,678

 

$

139,384

 

Operating and other expenses

 

49,492

 

47,166

 

45,068

 

44,720

 

General and administrative

 

9,117

 

7,562

 

8,685

 

6,397

 

Depreciation and amortization

 

34,420

 

32,286

 

31,487

 

29,633

 

Interest expense

 

26,780

 

27,320

 

26,512

 

29,037

 

Interest income

 

(328

)

(99

)

(220

)

(720

)

Total expenses

 

119,481

 

114,235

 

111,532

 

109,067

 

Income from continuing operations before equity in earnings of unconsolidated joint ventures

 

29,588

 

33,383

 

30,146

 

30,317

 

Equity in earnings of unconsolidated joint ventures, net

 

(4,463

)

(690

)

1,090

 

177

 

Gain on sale of investment in unconsolidated joint ventures

 

—

 

—

 

—

 

720

 

Income from continuing operations

 

25,125

 

32,693

 

31,236

 

31,214

 

Discontinued operations (net of minority interest):

 

 

 

 

 

 

 

 

 

Income from discontinued operations

 

2,235

 

3,452

 

2,813

 

2,948

 

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

 

11,130

 

—

 

(11,856

)

—

 

Total discontinued operations, net

 

13,365

 

3,452

 

(9,043

)

2,948

 

Net income

 

38,490

 

36,145

 

22,193

 

34,162

 

Preferred unit distributions

 

(4,409

)

(4,409

)

(4,409

)

(4,409

)

Net income available to common unitholders

 

$

34,081

 

$

31,736

 

$

17,784

 

$

29,753

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per unit:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.30

 

$

0.41

 

$

0.39

 

$

0.40

 

Discontinued operations

 

0.20

 

0.05

 

(0.13

)

0.04

 

Net income available to common unitholders

 

$

0.50

 

$

0.46

 

$

0.26

 

$

0.44

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per unit:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.30

 

$

0.41

 

$

0.39

 

$

0.40

 

Discontinued operations

 

0.19

 

0.05

 

(0.13

)

0.04

 

Net income available to common unitholders

 

$

0.49

 

$

0.46

 

$

0.26

 

$

0.44

 

 

 

 

 

 

 

 

 

 

 

Distributions declared per common unit

 

$

0.63

 

$

0.63

 

$

0.63

 

$

0.63

 

 

110


 

MACK-CALI REALTY, L.P.

REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION

December 31, 2005

(dollars in thousands)

 

SCHEDULE III

 

 

 

 

 

 

 

 

 

Initial Costs

 

Costs
Capitalized
Subsequent
to Acquisition

 

Gross Amount at Which
Carried at Close of
Period (a)

 

 

 

Property Location (b)

 

Year
Built

 

Acquired

 

Related
Encumbrances

 

Land

 

Building and
Improvements

 

 

Land

 

Building and
Improvements

 

Total

 

Accumulated
Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW JERSEY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Atlantic County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Egg Harbor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Decadon Drive (O)

 

1987

 

1995

 

—

 

300

 

3,282

 

385

 

300

 

3,667

 

3,967

 

1,102

 

200 Decadon Drive (O)

 

1991

 

1995

 

—

 

369

 

3,241

 

519

 

369

 

3,760

 

4,129

 

1,039

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bergen County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Lawn

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17-17 Rte 208 North (O)

 

1987

 

1995

 

—

 

3,067

 

19,415

 

2,320

 

3,067

 

21,735

 

24,802

 

6,486

 

Fort Lee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One Bridge Plaza (O)

 

1981

 

1996

 

—

 

2,439

 

24,462

 

3,810

 

2,439

 

28,272

 

30,711

 

6,955

 

2115 Linwood Avenue (O)

 

1981

 

1998

 

—

 

474

 

4,419

 

4,755

 

474

 

9,174

 

9,648

 

2,302

 

Little Ferry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

200 Riser Road (O)

 

1974

 

1997

 

9,644

 

3,888

 

15,551

 

692

 

3,888

 

16,243

 

20,131

 

3,235

 

Montvale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

95 Chestnut Ridge Road (O)

 

1975

 

1997

 

—

 

1,227

 

4,907

 

718

 

1,227

 

5,625

 

6,852

 

1,273

 

135 Chestnut Ridge Road (O)

 

1981

 

1997

 

—

 

2,587

 

10,350

 

2,345

 

2,587

 

12,695

 

15,282

 

3,205

 

Paramus

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15 East Midland Avenue (O)

 

1988

 

1997

 

20,600

 

10,375

 

41,497

 

80

 

10,375

 

41,577

 

51,952

 

8,357

 

461 From Road (O)

 

1988

 

1997

 

—

 

13,194

 

52,778

 

243

 

13,194

 

53,021

 

66,215

 

10,671

 

650 From Road (O)

 

1978

 

1997

 

25,600

 

10,487

 

41,949

 

5,863

 

10,487

 

47,812

 

58,299

 

10,382

 

140 East Ridgewood Avenue (O)

 

1981

 

1997

 

16,100

 

7,932

 

31,463

 

3,431

 

7,932

 

34,894

 

42,826

 

6,859

 

61 South Paramus Avenue (O)

 

1985

 

1997

 

20,800

 

9,005

 

36,018

 

5,491

 

9,005

 

41,509

 

50,514

 

9,628

 

Rochelle Park

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

120 Passaic Street (O)

 

1972

 

1997

 

—

 

1,354

 

5,415

 

102

 

1,357

 

5,514

 

6,871

 

1,118

 

365 West Passaic Street (O)

 

1976

 

1997

 

12,250

 

4,148

 

16,592

 

3,082

 

4,148

 

19,674

 

23,822

 

4,758

 

Upper Saddle River

 

 

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Lake Street (O)

 

1994

 

1997

 

35,550

 

13,952

 

55,812

 

50

 

13,952

 

55,862

 

69,814

 

11,228

 

10 Mountainview Road (O)

 

1986

 

1998

 

—

 

4,240

 

20,485

 

2,049

 

4,240

 

22,534

 

26,774

 

4,356

 

Woodcliff Lake

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

400 Chestnut Ridge Road (O)

 

1982

 

1997

 

—

 

4,201

 

16,802

 

5,080

 

4,201

 

21,882

 

26,083

 

4,235

 

470 Chestnut Ridge Road (O)

 

1987

 

1997

 

—

 

2,346

 

9,385

 

5

 

2,346

 

9,390

 

11,736

 

1,888

 

530 Chestnut Ridge Road (O)

 

1986

 

1997

 

—

 

1,860

 

7,441

 

3

 

1,860

 

7,444

 

9,304

 

1,497

 

300 Tice Boulevard (O)

 

1991

 

1996

 

—

 

5,424

 

29,688

 

3,174

 

5,424

 

32,862

 

38,286

 

8,045

 

50 Tice Boulevard (O)

 

1984

 

1994

 

19,100

 

4,500

 

—

 

27,427

 

4,500

 

27,427

 

31,927

 

15,945

 

 

111


 

 

 

 

 

 

 

 

 

Initial Costs

 

Costs
Capitalized
Subsequent
to Acquisition

 

Gross Amount at Which
Carried at Close of
Period (a)

 

 

 

Property Location (b)

 

Year
Built

 

Acquired

 

Related
Encumbrances

 

Land

 

Building and
Improvements

 

 

Land

 

Building and
Improvements

 

Total

 

Accumulated
Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Burlington County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Burlington

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3 Terri Lane (F)

 

1991

 

1998

 

—

 

652

 

3,433

 

1,235

 

658

 

4,662

 

5,320

 

1,048

 

5 Terri Lane (F)

 

1992

 

1998

 

—

 

564

 

3,792

 

2,026

 

569

 

5,813

 

6,382

 

1,559

 

Moorestown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2 Commerce Drive (F)

 

1986

 

1999

 

—

 

723

 

2,893

 

95

 

723

 

2,988

 

3,711

 

454

 

101 Commerce Drive (F)

 

1988

 

1998

 

—

 

422

 

3,528

 

437

 

426

 

3,961

 

4,387

 

788

 

102 Commerce Drive (F)

 

1987

 

1999

 

—

 

389

 

1,554

 

193

 

389

 

1,747

 

2,136

 

263

 

201 Commerce Drive (F)

 

1986

 

1998

 

—

 

254

 

1,694

 

338

 

258

 

2,028

 

2,286

 

480

 

202 Commerce Drive (F)

 

1988

 

1999

 

—

 

490

 

1,963

 

350

 

490

 

2,313

 

2,803

 

379

 

1 Executive Drive (F)

 

1989

 

1998

 

—

 

226

 

1,453

 

418

 

228

 

1,869

 

2,097

 

404

 

2 Executive Drive (F)

 

1988

 

2000

 

—

 

801

 

3,206

 

463

 

801

 

3,669

 

4,470

 

650

 

101 Executive Drive (F)

 

1990

 

1998

 

—

 

241

 

2,262

 

167

 

244

 

2,426

 

2,670

 

554

 

102 Executive Drive (F)

 

1990

 

1998

 

—

 

353

 

3,607

 

195

 

357

 

3,798

 

4,155

 

812

 

225 Executive Drive (F)

 

1990

 

1998

 

—

 

323

 

2,477

 

183

 

326

 

2,657

 

2,983

 

649

 

97 Foster Road (F)

 

1982

 

1998

 

—

 

208

 

1,382

 

145

 

211

 

1,524

 

1,735

 

357

 

1507 Lancer Drive (F)

 

1995

 

1998

 

—

 

119

 

1,106

 

43

 

119

 

1,149

 

1,268

 

239

 

1510 Lancer Drive (F)

 

1998

 

1998

 

—

 

732

 

2,928

 

41

 

735

 

2,966

 

3,701

 

556

 

840 North Lenola Road (F)

 

1995

 

1998

 

—

 

329

 

2,366

 

527

 

333

 

2,889

 

3,222

 

649

 

844 North Lenola Road (F)

 

1995

 

1998

 

—

 

239

 

1,714

 

260

 

241

 

1,972

 

2,213

 

450

 

915 North Lenola Road (F)

 

1998

 

2000

 

—

 

508

 

2,034

 

271

 

508

 

2,305

 

2,813

 

431

 

1245 North Church Street (F)

 

1998

 

2001

 

—

 

691

 

2,810

 

17

 

691

 

2,827

 

3,518

 

333

 

1247 North Church Street (F)

 

1998

 

2001

 

—

 

805

 

3,269

 

176

 

805

 

3,445

 

4,250

 

386

 

1256 North Church (F)

 

1984

 

1998

 

—

 

354

 

3,098

 

481

 

357

 

3,576

 

3,933

 

899

 

224 Strawbridge Drive (O)

 

1984

 

1997

 

—

 

766

 

4,335

 

3,208

 

766

 

7,543

 

8,309

 

2,496

 

228 Strawbridge Drive (O)

 

1984

 

1997

 

—

 

766

 

4,334

 

2,208

 

767

 

6,541

 

7,308

 

1,328

 

232 Strawbridge Drive (O)

 

1986

 

2004

 

—

 

1,521

 

7,076

 

1,473

 

1,521

 

8,549

 

10,070

 

207

 

2 Twosome Drive (F)

 

2000

 

2001

 

—

 

701

 

2,807

 

18

 

701

 

2,825

 

3,526

 

329

 

30 Twosome Drive (F)

 

1997

 

1998

 

—

 

234

 

1,954

 

64

 

236

 

2,016

 

2,252

 

446

 

31 Twosome Drive (F)

 

1998

 

2001

 

—

 

815

 

3,276

 

102

 

815

 

3,378

 

4,193

 

416

 

40 Twosome Drive (F)

 

1996

 

1998

 

—

 

297

 

2,393

 

245

 

301

 

2,634

 

2,935

 

594

 

41 Twosome Drive (F)

 

1998

 

2001

 

—

 

605

 

2,459

 

12

 

605

 

2,471

 

3,076

 

307

 

50 Twosome Drive (F)

 

1997

 

1998

 

—

 

301

 

2,330

 

89

 

304

 

2,416

 

2,720

 

548

 

West Deptford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1451 Metropolitan Drive (F)

 

1996

 

1998

 

—

 

203

 

1,189

 

30

 

206

 

1,216

 

1,422

 

265

 

 

112


 

 

 

 

 

 

 

 

 

Initial Costs

 

Costs
Capitalized
Subsequent
to Acquisition

 

Gross Amount at Which
Carried at Close of
Period (a)

 

 

 

Property Location (b)

 

Year
Built

 

Acquired

 

Related
Encumbrances

 

Land

 

Building and
Improvements

 

 

Land

 

Building and
Improvements

 

Total

 

Accumulated
Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Essex County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Millburn

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

150 J.F. Kennedy Parkway (O)

 

1980

 

1997

 

—

 

12,606

 

50,425

 

8,502

 

12,606

 

58,927

 

71,533

 

12,158

 

Roseland

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101 Eisenhower Parkway (O)

 

1980

 

1994

 

—

 

228

 

—

 

15,156

 

228

 

15,156

 

15,384

 

8,837

 

103 Eisenhower Parkway (O)

 

1985

 

1994

 

—

 

—

 

—

 

14,353

 

2,300

 

12,053

 

14,353

 

6,440

 

105 Eisenhower Parkway (O)

 

2001

 

2001

 

—

 

4,430

 

42,898

 

4,342

 

3,835

 

47,835

 

51,670

 

6,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hudson County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jersey City

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Harborside Financial Center
Plaza 1 (O)

 

1983

 

1996

 

—

 

3,923

 

51,013

 

11,675

 

3,923

 

62,688

 

65,252

 

11,726

 

Harborside Financial Center
Plaza 2 (O)

 

1990

 

1996

 

72,321

 

17,655

 

101,546

 

13,096

 

15,039

 

117,258

 

132,297

 

27,122

 

Harborside Financial Center
Plaza 3 (O)

 

1990

 

1996

 

72,321

 

17,655

 

101,878

 

12,766

 

15,040

 

117,259

 

132,299

 

27,122

 

Harborside Financial Center
Plaza 4A (O)

 

2000

 

2000

 

—

 

1,244

 

56,144

 

8,567

 

1,244

 

64,711

 

65,955

 

9,503

 

Harborside Financial Center
Plaza 5 (O)

 

2002

 

2002

 

—

 

6,218

 

170,682

 

54,352

 

5,705

 

225,547

 

231,252

 

18,384

 

101 Hudson Street (O)

 

1992

 

2004

 

—

 

45,530

 

271,376

 

226

 

45,530

 

271,602

 

317,132

 

7,902

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mercer County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hamilton Township

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Horizon Drive (F)

 

1989

 

1995

 

—

 

205

 

1,676

 

738

 

222

 

2,397

 

2,619

 

577

 

200 Horizon Drive (F)

 

1991

 

1995

 

—

 

205

 

3,027

 

824

 

255

 

3,801

 

4,056

 

947

 

300 Horizon Drive (F)

 

1989

 

1995

 

—

 

379

 

4,355

 

1,361

 

429

 

5,666

 

6,095

 

1,630

 

500 Horizon Drive (F)

 

1990

 

1995

 

—

 

379

 

3,395

 

1,256

 

394

 

4,636

 

5,030

 

1,175

 

600 Horizon Drive (F)

 

2002

 

2002

 

—

 

—

 

7,549

 

248

 

282

 

7,515

 

7,797

 

579

 

Princeton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

103 Carnegie Center (O)

 

1984

 

1996

 

—

 

2,566

 

7,868

 

1,461

 

2,566

 

9,329

 

11,895

 

2,271

 

100 Overlook Center (O)

 

1988

 

1997

 

—

 

2,378

 

21,754

 

2,074

 

2,378

 

23,828

 

26,206

 

5,265

 

5 Vaughn Drive (O)

 

1987

 

1995

 

—

 

657

 

9,800

 

1,498

 

657

 

11,298

 

11,955

 

3,239

 

 

113


 

 

 

 

 

 

 

 

 

Initial Costs

 

Costs
Capitalized
Subsequent
to Acquisition

 

Gross Amount at Which
Carried at Close of
Period (a)

 

 

 

Property Location (b)

 

Year
Built

 

Acquired

 

Related
Encumbrances

 

Land

 

Building and
Improvements

 

 

Land

 

Building and
Improvements

 

Total

 

Accumulated
Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Middlesex County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East Brunswick

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

377 Summerhill Road (O)

 

1977

 

1997

 

—

 

649

 

2,594

 

374

 

649

 

2,968

 

3,617

 

586

 

Piscataway

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30 Knightsbridge Road,
Building 3 (O)

 

1977

 

2004

 

—

 

1,030

 

7,269

 

24

 

1,030

 

7,293

 

8,323

 

288

 

30 Knightsbridge Road,
Building 4 (O)

 

1977

 

2004

 

—

 

1,433

 

10,121

 

34

 

1,433

 

10,155

 

11,588

 

402

 

30 Knightsbridge Road,
Building 5 (O)

 

1977

 

2004

 

—

 

2,979

 

21,035

 

561

 

2,979

 

21,596

 

24,575

 

834

 

30 Knightsbridge Road,
Building 6 (O)

 

1977

 

2004

 

—

 

448

 

3,161

 

277

 

448

 

3,438

 

3,886

 

125

 

Plainsboro

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

500 College Road East (O)

 

1984

 

1998

 

—

 

614

 

20,626

 

754

 

614

 

21,380

 

21,994

 

4,206

 

South Brunswick

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3 Independence Way (O)

 

1983

 

1997

 

—

 

1,997

 

11,391

 

675

 

1,997

 

12,066

 

14,063

 

2,470

 

Woodbridge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

581 Main Street (O)

 

1991

 

1997

 

—

 

3,237

 

12,949

 

20,250

 

8,115

 

28,321

 

36,436

 

5,487

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Monmouth County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Middletown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23 Main Street (O)

 

1977

 

2005

 

33,500

 

4,336

 

19,544

 

5,825

 

4,336

 

25,369

 

29,705

 

402

 

2 Paragon Way (O)

 

1989

 

2005

 

4,470

 

999

 

4,619

 

17

 

999

 

4,636

 

5,635

 

125

 

3 Paragon Way (O)

 

1991

 

2005

 

5,968

 

1,423

 

6,041

 

27

 

1,423

 

6,068

 

7,491

 

102

 

4 Paragon Way (O)

 

2002

 

2005

 

—

 

1,961

 

8,827

 

12

 

1,961

 

8,839

 

10,800

 

234

 

One River Center, Building 1 (O)

 

1983

 

2004

 

—

 

3,070

 

17,414

 

4,115

 

3,054

 

21,545

 

24,599

 

631

 

One River Center, Building 2 (O)

 

1983

 

2004

 

—

 

2,468

 

15,043

 

529

 

2,452

 

15,588

 

18,040

 

385

 

One River Center, Building 3 (O)

 

1984

 

2004

 

—

 

4,051

 

24,790

 

656

 

4,024

 

25,473

 

29,497

 

674

 

100 Willowbrook Road (O)

 

1988

 

2005

 

5,606

 

1,264

 

5,573

 

26

 

1,264

 

5,599

 

6,863

 

109

 

Neptune

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3600 Route 66 (O)

 

1989

 

1995

 

—

 

1,098

 

18,146

 

1,459

 

1,098

 

19,605

 

20,703

 

4,694

 

 

114


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amount at Which

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

Carried at Close of

 

 

 

 

 

 

 

 

 

 

 

Initial Costs

 

Capitalized

 

Period (a)

 

 

 

 

 

Year

 

 

 

Related

 

 

 

Building and

 

Subsequent

 

 

 

Building and

 

 

 

Accumulated

 

Property Location (b)

 

Built

 

Acquired

 

Encumbrances

 

Land

 

Improvements

 

to Acquisition

 

Land

 

Improvements

 

Total

 

Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wall Township

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1305 Campus Parkway (O)

 

1988

 

1995

 

—

 

335

 

2,560

 

129

 

335

 

2,689

 

3,024

 

698

 

1325 Campus Parkway (F)

 

1988

 

1995

 

—

 

270

 

2,928

 

1,292

 

270

 

4,220

 

4,490

 

1,293

 

1340 Campus Parkway (F)

 

1992

 

1995

 

—

 

489

 

4,621

 

794

 

489

 

5,415

 

5,904

 

1,400

 

1345 Campus Parkway (F)

 

1995

 

1997

 

—

 

1,023

 

5,703

 

1,587

 

1,024

 

7,289

 

8,313

 

1,743

 

1350 Campus Parkway (O)

 

1990

 

1995

 

—

 

454

 

7,134

 

1,157

 

454

 

8,291

 

8,745

 

2,102

 

1433 Highway 34 (F)

 

1985

 

1995

 

—

 

889

 

4,321

 

794

 

889

 

5,115

 

6,004

 

1,232

 

1320 Wyckoff Avenue (F)

 

1986

 

1995

 

—

 

255

 

1,285

 

68

 

255

 

1,353

 

1,608

 

334

 

1324 Wyckoff Avenue (F)

 

1987

 

1995

 

—

 

230

 

1,439

 

198

 

230

 

1,637

 

1,867

 

477

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Morris County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Florham Park

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

325 Columbia Parkway (O)

 

1987

 

1994

 

—

 

1,564

 

—

 

14,605

 

1,564

 

14,605

 

16,169

 

6,336

 

Morris Plains

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

250 Johnson Road (O)

 

1977

 

1997

 

—

 

2,004

 

8,016

 

1,406

 

2,004

 

9,422

 

11,426

 

1,996

 

201 Littleton Road (O)

 

1979

 

1997

 

—

 

2,407

 

9,627

 

858

 

2,407

 

10,485

 

12,892

 

2,218

 

Morris Township

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

412 Mt. Kemble Avenue (O)

 

1985

 

2004

 

—

 

4,360

 

33,167

 

0

 

4,360

 

33,167

 

37,527

 

1,319

 

Parsippany

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4 Campus Drive (O)

 

1983

 

2001

 

—

 

5,213

 

20,984

 

1,022

 

5,213

 

22,006

 

27,219

 

2,723

 

6 Campus Drive (O)

 

1983

 

2001

 

—

 

4,411

 

17,796

 

1,586

 

4,411

 

19,382

 

23,793

 

2,610

 

7 Campus Drive (O)

 

1982

 

1998

 

—

 

1,932

 

27,788

 

107

 

1,932

 

27,895

 

29,827

 

5,498

 

8 Campus Drive (O)

 

1987

 

1998

 

—

 

1,865

 

35,456

 

3,914

 

1,865

 

39,370

 

41,235

 

7,956

 

9 Campus Drive (O)

 

1983

 

2001

 

—

 

3,277

 

11,796

 

16,873

 

5,842

 

26,104

 

31,946

 

4,587

 

4 Century Drive (O)

 

1981

 

2004

 

—

 

1,787

 

9,575

 

607

 

1,787

 

10,182

 

11,969

 

243

 

5 Century Drive (O)

 

1981

 

2004

 

—

 

1,762

 

9,341

 

112

 

1,762

 

9,453

 

11,215

 

235

 

6 Century Drive (O)

 

1981

 

2004

 

—

 

1,289

 

6,848

 

179

 

1,289

 

7,027

 

8,316

 

174

 

2 Dryden Way (O)

 

1990

 

1998

 

—

 

778

 

420

 

13

 

778

 

433

 

1,211

 

94

 

4 Gatehall Drive (O)

 

1988

 

2000

 

—

 

8,452

 

33,929

 

1,920

 

8,452

 

35,849

 

44,301

 

5,204

 

2 Hilton Court (O)

 

1991

 

1998

 

—

 

1,971

 

32,007

 

2,194

 

1,971

 

34,201

 

36,172

 

6,931

 

1633 Littleton Road (O)

 

1978

 

2002

 

—

 

2,283

 

9,550

 

163

 

2,355

 

9,641

 

11,996

 

1,099

 

600 Parsippany Road (O)

 

1978

 

1994

 

—

 

1,257

 

5,594

 

1,992

 

1,257

 

7,586

 

8,843

 

2,316

 

 

115


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amount at Which

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

Carried at Close of

 

 

 

 

 

 

 

 

 

 

 

Initial Costs

 

Capitalized

 

Period (a)

 

 

 

 

 

Year

 

 

 

Related

 

 

 

Building and

 

Subsequent

 

 

 

Building and

 

 

 

Accumulated

 

Property Location (b)

 

Built

 

Acquired

 

Encumbrances

 

Land

 

Improvements

 

to Acquisition

 

Land

 

Improvements

 

Total

 

Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Sylvan Way (O)

 

1989

 

1998

 

—

 

1,689

 

24,699

 

394

 

1,021

 

25,761

 

26,782

 

6,177

 

5 Sylvan Way (O)

 

1989

 

1998

 

—

 

1,160

 

25,214

 

2,040

 

1,161

 

27,253

 

28,414

 

5,591

 

7 Sylvan Way (O)

 

1987

 

1998

 

—

 

2,084

 

26,083

 

2,092

 

2,084

 

28,175

 

30,259

 

5,701

 

5 Wood Hollow Road (O)

 

1979

 

2004

 

—

 

5,302

 

26,488

 

5,003

 

5,302

 

31,491

 

36,793

 

1,158

 

Passaic County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Clifton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

777 Passaic Avenue (O)

 

1983

 

1994

 

—

 

—

 

—

 

6,973

 

1,100

 

5,873

 

6,973

 

3,208

 

Totowa

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Center Court (F)

 

1999

 

1999

 

—

 

270

 

1,824

 

713

 

270

 

2,537

 

2,807

 

805

 

2 Center Court (F)

 

1998

 

1998

 

—

 

191

 

—

 

2,592

 

191

 

2,592

 

2,783

 

914

 

11 Commerce Way (F)

 

1989

 

1995

 

—

 

586

 

2,986

 

267

 

586

 

3,253

 

3,839

 

983

 

20 Commerce Way (F)

 

1992

 

1995

 

—

 

516

 

3,108

 

59

 

516

 

3,167

 

3,683

 

827

 

29 Commerce Way (F)

 

1990

 

1995

 

—

 

586

 

3,092

 

1,146

 

586

 

4,238

 

4,824

 

1,288

 

40 Commerce Way (F)

 

1987

 

1995

 

—

 

516

 

3,260

 

438

 

516

 

3,698

 

4,214

 

1,238

 

45 Commerce Way (F)

 

1992

 

1995

 

—

 

536

 

3,379

 

474

 

536

 

3,853

 

4,389

 

1,072

 

60 Commerce Way (F)

 

1988

 

1995

 

—

 

526

 

3,257

 

513

 

526

 

3,770

 

4,296

 

1,057

 

80 Commerce Way (F)

 

1996

 

1996

 

—

 

227

 

—

 

1,678

 

227

 

1,678

 

1,905

 

798

 

100 Commerce Way (F)

 

1996

 

1996

 

—

 

226

 

—

 

1,677

 

226

 

1,677

 

1,903

 

798

 

120 Commerce Way (F)

 

1994

 

1995

 

—

 

228

 

—

 

1,299

 

228

 

1,299

 

1,527

 

326

 

140 Commerce Way (F)

 

1994

 

1995

 

—

 

229

 

—

 

1,299

 

229

 

1,299

 

1,528

 

327

 

999 Riverview Drive (O)

 

1988

 

1995

 

—

 

476

 

6,024

 

2,137

 

1,102

 

7,535

 

8,637

 

1,889

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Somerset County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basking Ridge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

106 Allen Road (O)

 

2000

 

2000

 

—

 

3,853

 

14,465

 

3,519

 

4,093

 

17,744

 

21,837

 

3,539

 

222 Mt. Airy Road (O)

 

1986

 

1996

 

—

 

775

 

3,636

 

2,132

 

775

 

5,768

 

6,543

 

964

 

233 Mt. Airy Road (O)

 

1987

 

1996

 

—

 

1,034

 

5,033

 

1,646

 

1,034

 

6,679

 

7,713

 

1,818

 

Bridgewater

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

721 Route 202/206 (O)

 

1989

 

1997

 

—

 

6,730

 

26,919

 

2,541

 

6,730

 

29,460

 

36,190

 

5,751

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Union County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Clark

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Walnut Avenue (O)

 

1985

 

1994

 

—

 

—

 

—

 

16,765

 

1,822

 

14,943

 

16,765

 

7,533

 

 

116


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amount at Which

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

Carried at Close of

 

 

 

 

 

 

 

 

 

 

 

Initial Costs

 

Capitalized

 

Period (a)

 

 

 

 

 

Year

 

 

 

Related

 

 

 

Building and

 

Subsequent

 

 

 

Building and

 

 

 

Accumulated

 

Property Location (b)

 

Built

 

Acquired

 

Encumbrances

 

Land

 

Improvements

 

to Acquisition

 

Land

 

Improvements

 

Total

 

Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cranford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6 Commerce Drive (O)

 

1973

 

1994

 

—

 

250

 

—

 

2,887

 

250

 

2,887

 

3,137

 

1,762

 

11 Commerce Drive (O)

 

1981

 

1994

 

—

 

470

 

—

 

5,701

 

470

 

5,701

 

6,171

 

3,246

 

12 Commerce Drive (O)

 

1967

 

1997

 

—

 

887

 

3,549

 

1,537

 

887

 

5,086

 

5,973

 

1,243

 

14 Commerce Drive (O)

 

1971

 

2003

 

—

 

1,283

 

6,344

 

31

 

1,283

 

6,375

 

7,658

 

359

 

20 Commerce Drive (O)

 

1990

 

1994

 

—

 

2,346

 

—

 

21,212

 

2,346

 

21,212

 

23,558

 

8,538

 

25 Commerce Drive (O)

 

1971

 

2002

 

—

 

1,520

 

6,186

 

214

 

1,520

 

6,400

 

7,920

 

1,304

 

65 Jackson Drive (O)

 

1984

 

1994

 

—

 

541

 

—

 

6,269

 

542

 

6,268

 

6,810

 

3,133

 

New Providence

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

890 Mountain Road (O)

 

1977

 

1997

 

—

 

2,796

 

11,185

 

4,873

 

3,765

 

15,089

 

18,854

 

3,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NEW YORK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dutchess County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fishkill

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

300 South Lake Drive (O)

 

1987

 

1997

 

—

 

2,258

 

9,031

 

1,507

 

2,258

 

10,538

 

12,796

 

2,309

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rockland County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suffern

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

400 Rella Boulevard (O)

 

1988

 

1995

 

—

 

1,090

 

13,412

 

3,479

 

1,090

 

16,891

 

17,981

 

5,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Westchester County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elmsford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11 Clearbrook Road (F)

 

1974

 

1997

 

—

 

149

 

2,159

 

240

 

149

 

2,399

 

2,548

 

558

 

75 Clearbrook Road (F)

 

1990

 

1997

 

—

 

2,314

 

4,716

 

56

 

2,314

 

4,772

 

7,086

 

1,054

 

100 Clearbrook Road (O)

 

1975

 

1997

 

—

 

220

 

5,366

 

1,158

 

220

 

6,524

 

6,744

 

1,540

 

125 Clearbrook Road (F)

 

2002

 

2002

 

—

 

1,055

 

3,676

 

(51

)

1,055

 

3,625

 

4,680

 

607

 

150 Clearbrook Road (F)

 

1975

 

1997

 

—

 

497

 

7,030

 

734

 

497

 

7,764

 

8,261

 

1,735

 

175 Clearbrook Road (F)

 

1973

 

1997

 

—

 

655

 

7,473

 

805

 

655

 

8,278

 

8,933

 

1,942

 

200 Clearbrook Road (F)

 

1974

 

1997

 

—

 

579

 

6,620

 

894

 

579

 

7,514

 

8,093

 

1,810

 

250 Clearbrook Road (F)

 

1973

 

1997

 

—

 

867

 

8,647

 

1,004

 

867

 

9,651

 

10,518

 

2,275

 

50 Executive Boulevard (F)

 

1969

 

1997

 

—

 

237

 

2,617

 

97

 

237

 

2,714

 

2,951

 

607

 

77 Executive Boulevard (F)

 

1977

 

1997

 

—

 

34

 

1,104

 

126

 

34

 

1,230

 

1,264

 

295

 

85 Executive Boulevard (F)

 

1968

 

1997

 

—

 

155

 

2,507

 

208

 

155

 

2,715

 

2,870

 

588

 

101 Executive Boulevard (O)

 

1971

 

1997

 

—

 

267

 

5,838

 

873

 

267

 

6,711

 

6,978

 

1,530

 

 

117


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amount at Which

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

Carried at Close of

 

 

 

 

 

 

 

 

 

 

 

Initial Costs

 

Capitalized

 

Period (a)

 

 

 

 

 

Year

 

 

 

Related

 

 

 

Building and

 

Subsequent

 

 

 

Building and

 

 

 

Accumulated

 

Property Location (b)

 

Built

 

Acquired

 

Encumbrances

 

Land

 

Improvements

 

to Acquisition

 

Land

 

Improvements

 

Total

 

Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

300 Executive Boulevard (F)

 

1970

 

1997

 

—

 

460

 

3,609

 

153

 

460

 

3,762

 

4,222

 

848

 

350 Executive Boulevard (F)

 

1970

 

1997

 

—

 

100

 

1,793

 

150

 

100

 

1,943

 

2,043

 

483

 

399 Executive Boulevard (F)

 

1962

 

1997

 

—

 

531

 

7,191

 

103

 

531

 

7,294

 

7,825

 

1,643

 

400 Executive Boulevard (F)

 

1970

 

1997

 

—

 

2,202

 

1,846

 

409

 

2,202

 

2,255

 

4,457

 

588

 

500 Executive Boulevard (F)

 

1970

 

1997

 

—

 

258

 

4,183

 

661

 

258

 

4,844

 

5,102

 

1,229

 

525 Executive Boulevard (F)

 

1972

 

1997

 

—

 

345

 

5,499

 

579

 

345

 

6,078

 

6,423

 

1,405

 

700 Executive Boulevard (L)

 

N/A

 

1997

 

—

 

970

 

—

 

0

 

970

 

—

 

970

 

—

 

3 Odell Plaza (O)

 

1984

 

2003

 

—

 

1,322

 

4,777

 

2,301

 

1,322

 

7,078

 

8,400

 

497

 

5 Skyline Drive (F)

 

1980

 

2001

 

—

 

2,219

 

8,916

 

551

 

2,219

 

9,467

 

11,686

 

1,330

 

6 Skyline Drive (F)

 

1980

 

2001

 

—

 

740

 

2,971

 

6

 

740

 

2,977

 

3,717

 

638

 

555 Taxter Road (O)

 

1986

 

2000

 

—

 

4,285

 

17,205

 

4,832

 

4,285

 

22,037

 

26,322

 

3,001

 

565 Taxter Road (O)

 

1988

 

2000

 

—

 

4,285

 

17,205

 

2,634

 

4,233

 

19,891

 

24,124

 

2,863

 

570 Taxter Road (O)

 

1972

 

1997

 

—

 

438

 

6,078

 

840

 

438

 

6,918

 

7,356

 

1,820

 

1 Warehouse Lane (I)

 

1957

 

1997

 

—

 

3

 

268

 

215

 

3

 

483

 

486

 

97

 

2 Warehouse Lane (I)

 

1957

 

1997

 

—

 

4

 

672

 

189

 

4

 

861

 

865

 

232

 

3 Warehouse Lane (I)

 

1957

 

1997

 

—

 

21

 

1,948

 

508

 

21

 

2,456

 

2,477

 

619

 

4 Warehouse Lane (I)

 

1957

 

1997

 

—

 

84

 

13,393

 

2,346

 

85

 

15,738

 

15,823

 

3,513

 

5 Warehouse Lane (I)

 

1957

 

1997

 

—

 

19

 

4,804

 

1,165

 

19

 

5,969

 

5,988

 

1,429

 

6 Warehouse Lane (I)

 

1982

 

1997

 

—

 

10

 

4,419

 

307

 

10

 

4,726

 

4,736

 

1,030

 

1 Westchester Plaza (F)

 

1967

 

1997

 

—

 

199

 

2,023

 

149

 

199

 

2,172

 

2,371

 

488

 

2 Westchester Plaza (F)

 

1968

 

1997

 

—

 

234

 

2,726

 

124

 

234

 

2,850

 

3,084

 

632

 

3 Westchester Plaza (F)

 

1969

 

1997

 

—

 

655

 

7,936

 

462

 

655

 

8,398

 

9,053

 

1,964

 

4 Westchester Plaza (F)

 

1969

 

1997

 

—

 

320

 

3,729

 

53

 

320

 

3,782

 

4,102

 

860

 

5 Westchester Plaza (F)

 

1969

 

1997

 

—

 

118

 

1,949

 

194

 

118

 

2,143

 

2,261

 

543

 

6 Westchester Plaza (F)

 

1968

 

1997

 

—

 

164

 

1,998

 

160

 

164

 

2,158

 

2,322

 

551

 

7 Westchester Plaza (F)

 

1972

 

1997

 

—

 

286

 

4,321

 

164

 

286

 

4,485

 

4,771

 

993

 

8 Westchester Plaza (F)

 

1971

 

1997

 

—

 

447

 

5,262

 

545

 

447

 

5,807

 

6,254

 

1,363

 

Hawthorne

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

200 Saw Mill River Road (F)

 

1965

 

1997

 

—

 

353

 

3,353

 

314

 

353

 

3,667

 

4,020

 

858

 

1 Skyline Drive (O)

 

1980

 

1997

 

—

 

66

 

1,711

 

294

 

66

 

2,005

 

2,071

 

447

 

2 Skyline Drive (O)

 

1987

 

1997

 

—

 

109

 

3,128

 

396

 

109

 

3,524

 

3,633

 

899

 

4 Skyline Drive (F)

 

1987

 

1997

 

—

 

363

 

7,513

 

1,088

 

363

 

8,601

 

8,964

 

1,943

 

 

118


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amount at Which

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

Carried at Close of

 

 

 

 

 

 

 

 

 

 

 

Initial Costs

 

Capitalized

 

Period (a)

 

 

 

 

 

Year

 

 

 

Related

 

 

 

Building and

 

Subsequent

 

 

 

Building and

 

 

 

Accumulated

 

Property Location (b)

 

Built

 

Acquired

 

Encumbrances

 

Land

 

Improvements

 

to Acquisition

 

Land

 

Improvements

 

Total

 

Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7 Skyline Drive (O)

 

1987

 

1998

 

—

 

330

 

13,013

 

1,293

 

330

 

14,306

 

14,636

 

2,761

 

8 Skyline Drive (F)

 

1985

 

1997

 

—

 

212

 

4,410

 

2,194

 

212

 

6,604

 

6,816

 

2,160

 

10 Skyline Drive (F)

 

1985

 

1997

 

—

 

134

 

2,799

 

79

 

134

 

2,878

 

3,012

 

632

 

11 Skyline Drive (F)

 

1989

 

1997

 

—

 

—

 

4,788

 

374

 

—

 

5,162

 

5,162

 

1,261

 

12 Skyline Drive (F)

 

1999

 

1999

 

—

 

1,562

 

3,254

 

1,594

 

1,320

 

5,090

 

6,410

 

1,509

 

14 Skyline Drive (L)

 

N/A

 

2002

 

—

 

964

 

—

 

16

 

980

 

—

 

980

 

—

 

15 Skyline Drive (F)

 

1989

 

1997

 

—

 

—

 

7,449

 

284

 

—

 

7,733

 

7,733

 

1,857

 

16 Skyline Drive (L)

 

N/A

 

2002

 

—

 

850

 

—

 

31

 

881

 

—

 

881

 

—

 

17 Skyline Drive (O)

 

1989

 

1997

 

—

 

—

 

7,269

 

391

 

—

 

7,660

 

7,660

 

1,664

 

19 Skyline Drive (O)

 

1982

 

1997

 

—

 

2,355

 

34,254

 

3,182

 

2,356

 

37,435

 

39,791

 

9,898

 

Tarrytown

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

200 White Plains Road (O)

 

1982

 

1997

 

—

 

378

 

8,367

 

1,083

 

378

 

9,450

 

9,828

 

2,182

 

220 White Plains Road (O)

 

1984

 

1997

 

—

 

367

 

8,112

 

964

 

367

 

9,076

 

9,443

 

2,103

 

230 White Plains Road (R)

 

1984

 

1997

 

—

 

124

 

1,845

 

—

 

124

 

1,845

 

1,969

 

411

 

White Plains

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Barker Avenue (O)

 

1975

 

1997

 

—

 

208

 

9,629

 

960

 

207

 

10,590

 

10,797

 

2,474

 

3 Barker Avenue (O)

 

1983

 

1997

 

—

 

122

 

7,864

 

1,852

 

122

 

9,716

 

9,838

 

2,443

 

50 Main Street (O)

 

1985

 

1997

 

—

 

564

 

48,105

 

5,403

 

564

 

53,508

 

54,072

 

12,944

 

11 Martine Avenue (O)

 

1987

 

1997

 

—

 

127

 

26,833

 

4,755

 

127

 

31,588

 

31,715

 

8,155

 

1 Water Street (O)

 

1979

 

1997

 

—

 

211

 

5,382

 

918

 

211

 

6,300

 

6,511

 

1,487

 

Yonkers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Corporate Boulevard (F)

 

1987

 

1997

 

—

 

602

 

9,910

 

749

 

602

 

10,659

 

11,261

 

2,551

 

200 Corporate Boulevard South (F)

 

1990

 

1997

 

—

 

502

 

7,575

 

440

 

502

 

8,015

 

8,517

 

1,660

 

250 Corporate Boulevard South (L)

 

N/A

 

2002

 

—

 

1,028

 

—

 

111

 

1,139

 

—

 

1,139

 

—

 

1 Enterprise Boulevard (L)

 

N/A

 

1997

 

—

 

1,379

 

—

 

1

 

1,380

 

—

 

1,380

 

—

 

1 Executive Boulevard (O)

 

1982

 

1997

 

—

 

1,104

 

11,904

 

2,022

 

1,105

 

13,925

 

15,030

 

3,413

 

2 Executive Plaza (R)

 

1986

 

1997

 

—

 

89

 

2,439

 

3

 

89

 

2,442

 

2,531

 

544

 

3 Executive Plaza (O)

 

1987

 

1997

 

—

 

385

 

6,256

 

1,619

 

385

 

7,875

 

8,260

 

2,094

 

4 Executive Plaza (F)

 

1986

 

1997

 

—

 

584

 

6,134

 

1,424

 

584

 

7,558

 

8,142

 

1,757

 

6 Executive Plaza (F)

 

1987

 

1997

 

—

 

546

 

7,246

 

260

 

546

 

7,506

 

8,052

 

1,710

 

 

119


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amount at Which

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

Carried at Close of

 

 

 

 

 

 

 

 

 

 

 

Initial Costs

 

Capitalized

 

Period (a)

 

 

 

 

 

Year

 

 

 

Related

 

 

 

Building and

 

Subsequent

 

 

 

Building and

 

 

 

Accumulated

 

Property Location (b)

 

Built

 

Acquired

 

Encumbrances

 

Land

 

Improvements

 

to Acquisition

 

Land

 

Improvements

 

Total

 

Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Odell Plaza (F)

 

1980

 

1997

 

—

 

1,206

 

6,815

 

668

 

1,206

 

7,483

 

8,689

 

1,769

 

5 Odell Plaza (F)

 

1983

 

1997

 

—

 

331

 

2,988

 

227

 

331

 

3,215

 

3,546

 

730

 

7 Odell Plaza (F)

 

1984

 

1997

 

—

 

419

 

4,418

 

301

 

419

 

4,719

 

5,138

 

1,051

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PENNSYLVANIA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chester County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Berwyn

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1000 Westlakes Drive (O)

 

1989

 

1997

 

—

 

619

 

9,016

 

551

 

619

 

9,567

 

10,186

 

2,197

 

1055 Westlakes Drive (O)

 

1990

 

1997

 

—

 

1,951

 

19,046

 

3,557

 

1,951

 

22,603

 

24,554

 

5,391

 

1205 Westlakes Drive (O)

 

1988

 

1997

 

—

 

1,323

 

20,098

 

1,341

 

1,323

 

21,439

 

22,762

 

4,807

 

1235 Westlakes Drive (O)

 

1986

 

1997

 

—

 

1,417

 

21,215

 

2,084

 

1,418

 

23,298

 

24,716

 

5,191

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delaware County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lester

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Stevens Drive (O)

 

1986

 

1996

 

—

 

1,349

 

10,018

 

2,817

 

1,349

 

12,835

 

14,184

 

3,234

 

200 Stevens Drive (O)

 

1987

 

1996

 

—

 

1,644

 

20,186

 

4,607

 

1,644

 

24,793

 

26,437

 

6,148

 

300 Stevens Drive (O)

 

1992

 

1996

 

—

 

491

 

9,490

 

1,646

 

491

 

11,136

 

11,627

 

2,715

 

Media

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1400 Providence Rd, Center I (O)

 

1986

 

1996

 

—

 

1,042

 

9,054

 

1,873

 

1,042

 

10,927

 

11,969

 

2,938

 

1400 Providence Rd, Center II (O)

 

1990

 

1996

 

—

 

1,543

 

16,464

 

2,520

 

1,544

 

18,983

 

20,527

 

4,979

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Montgomery County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bala Cynwyd

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

150 Monument Road (O)

 

1981

 

2004

 

—

 

2,845

 

14,780

 

944

 

2,845

 

15,724

 

18,569

 

375

 

Blue Bell

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4 Sentry Parkway (O)

 

1982

 

2003

 

—

 

1,749

 

7,721

 

189

 

1,749

 

7,910

 

9,659

 

458

 

16 Sentry Parkway (O)

 

1988

 

2002

 

—

 

3,377

 

13,511

 

729

 

3,377

 

14,240

 

17,617

 

1,776

 

18 Sentry Parkway (O)

 

1988

 

2002

 

—

 

3,515

 

14,062

 

933

 

3,515

 

14,995

 

18,510

 

1,764

 

King of Prussia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2200 Renaissance Blvd (O)

 

1985

 

2002

 

18,174

 

5,347

 

21,453

 

2,160

 

5,347

 

23,613

 

28,960

 

4,129

 

 

120


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amount at Which

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

Carried at Close of

 

 

 

 

 

 

 

 

 

 

 

Initial Costs

 

Capitalized

 

Period (a)

 

 

 

 

 

Year

 

 

 

Related

 

 

 

Building and

 

Subsequent

 

 

 

Building and

 

 

 

Accumulated

 

Property Location (b)

 

Built

 

Acquired

 

Encumbrances

 

Land

 

Improvements

 

to Acquisition

 

Land

 

Improvements

 

Total

 

Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lower Providence

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1000 Madison Avenue (O)

 

1990

 

1997

 

—

 

1,713

 

12,559

 

895

 

1,714

 

13,453

 

15,167

 

2,859

 

Plymouth Meeting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1150 Plymouth Meeting Mall (O)

 

1970

 

1997

 

—

 

125

 

499

 

29,527

 

6,219

 

23,932

 

30,151

 

5,046

 

Five Sentry Parkway East (O)

 

1984

 

1996

 

—

 

642

 

7,992

 

514

 

642

 

8,506

 

9,148

 

1,945

 

Five Sentry Parkway West (O)

 

1984

 

1996

 

—

 

268

 

3,334

 

85

 

268

 

3,419

 

3,687

 

783

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONNETICUT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fairfield County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greenwich

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

500 West Putnam Avenue (O)

 

1973

 

1998

 

25,000

 

3,300

 

16,734

 

1,623

 

3,300

 

18,357

 

21,657

 

4,065

 

Norwalk

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40 Richards Avenue (O)

 

1985

 

1998

 

—

 

1,087

 

18,399

 

2,882

 

1,087

 

21,281

 

22,368

 

4,404

 

Shelton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1000 Bridgeport Avenue (O)

 

1986

 

1997

 

—

 

773

 

14,934

 

1,333

 

744

 

16,296

 

17,040

 

3,919

 

Stamford

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1266 East Main Street (O)

 

1984

 

2002

 

18,427

 

6,638

 

26,567

 

1,127

 

6,638

 

27,694

 

34,332

 

3,231

 

419 West Avenue (F)

 

1986

 

1997

 

—

 

4,538

 

9,246

 

1,266

 

4,538

 

10,512

 

15,050

 

2,412

 

500 West Avenue (F)

 

1988

 

1997

 

—

 

415

 

1,679

 

162

 

415

 

1,841

 

2,256

 

444

 

550 West Avenue (F)

 

1990

 

1997

 

—

 

1,975

 

3,856

 

16

 

1,975

 

3,872

 

5,847

 

863

 

600 West Avenue (F)

 

1999

 

1999

 

—

 

2,305

 

2,863

 

833

 

2,305

 

3,696

 

6,001

 

567

 

650 West Avenue (F)

 

1998

 

1998

 

—

 

1,328

 

—

 

3,929

 

1,328

 

3,929

 

5,257

 

1,387

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DISTRICT OF COLUMBIA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1201 Connecticut Avenue, NW (O)

 

1940

 

1999

 

—

 

14,228

 

18,571

 

1,912

 

14,228

 

20,483

 

34,711

 

3,731

 

1400 L Street, NW (O)

 

1987

 

1998

 

—

 

13,054

 

27,423

 

1,839

 

13,054

 

29,262

 

42,316

 

5,513

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MARYLAND

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prince George’s County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lanham

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4200 Parliament Place (O)

 

1989

 

1998

 

—

 

2,114

 

13,546

 

562

 

1,393

 

14,829

 

16,222

 

3,328

 

 

121


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amount at Which

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

Carried at Close of

 

 

 

 

 

 

 

 

 

 

 

Initial Costs

 

Capitalized

 

Period (a)

 

 

 

 

 

Year

 

 

 

Related

 

 

 

Building and

 

Subsequent

 

 

 

Building and

 

 

 

Accumulated

 

Property Location (b)

 

Built

 

Acquired

 

Encumbrances

 

Land

 

Improvements

 

to Acquisition

 

Land

 

Improvements

 

Total

 

Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COLORADO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Arapahoe County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denver

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

400 South Colorado Boulevard (O)

 

1983

 

1998

 

—

 

1,461

 

10,620

 

1,946

 

1,461

 

12,566

 

14,027

 

2,627

 

Englewood

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9359 East Nichols Avenue (O)

 

1997

 

1998

 

—

 

1,155

 

8,171

 

594

 

1,155

 

8,765

 

9,920

 

1,625

 

5350 South Roslyn Street (O)

 

1982

 

1998

 

—

 

862

 

6,831

 

(2,170

)

559

 

4,964

 

5,523

 

826

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Boulder County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broomfield

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

105 South Technology Court (O)

 

1997

 

1998

 

—

 

653

 

4,936

 

(2,378

)

653

 

2,558

 

3,211

 

365

 

303 South Technology Court A (O)

 

1997

 

1998

 

—

 

623

 

3,892

 

(1,399

)

623

 

2,493

 

3,116

 

325

 

303 South Technology Court B (O)

 

1997

 

1998

 

—

 

623

 

3,892

 

(1,399

)

623

 

2,493

 

3,116

 

325

 

Louisville

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1172 Century Drive (O)

 

1996

 

1998

 

—

 

707

 

4,647

 

274

 

707

 

4,921

 

5,628

 

628

 

248 Centennial Parkway (O)

 

1996

 

1998

 

—

 

708

 

4,647

 

275

 

708

 

4,922

 

5,630

 

629

 

285 Century Place (O)

 

1997

 

1998

 

—

 

889

 

10,133

 

(3,877

)

891

 

6,254

 

7,145

 

603

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denver County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denver

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8181 East Tufts Avenue (O)

 

2001

 

2001

 

—

 

2,342

 

32,029

 

2,371

 

2,342

 

34,400

 

36,742

 

5,742

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Douglas County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Englewood

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67 Inverness Drive East (O)

 

1996

 

1998

 

—

 

1,034

 

5,516

 

(2,859

)

1,034

 

2,657

 

3,691

 

364

 

384 Inverness Drive South (O)

 

1985

 

1998

 

—

 

703

 

5,653

 

(2,337

)

703

 

3,316

 

4,019

 

491

 

400 Inverness Drive (O)

 

1997

 

1998

 

—

 

1,584

 

19,878

 

(4,483

)

1,584

 

15,395

 

16,979

 

1,959

 

5975 South Quebec Street (O)

 

1996

 

1998

 

—

 

855

 

11,551

 

1,954

 

857

 

13,503

 

14,360

 

3,226

 

 

122


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amount at Which

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

Carried at Close of

 

 

 

 

 

 

 

 

 

 

 

Initial Costs

 

Capitalized

 

Period (a)

 

 

 

 

 

Year

 

 

 

Related

 

 

 

Building and

 

Subsequent

 

 

 

Building and

 

 

 

Accumulated

 

Property Location (b)

 

Built

 

Acquired

 

Encumbrances

 

Land

 

Improvements

 

to Acquisition

 

Land

 

Improvements

 

Total

 

Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Parker

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9777 Pyramid Court (O)

 

1995

 

1998

 

—

 

1,304

 

13,189

 

2,324

 

1,880

 

14,937

 

16,817

 

3,022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

El Paso County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Colorado Springs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8415 Explorer (O)

 

1998

 

1999

 

—

 

347

 

2,507

 

2,599

 

347

 

5,106

 

5,453

 

521

 

1975 Research Parkway (O)

 

1997

 

1998

 

—

 

1,397

 

13,221

 

(371

)

1,611

 

12,636

 

14,247

 

1,716

 

2375 Telstar Drive (O)

 

1998

 

1999

 

—

 

348

 

2,507

 

2,599

 

348

 

5,106

 

5,454

 

521

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jefferson County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lakewood

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

141 Union Boulevard (O)

 

1985

 

1998

 

—

 

774

 

6,891

 

(954

)

775

 

5,936

 

6,711

 

871

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CALIFORNIA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco County

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

795 Folsom Street (O)

 

1977

 

1999

 

—

 

9,348

 

24,934

 

5,915

 

9,348

 

30,849

 

40,197

 

6,885

 

760 Market Street (O)

 

1908

 

1997

 

—

 

5,588

 

22,352

 

40,417

 

13,499

 

54,858

 

68,357

 

10,853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projects Under Development and Developable Land

 

 

 

 

 

—

 

90,655

 

6,805

 

—

 

90,655

 

6,805

 

97,460

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Furniture, Fixtures and Equipment

 

 

 

 

 

—

 

—

 

—

 

7,432

 

—

 

7,432

 

7,432

 

5,759

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTALS

 

 

 

 

 

$

415,431

 

$

616,051

 

$

3,267,049

 

$

608,652

 

$

637,653

 

$

3,854,099

 

$

4,491,752

 

$

722,980

 

 

(a)

The aggregate cost for federal income tax purposes at December 31, 2005 was approximately $2.9 billion.

 

 

(b)

Legend of Property Codes:

 

(O)=Office Property

(R)=Stand-alone Retail Property

 

(F)=Office/Flex Property

(L)=Land Lease

 

(I)=Industrial/Warehouse Property

 

123


 

MACK-CALI REALTY, L.P.

NOTE TO SCHEDULE III

 

Changes in rental properties and accumulated depreciation for the periods ended December 31, 2005, 2004 and 2003 are as follows (in thousands):

 

 

 

2005

 

2004

 

2003

 

Rental Properties

 

 

 

 

 

 

 

Balance at beginning of year

 

$

4,160,959

 

$

3,954,632

 

$

3,857,657

 

Additions

 

485,680

 

340,472

 

115,882

 

Rental property held for sale –  before accumulated depreciation

 

—

 

(21,929

)

—

 

Properties sold

 

(120,755

)

(112,179

)

(16,951

)

Retirements/disposals

 

(34,132

)

(37

)

(1,956

)

Balance at end of year

 

$

4,491,752

 

$

4,160,959

 

$

3,954,632

 

 

 

 

 

 

 

 

 

Accumulated Depreciation

 

 

 

 

 

 

 

Balance at beginning of year

 

$

641,626

 

$

546,007

 

$

445,569

 

Depreciation expense

 

128,814

 

111,975

 

103,483

 

Rental property held for sale

 

—

 

(1,550

)

—

 

Properties sold

 

(16,691

)

(14,797

)

(2,462

)

Retirements/disposals

 

(30,769

)

(9

)

(583

)

Balance at end of year

 

$

722,980

 

$

641,626

 

$

546,007

 

 

124


 

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: February 22, 2006

/s/ Barry Lefkowitz

 

 

Barry Lefkowitz

 

Executive Vice President and

 

  Chief Financial Officer

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

 

Name

 

Title

 

Date

 

 

 

 

 

/s/ William L. Mack

 

Chairman of the Board

 

February 22, 2006

William L. Mack

 

 

 

 

 

 

 

 

 

/s/ Mitchell E. Hersh

 

President and Chief Executive

 

February 22, 2006

Mitchell E. Hersh

 

Officer and Director

 

 

 

 

 

 

 

/s/ Barry Lefkowitz

 

Executive Vice President and

 

February 22, 2006

Barry Lefkowitz

 

Chief Financial Officer

 

 

 

 

 

 

 

/s/ Martin S. Berger

 

Director

 

February 22, 2006

Martin S. Berger

 

 

 

 

 

 

 

 

 

/s/ Alan S. Bernikow

 

Director

 

February 22, 2006

Alan S. Bernikow

 

 

 

 

 

 

 

 

 

/s/ John R. Cali

 

Director

 

February 22, 2006

John R. Cali

 

 

 

 

 

 

 

 

 

/s/ Kenneth M. Duberstein

 

Director

 

February 22, 2006

Kenneth M. Duberstein

 

 

 

 

 

 

 

 

 

/s/ Nathan Gantcher

 

Director

 

February 22, 2006

Nathan Gantcher

 

 

 

 

 

125


 

Name

 

Title

 

Date

 

 

 

 

 

/s/ David S. Mack

 

Director

 

February 22, 2006

David S. Mack

 

 

 

 

 

 

 

 

 

/s/ Alan G. Philibosian

 

Director

 

February 22, 2006

Alan G. Philibosian

 

 

 

 

 

 

 

 

 

/s/ Irvin D. Reid

 

Director

 

February 22, 2006

Irvin D. Reid

 

 

 

 

 

 

 

 

 

/s/ Vincent Tese

 

Director

 

February 22, 2006

Vincent Tese

 

 

 

 

 

 

 

 

 

/s/ Roy J. Zuckerberg

 

Director

 

February 22, 2006

Roy J. Zuckerberg

 

 

 

 

 

126


 

MACK-CALI REALTY, L.P.

 

EXHIBIT INDEX

 

Exhibit
Number

 

Exhibit Title

 

 

 

3.1

 

Restated Charter of Mack-Cali Realty Corporation dated June 11, 2001 (filed as Exhibit 3.1 to the Operating Partnership’s Form 10-Q dated June 30, 2001 and incorporated herein by reference).

 

 

 

3.2

 

Amended and Restated Bylaws of Mack-Cali Realty Corporation dated June 10, 1999 (filed as Exhibit 3.2 to the Corporation’s Form 8-K dated June 10, 1999 and incorporated herein by reference).

 

 

 

3.3

 

Amendment No. 1 to the Amended and Restated Bylaws of Mack-Cali Realty Corporation dated March 4, 2003, (filed as Exhibit 3.3 to the Operating Partnership’s Form 10-Q dated March 31, 2003 and incorporated herein by reference).

 

 

 

3.4

 

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).

 

 

 

3.5

 

Amendment No. 1 to the Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. dated August 21, 1998 (filed as Exhibit 3.1 to the Corporation’s and the Operating Partnership’s Registration Statement on Form S-3, Registration No. 333-57103, and incorporated herein by reference).

 

 

 

3.6

 

Second Amendment to the Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. dated July 6, 1999 (filed as Exhibit 10.1 to the Operating Partnership’s Form 8-K dated July 6, 1999 and incorporated herein by reference).

 

 

 

3.7

 

Third Amendment to the Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. dated September 30, 2003 (filed as Exhibit 3.7 to the Operating Partnership’s Form 10-Q dated September 30, 2003 and incorporated herein by reference).

 

 

 

3.8

 

Certificate of Designation of Series B Preferred Operating Partnership Units of Limited Partnership Interest of Mack-Cali Realty, L.P. (filed as Exhibit 10.101 to the Corporation’s Form 8-K dated December 11, 1997 and incorporated herein by reference).

 

 

 

3.9

 

Articles Supplementary for the 8% Series C Cumulative Redeemable Perpetual Preferred Stock dated March 11, 2003 (filed as Exhibit 3.1 to the Corporation’s Form 8-K dated March 14, 2003 and incorporated herein by reference).

 

 

 

3.10

 

Certificate of Designation for the 8% Series C Cumulative Redeemable Perpetual Preferred Operating Partnership Units dated March 14, 2003 (filed as Exhibit 3.2 to the Operating Partnership’s Form 8-K dated March 14, 2003 and incorporated herein by reference).

 

 

 

4.1

 

Amended and Restated Shareholder Rights Agreement, dated as of March 7, 2000, between Mack-Cali Realty Corporation and EquiServe Trust Company, N.A., as Rights Agent (filed as Exhibit 4.1 to the Operating Partnership’s Form 8-K dated March 7, 2000 and incorporated herein by reference).

 

127


 

Exhibit
Number

 

Exhibit Title

 

 

 

4.2

 

Amendment No. 1 to the Amended and Restated Shareholder Rights Agreement, dated as of June 27, 2000, by and among Mack-Cali Realty Corporation and EquiServe Trust Company, N.A. (filed as Exhibit 4.1 to the Operating Partnership’s Form 8-K dated June 27, 2000 and incorporated herein by reference).

 

 

 

4.3

 

Indenture dated as of March 16, 1999, by and among Mack-Cali Realty, L.P., as issuer, Mack-Cali Realty Corporation, as guarantor, and Wilmington Trust Company, as trustee (filed as Exhibit 4.1 to the Operating Partnership’s Form 8-K dated March 16, 1999 and incorporated herein by reference).

 

 

 

4.4

 

Supplemental Indenture No. 1 dated as of March 16, 1999, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated March 16, 1999 and incorporated herein by reference).

 

 

 

4.5

 

Supplemental Indenture No. 2 dated as of August 2, 1999, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.4 to the Operating Partnership’s Form 10-Q dated June 30, 1999 and incorporated herein by reference).

 

 

 

4.6

 

Supplemental Indenture No. 3 dated as of December 21, 2000, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated December 21, 2000 and incorporated herein by reference).

 

 

 

4.7

 

Supplemental Indenture No. 4 dated as of January 29, 2001, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated January 29, 2001 and incorporated herein by reference).

 

 

 

4.8

 

Supplemental Indenture No. 5 dated as of December 20, 2002, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated December 20, 2002 and incorporated herein by reference).

 

 

 

4.9

 

Supplemental Indenture No. 6 dated as of March 14, 2003, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated March 14, 2003 and incorporated herein by reference).

 

 

 

4.10

 

Supplemental Indenture No. 7 dated as of June 12, 2003, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated June 12, 2003 and incorporated herein by reference).

 

 

 

4.11

 

Supplemental Indenture No. 8 dated as of February 9, 2004, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated February 9, 2004 and incorporated herein by reference).

 

 

 

4.12

 

Supplemental Indenture No. 9 dated as of March 22, 2004, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated March 22, 2004 and incorporated herein by reference).

 

128


 

Exhibit
Number

 

Exhibit Title

 

 

 

4.13

 

Supplemental Indenture No. 10 dated as of January 25, 2005, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated January 25, 2005 and incorporated herein by reference).

 

 

 

4.14

 

Supplemental Indenture No. 11 dated as of April 15, 2005, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated April 15, 2005 and incorporated herein by reference).

 

 

 

4.15

 

Supplemental Indenture No. 12 dated as of November 30, 2005, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated November 30, 2005 and incorporated herein by reference).

 

 

 

4.16

 

Supplemental Indenture No. 13 dated as of January 24, 2006, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated January 18, 2006 and incorporated herein by reference).

 

 

 

4.17

 

Deposit Agreement dated March 14, 2003 by and among Mack-Cali Realty Corporation, EquiServe Trust Company, N.A., and the holders from time to time of the Depositary Receipts described therein (filed as Exhibit 4.1 to the Corporation’s Form 8-K dated March 14, 2003 and incorporated herein by reference).

 

 

 

10.1

 

Amended and Restated Employment Agreement dated as of July 1, 1999 between Mitchell E. Hersh and Mack-Cali Realty Corporation (filed as Exhibit 10.2 to the 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 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).

 

 

 

10.3

 

Second Amended and Restated Employment Agreement dated as of July 1, 1999 between Roger W. Thomas and Mack-Cali Realty Corporation (filed as Exhibit 10.7 to the Operating Partnership’s Form 10-Q dated June 30, 1999 and incorporated herein by reference).

 

 

 

10.4

 

Employment Agreement dated as of December 5, 2000 between Michael Grossman and Mack-Cali Realty Corporation (filed as Exhibit 10.5 to the Operating Partnership’s Form 10-K for the year ended December 31, 2000 and incorporated herein by reference).

 

 

 

10.5

 

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).

 

 

 

10.6

 

Restricted Share Award Agreement dated as of July 1, 1999 between Barry Lefkowitz and Mack-Cali Realty Corporation (filed as Exhibit 10.12 to the Operating Partnership’s Form 10-Q dated June 30, 1999 and incorporated herein by reference).

 

 

 

10.7

 

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).

 

129


 

Exhibit
Number

 

Exhibit Title

 

 

 

10.8

 

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).

 

 

 

10.9

 

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).

 

 

 

10.10

 

Restricted Share Award Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

 

 

10.11

 

Tax Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

 

 

10.12

 

First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated July 1, 1999 between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.3 to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

 

 

10.13

 

Restricted Share Award Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.7 to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

 

 

10.14

 

Tax Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.8 to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

 

 

10.15

 

First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated July 1, 1999 between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.9 to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

 

 

10.16

 

Restricted Share Award Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.10 to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

 

 

10.17

 

Tax Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.11 to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

 

 

10.18

 

First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated July 1, 1999 between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.12 to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

 

 

10.19

 

First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated March 12, 2001 between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.13 to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

130


 

Exhibit
Number

 

Exhibit Title

 

 

 

10.20

 

Restricted Share Award Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.14 to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

 

 

10.21

 

Tax Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.15 to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

 

 

10.22

 

Restricted Share Award Agreement dated December 6, 1999 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.16 to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

 

 

10.23

 

First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated December 6, 1999 between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.17 to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

 

 

10.24

 

First Amendment effective as of January 2, 2003 to the Restricted Share Award Agreement dated March 12, 2001 between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.18 to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).

 

 

 

10.25

 

Restricted Share Award Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to the Corporation’s Form 8-K dated December 2, 2003 and incorporated herein by reference).

 

 

 

10.26

 

Tax Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Corporation’s Form 8-K dated December 2, 2003 and incorporated herein by reference).

 

 

 

10.27

 

Restricted Share Award Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Corporation’s Form 8-K dated December 2, 2003 and incorporated herein by reference).

 

 

 

10.28

 

Tax Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.6 to the Corporation’s Form 8-K dated December 2, 2003 and incorporated herein by reference).

 

 

 

10.29

 

Restricted Share Award Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.7 to the Corporation’s Form 8-K dated December 2, 2003 and incorporated herein by reference).

 

 

 

10.30

 

Tax Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.8 to the Corporation’s Form 8-K dated December 2, 2003 and incorporated herein by reference).

 

 

 

10.31

 

Restricted Share Award Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Michael Grossman (filed as Exhibit 10.9 to the Corporation’s Form 8-K dated December 2, 2003 and incorporated herein by reference).

 

131


 

Exhibit
Number

 

Exhibit Title

 

 

 

10.32

 

Tax Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali Realty Corporation and Michael Grossman (filed as Exhibit 10.10 to the Corporation’s Form 8-K dated December 2, 2003 and incorporated herein by reference).

 

 

 

10.33

 

Restricted Share Award Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Corporation’s Form 8-K dated December 7, 2004 and incorporated herein by reference).

 

 

 

10.34

 

Tax Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.3 to the Corporation’s Form 8-K dated December 7, 2004 and incorporated herein by reference).

 

 

 

10.35

 

Restricted Share Award Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.4 to the Corporation’s Form 8-K dated December 7, 2004 and incorporated herein by reference).

 

 

 

10.36

 

Tax Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Corporation’s Form 8-K dated December 7, 2004 and incorporated herein by reference).

 

 

 

10.37

 

Restricted Share Award Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.6 to the Corporation’s Form 8-K dated December 7, 2004 and incorporated herein by reference).

 

 

 

10.38

 

Tax Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.7 to the Corporation’s Form 8-K dated December 7, 2004 and incorporated herein by reference).

 

 

 

10.39

 

Restricted Share Award Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.8 to the Corporation’s Form 8-K dated December 7, 2004 and incorporated herein by reference).

 

 

 

10.40

 

Tax Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.9 to the Corporation’s Form 8-K dated December 7, 2004 and incorporated herein by reference).

 

 

 

10.41

 

Restricted Share Award Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Operating Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by reference).

 

 

 

10.42

 

Tax Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.3 to the Operating Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by reference).

 

 

 

10.43

 

Restricted Share Award Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.4 to the Operating Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by reference).

 

 

 

10.44

 

Tax Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Operating Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by reference).

 

132


 

Exhibit
Number

 

Exhibit Title

 

 

 

10.45

 

Restricted Share Award Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.6 to the Operating Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by reference).

 

 

 

10.46

 

Tax Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.7 to the Operating Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by reference).

 

 

 

10.47

 

Restricted Share Award Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.8 to the Operating Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by reference).

 

 

 

10.48

 

Tax Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.9 to the Operating Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by reference).

 

 

 

10.49

 

Amended and Restated Revolving Credit Agreement dated as of September 27, 2002, among Mack-Cali Realty, L.P. and JPMorgan Chase Bank, Fleet National Bank and Other Lenders Which May Become Parties Thereto with JPMorgan Chase Bank, as administrative agent, swing lender and fronting bank, Fleet National Bank and Commerzbank AG, New York and Grand Cayman branches as syndication agents, Bank of America, N.A. and Wells Fargo Bank, National Association, as documentation agents, and J.P. Morgan Securities Inc. and Fleet Securities, Inc, as arrangers (filed as Exhibit 10.1 to the Operating Partnership’s Form 8-K dated September 27, 2002 and incorporated herein by reference).

 

 

 

10.50

 

Second Amended and Restated Revolving Credit Agreement among Mack-Cali Realty, L.P., JPMorgan Chase Bank, N.A., Bank of America, N.A., and other lending institutions that are or may become a party to the Second Amended and Restated Revolving Credit Agreement dated as of November 23, 2004 (filed as Exhibit 10.1 to the Operating Partnership’s Form 8-K dated November 23, 2004 and incorporated herein by reference).

 

 

 

10.51

 

Extension and Modification Agreement dated as of September 16, 2005 by and among Mack-Cali Realty, L.P., JPMorgan Chase Bank, N.A., as administrative agent, and the several Lenders Party thereto (filed as Exhibit 10.1 to the Operating Partnership’s Form 8-K dated September 16, 2005 and incorporated herein by reference).

 

 

 

10.52

 

Amended and Restated Master Loan Agreement dated as of November 12, 2004 among Mack-Cali Realty, L.P., and Affiliates of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P., as Borrowers, Mack-Cali Realty Corporation and Mack-Cali Realty L.P., as Guarantors and The Prudential Insurance Company of America, as Lender (filed as Exhibit 10.1 to the Operating Partnership’s Form 8-K dated November 12, 2004 and incorporated herein by reference).

 

 

 

10.53

 

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).

 

 

 

10.54

 

First Amendment to Contribution and Exchange Agreement, dated as of December 11, 1997, by and among the Company and the Mack Group (filed as Exhibit 10.99 to the Corporation’s Form 8-K dated December 11, 1997 and incorporated herein by reference).

 

133


 

Exhibit
Number

 

Exhibit Title

 

 

 

10.55

 

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).

 

 

 

10.56

 

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).

 

 

 

10.57

 

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), as amended by the First Amendment to the 2000 Employee Stock Option Plan (filed as Exhibit 10.17 to the Corporation’s Form 10-Q dated June 30, 2002 and incorporated herein by reference).

 

 

 

10.58

 

Amended and Restated 2000 Director Stock Option Plan (filed as Exhibit 10.2 to the Corporation’s Post-Effective Amendment No. 1 to Registration Statement on Form S-8, Registration No. 333-100244, and incorporated herein by reference).

 

 

 

10.59

 

Mack-Cali Realty Corporation 2004 Incentive Stock Plan (filed as Exhibit 10.1 to the Corporation’s Registration Statement on Form S-8, Registration No. 333-116437, and incorporated herein by reference).

 

 

 

10.60

 

Deferred Compensation Plan for Directors (filed as Exhibit 10.1 to the Corporation’s Registration Statement on Form S-8, Registration No. 333-80081, and incorporated herein by reference).

 

 

 

10.61

 

Form of Indemnification Agreement by and between Mack-Cali Realty Corporation and each of William L. Mack, John J. Cali, Mitchell E. Hersh, John R. Cali, David S. Mack, Martin S. Berger, Alan S. Bernikow, Kenneth M. Duberstein, Martin D. Gruss, Nathan Gantcher, Vincent Tese, Roy J. Zuckerberg, Alan G. Philibosian, Irvin D. Reid, Robert F. Weinberg, Barry Lefkowitz, Roger W. Thomas, Michael A. Grossman, Anthony Krug, Dean Cingolani, Anthony DeCaro Jr., Mark Durno, William Fitzpatrick, John Kropke, Nicholas Mitarotonda, Jr., Michael Nevins, Virginia Sobol, Albert Spring, Daniel Wagner, Deborah Franklin, John Marazzo, Christopher DeLorenzo, Jeffrey Warner, Diane Chayes and James Corrigan (filed as Exhibit 10.28 to the Operating Partnership’s Form 10-Q dated September 30, 2002 and incorporated herein by reference).

 

 

 

10.62

 

Indemnification Agreement dated October 22, 2002 by and between Mack-Cali Realty Corporation and John Crandall (filed as Exhibit 10.29 to the Operating Partnership’s Form 10-Q dated September 30, 2002 and incorporated herein by reference).

 

 

 

10.63

 

Second Amendment to Contribution and Exchange Agreement, dated as of June 27, 2000, between RMC Development Company, LLC f/k/a Robert Martin Company, LLC, Robert Martin Eastview North Company, L.P., the Company and the Operating Partnership (filed as Exhibit 10.44 to the Operating Partnership’s Form 10-K dated December 31, 2002 and incorporated herein by reference.)

 

 

 

10.64

 

Limited Partnership Agreement of Meadowlands Mills/Mack-Cali Limited Partnership by and between Meadowlands Mills Limited Partnership, Mack-Cali Meadowlands Entertainment L.L.C. and Mack-Cali Meadowlands Special L.L.C. dated November 25, 2003 (filed as Exhibit 10.1 to the Corporation’s Form 8-K dated December 3, 2003 and incorporated herein by reference).

 

134


 

Exhibit
Number

 

Exhibit Title

 

 

 

10.65

 

Redevelopment Agreement by and between the New Jersey Sports and Exposition Authority and Meadowlands Mills/Mack-Cali Limited Partnership dated December 3, 2003 (filed as Exhibit 10.2 to the Corporation’s Form 8-K dated December 3, 2003 and incorporated herein by reference).

 

 

 

10.66

 

First Amendment to Redevelopment Agreement by and between the New Jersey Sports and Exposition Authority and Meadowlands Mills/Mack-Cali Limited Partnership dated October 5, 2004 (filed as Exhibit 10.54 to the Corporation’s Form 10-Q dated September 30, 2004 and incorporated herein by reference).

 

 

 

10.67

 

Letter Agreement by and between Mack-Cali Realty Corporation and The Mills Corporation dated October 5, 2004 (filed as Exhibit 10.55 to the Corporation’s Form 10-Q dated September 30, 2004 and incorporated herein by reference).

 

 

 

10.68

 

First Amendment to Limited Partnership Agreement of Meadowlands Mills/Mack-Cali Limited Partnership by and between Meadowlands Mills Limited Partnership, Mack-Cali Meadowlands Entertainment L.L.C. and Mack-Cali Meadowlands Special L.L.C. dated as of June 30, 2005 (filed as Exhibit 10.66 to the Operating Partnership’s Form 10-Q dated June 30, 2005 and incorporated herein by reference).

 

 

 

10.69*

 

Contribution and Exchange Agreement by and between Mack-Cali Realty, L.P. and Tenth Springhill Lake Associates L.L.L.P., Eleventh Springhill Lake Associates L.L.L.P., Twelfth Springhill Lake Associates L.L.L.P., Fourteenth Springhill Lake Associates L.L.L.P., each a Maryland limited liability limited partnership, Greenbelt Associates, a Maryland general partnership, and Sixteenth Springhill Lake Associates L.L.L.P., a Maryland limited liability limited partnership, and certain other natural persons, dated as of November 21, 2005.

 

 

 

21.1*

 

Subsidiaries of the Operating Partnership.

 

 

 

23.1*

 

Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm.

 

 

 

31.1*

 

Certification of the Corporation’s President and Chief Executive Officer, Mitchell E. Hersh, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

31.2*

 

Certification of the Corporation’s Chief Financial Officer, Barry Lefkowitz, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.1*

 

Certification of the Corporation’s President and Chief Executive Officer, Mitchell E. Hersh, and the Corporation’s Chief Financial Officer, Barry Lefkowitz, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

99.1

 

Mack-Cali Realty Corporation Corporate Governance Principles, as amended and restated (filed as Exhibit 99.2 to the Operating Partnership’s Form 8-K dated September 13, 2005 and incorporated herein by reference).

 

*filed herewith

 

135