Veris Residential, Inc. - Annual Report: 2015 (Form 10-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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[X]
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2015
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File Number: 1-13274
| MACK-CALI REALTY CORPORATION |
| (Exact Name of Registrant as specified in its charter) |
| Maryland | 22-3305147 |
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification No.)
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| 343 Thornall Street, Edison, New Jersey | 08837-2206 |
| (Address of principal executive offices) | (Zip code) |
(732) 590-1000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| (Title of Each Class) | (Name of Each Exchange on Which Registered) |
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Common Stock, $0.01 par value
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes X No ___
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ___ No X
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. [ X ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ___ No X
As of June 30, 2015, the aggregate market value of the voting stock held by non-affiliates of the registrant was $1,613,161,608. The aggregate market value was computed with reference to the closing price on the New York Stock Exchange on such date. This calculation does not reflect a determination that persons are affiliates for any other purpose. The registrant has no non-voting common stock.
As of February 22, 2016, 89,594,391 shares of common stock, $0.01 par value, of the Company (“Common Stock”) were outstanding.
LOCATION OF EXHIBIT INDEX: The index of exhibits is contained herein on page number 117.
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant’s definitive proxy statement for fiscal year ended December 31, 2015 to be issued in conjunction with the registrant’s annual meeting of shareholders expected to be held on June 1, 2016 are incorporated by reference in Part III of this Form 10-K. The definitive proxy statement will be filed by the registrant with the SEC not later than 120 days from the end of the registrant’s fiscal year ended December 31, 2015.
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FORM 10-K
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Table of Contents
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PART I
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Page No.
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Item 1
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Business
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3
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Item 1A
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Risk Factors
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10
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Item 1B
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Unresolved Staff Comments
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20
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Item 2
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Properties
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21
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Item 3
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Legal Proceedings
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35
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Item 4
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Mine Safety Disclosures
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35
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PART II
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Item 5
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Market for Registrant’s Common Equity, Related Stockholder Matters
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and Issuer Purchases of Equity Securities
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36
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Item 6
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Selected Financial Data
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39
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Item 7
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Management’s Discussion and Analysis of Financial Condition and
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Results of Operations
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40
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Item 7A
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Quantitative and Qualitative Disclosures About Market Risk
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61
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Item 8
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Financial Statements and Supplementary Data
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62
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Item 9
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Changes in and Disagreements with Accountants on Accounting and
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Financial Disclosure
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62
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Item 9A
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Controls and Procedures
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62
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Item 9B
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Other Information
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63
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PART III
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Item 10
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Directors, Executive Officers and Corporate Governance
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64
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Item 11
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Executive Compensation
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64
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Item 12
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Security Ownership of Certain Beneficial Owners and Management
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and Related Stockholder Matters
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64
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Item 13
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Certain Relationships and Related Transactions, and Director Independence
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64
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Item 14
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Principal Accounting Fees and Services
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64
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PART IV
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Item 15
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Exhibits and Financial Statement Schedules
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65
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SIGNATURES
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115
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EXHIBIT INDEX
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117
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2
PART I
ITEM 1. BUSINESS
GENERAL
Mack-Cali Realty Corporation, a Maryland corporation, together with its subsidiaries (collectively the “Company”), is a fully-integrated, self-administered and self-managed real estate investment trust (“REIT”) that owns and operates a real estate portfolio comprised predominantly of Class A office and office/flex properties located primarily in the Northeast with a recent emphasis on expansion into the multi-family rental sector in the same markets. The Company performs substantially all real estate leasing, management, acquisition, development and construction services on an in-house basis. Mack-Cali Realty Corporation was incorporated on May 24, 1994. The Company’s executive offices are located at 343 Thornall Street, Edison, New Jersey 08837-2206, and its telephone number is (732) 590-1000. The Company has an internet website at www.mack-cali.com.
As of December 31, 2015, the Company owned or had interests in 275 properties, consisting of 147 office and 109 flex properties, totaling approximately 29.9 million square feet, leased to approximately 1,900 commercial tenants and 19 multi-family rental properties containing 5,644 residential units, plus developable land (collectively, the “Properties”). The Properties are comprised of: (a) 223 wholly-owned or Company-controlled properties consisting of 111 office buildings and 106 flex buildings aggregating approximately 24.2 million square feet and six multi-family properties totaling 1,301 apartments, (collectively, the “Consolidated Properties”); and (b) 36 office properties totaling approximately 5.6 million square feet, 13 multi-family properties totaling 4,343 apartments, two retail properties totaling 81,700 square feet and a 350-room hotel, which are owned by unconsolidated joint ventures in which the Company has investment interests. Unless otherwise indicated, all references to square feet represent net rentable area. As of December 31, 2015, the office and flex properties included in the Consolidated Properties were 86.2 percent leased. Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future, and leases that expire at the period end date. Leases that expired as of December 31, 2015 aggregate 69,522 square feet, or 0.3 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.
On June 3, 2015, Mitchell E. Rudin joined the Company as its Chief Executive Officer and Michael J. DeMarco joined the Company as its President and Chief Operating Officer. The Company’s new management team assessed the Company’s historical strategy of focusing its operations, acquisition and development of office properties in high-barrier-to-entry markets and sub-markets where it believes it is, or can become, a significant and preferred owner and operator. In September 2015, the Company announced a three-year strategic initiative to transform into a more concentrated owner of New Jersey Hudson River waterfront and transit-oriented office properties and a regional owner of luxury multi-family residential properties. In furtherance of this strategy, the Company has commenced a comprehensive review of its portfolio and operations and is developing a business strategy that focuses on reshaping its portfolio over time. As part of this plan, the Company anticipates that it may dispose of a significant portion of its properties that do not meet its long-term goals, and, in September 2015, compiled a list of its properties that it considers as non-core to its ongoing operations. Specifically, the Company considers a non-core property to have one or more of the following attributes: (1) assets that do not offer an opportunity to create a competitive advantage; (2) assets that produce a low cash yield; (3) assets which have physical attributes that constrain their market competitiveness; and (4) assets located in low growth markets. The Company believes that the potential sales of these non-core properties over time would result in total estimated sales proceeds ranging from approximately $600 million to $800 million.
The Company believes that its Properties have excellent locations and access and are well-maintained and professionally managed. As a result, the Company believes that its Properties attract high quality tenants and residents, and achieve high rental, occupancy and tenant retention rates within their markets. The Company also believes that its extensive market knowledge provides it with a significant competitive advantage, which is further enhanced by its strong reputation for, and emphasis on, delivering highly responsive, professional management services.
BUSINESS STRATEGIES
Operations
Reputation: The Company has established a reputation as a highly-regarded landlord with an emphasis on delivering quality customer service in buildings it owns and/or manages. The Company believes that its continued success depends in part on enhancing its reputation as an operator of choice, which will facilitate the retention of current tenants and residents and the attraction of new tenants and residents. The Company believes it provides a superior level of service to its customers, which should in turn, allow the Company to maintain occupancy rates, at or above market levels, as well as improve tenant retention.
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Communication with tenants: The Company emphasizes frequent communication with its customers to ensure first-class service to the Properties. Property management personnel generally are located on site at the Properties to provide convenient access to management and to ensure that the Properties are well-maintained. Property management’s primary responsibility is to ensure that buildings are operated at peak efficiency in order to meet both the Company’s and tenants’ needs and expectations. Property management personnel additionally budget and oversee capital improvements and building system upgrades to enhance the Properties’ competitive advantages in their respective markets and to maintain the quality of the Properties.
The Company’s in-house leasing representatives for its office portfolio develop and maintain long-term relationships with the Company’s diverse tenant base and coordinate leasing, expansion, relocation and build-to-suit opportunities. This approach allows the Company to offer office space in the appropriate size and location to current or prospective tenants in any of its sub-markets.
The Company’s in-house multi-family rental management team emphasizes meticulous attention to detail and an unwavering commitment to customer service to complement the quality, design excellence and luxury living attributes of its multi-family rental properties. The Company believes this strategy will enable the Company to buttress management’s reputation with the market-leading designs, amenities and features of its multi-family rental properties to attract quality residents.
Portfolio Management: The Company plans to continue to own and operate a portfolio of office and office/flex properties in high-barrier-to-entry markets, with a primary focus in the Northeast. The Company also expects to continue to complement its core portfolio of office and office/flex properties by pursuing acquisition and development opportunities in the multi-family rental sector. The Company’s primary objectives are to maximize operating cash flow and to enhance the value of its portfolio through effective management, acquisition, development and property sales strategies.
The Company seeks to maximize the value of its existing office and office/flex portfolio through implementing operating strategies designed to produce the highest effective rental and occupancy rates and lowest tenant installation costs within the markets that it operates, and further within the parameters of those markets. The Company continues to pursue internal growth through leasing vacant space, re-leasing space at the highest possible effective rents in light of current market conditions with contractual rent increases and developing or redeveloping office space for its diverse base of high credit quality tenants, including Daiichi Sankyo, Bank of Tokyo-Mitsubishi FUJI Ltd and The United States of America - GSA. In addition, the Company seeks economies of scale through volume discounts to take advantage of its size and dominance in particular sub-markets, and operating efficiencies through the use of in-house management, leasing, marketing, financing, accounting, legal, development and construction services.
The Company continually reviews its portfolio and opportunities to divest office and office/flex properties that, among other things, no longer meet its long-term strategy, have reached their potential, are less efficient to operate or can be sold at attractive prices when market conditions are favorable. The Company anticipates redeploying the proceeds from sales of office and office/flex properties to develop, redevelop and acquire multi-family rental properties, as well as reposition certain office properties into multi-family/mixed use properties, in its core Northeast sub-markets as part of its overall strategy to reposition its portfolio from office and office/flex to a mix of office, office/flex and multi-family rental properties.
The Company believes that the opportunity to invest in multi-family development properties at higher returns on cost will position the Company to potentially produce higher levels of net operating income than if the Company were to only purchase stabilized multi-family properties at market returns. The Company anticipates that it will be several years before its multi-family development projects are income-producing. The Company believes that the transition to a company with a greater proportion of its properties in the multi-family residential sector will ultimately result in the creation of greater shareholder value than remaining a primarily suburban commercial office company, in part due to the lower capitalization rates associated with the multi-family sector.
Acquisitions: The Company also believes that growth opportunities exist through acquiring operating properties or properties for redevelopment with attractive returns in its core Northeast sub-markets where, based on its expertise in leasing, managing and operating properties, it believes it is, or can become, a significant and preferred owner and operator. The Company intends either directly or through joint ventures to acquire, invest in or redevelop additional properties, that: (i) are expected to provide attractive long-term yields; (ii) are well-located, of high quality and competitive in their respective sub-markets; (iii) are located in its existing sub-markets or in sub-markets in which the Company is or can become a significant and preferred owner and operator; and (iv) it believes have been under-managed or are otherwise capable of improved performance through intensive management, capital improvements and/or leasing that should result in increased effective rental and occupancy rates.
The Company has entered into and may continue in the future to enter into joint ventures (including limited liability companies and partnerships) through which it would own an indirect economic interest of less than 100 percent of a property owned directly by such joint ventures, and may include joint ventures that the Company does not control or manage, especially in connection with its expansion into the multi-family rental sector. The decision to pursue property acquisitions either directly or through joint ventures is based on a variety of factors and considerations, including: (i) the economic and tax terms required by a seller or co-developer of a property; (ii) the Company’s desire to diversify its portfolio by expanding into the multi-family rental sector and achieve a blended portfolio of office and multi-family rental properties by market and sub-market; (iii) the Company’s goal of maintaining a strong balance sheet; and (iv) the Company’s expectation that, in some circumstances, it will be able to achieve higher returns on its invested capital or reduce its risk if a joint venture vehicle is used. Investments in joint ventures are not limited to a specified percentage of the Company’s assets. Each joint venture agreement is individually negotiated, and the Company’s ability to operate and/or dispose of its interests in a joint venture in its sole discretion may be limited to varying degrees depending on the terms of the joint venture agreement. Many of the Company’s joint venture agreements entitle it to receive leasing, management, development and similar fees and/or a promoted interest if certain return thresholds are met. See Note 4: Investments in Unconsolidated Joint Ventures – to the Company’s Financial Statements.
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Development: The Company seeks to selectively develop additional properties either directly or through joint ventures where it believes such development will result in a favorable risk-adjusted return on investment in coordination with the above operating strategies. The Company identifies development opportunities primarily through its local market presence. Such development primarily will occur: (i) in stable core Northeast sub-markets where the demand for such space exceeds available supply; and (ii) where the Company is, or can become, a significant and preferred owner and operator. As part of the Company’s strategy to expand its multi-family rental portfolio, the Company may consider development opportunities with respect to improved land with existing commercial uses and seek to rezone the sites for multi-family rental use and development. As a result of competitive market conditions for land suitable for development, the Company may be required to hold land prior to construction for extended periods while entitlements or rezoning is obtained. The Company also may undertake repositioning opportunities that may require the expenditure of significant amounts of capital.
Property Sales: While management’s principal intention is to own and operate its properties on a long-term basis, it periodically assesses the attributes of each of its properties, with a particular focus on the supply and demand fundamentals of the sub-markets in which they are located. As a result of this assessment during 2015, the Company has identified non-core office properties that it may sell over time for total estimated sales proceeds that it believes may be between approximately $600 million and $800 million. The Company continually reviews its portfolio and opportunities to divest properties that, among other things, no longer meet its long-term strategy, have reached their potential, are less efficient to operate, or can be sold at attractive prices when market conditions are favorable.
Financial
The Company currently intends to maintain a ratio of debt-to-undepreciated assets (total debt of the Company as a percentage of total undepreciated assets) of 50 percent or less, however there can be no assurance that the Company will be successful in maintaining this ratio. As of December 31, 2015 and 2014, the Company’s total debt constituted approximately 39.0 percent and 37.3 percent of total undepreciated assets of the Company, respectively. Although there is no limit in the Company’s organizational documents on the amount of indebtedness that the Company may incur, the Company has entered into certain financial agreements which contain covenants that limit the Company’s ability to incur indebtedness under certain circumstances. The Company intends to utilize the most appropriate sources of capital for future acquisitions, development, capital improvements and other investments, which may include funds from operating activities, proceeds from property and land sales, joint venture capital, and short-term and long-term borrowings (including draws on the Company’s revolving credit facility), and the issuance of additional debt or equity securities.
EMPLOYEES
As of December 31, 2015, the Company had approximately 530 full-time employees.
COMPETITION
The leasing of real estate is highly competitive. The Properties compete for tenants and residents with lessors and developers of similar properties located in their respective markets primarily on the basis of location, the quality of properties, leasing terms (including rent and other charges and allowances for tenant improvements), services or amenities provided, the design and condition of the Properties, and reputation as an owner and operator of quality properties in the relevant markets. Additionally, the number of competitive multi-family rental properties in a particular area could have a material effect on the Company’s ability to lease residential units and on rents charged. In addition, other forms of multi-family rental properties or single family housing provide alternatives to potential residents of multi-family properties. The Company competes with other entities, some of which may have significant resources or who may be willing to accept lower returns or pay higher prices than the Company in terms of acquisition and development opportunities. The Company also experiences competition when attempting to acquire or dispose of real estate, including competition from domestic and foreign financial institutions, other REITs, life insurance companies, pension trusts, trust funds, partnerships, individual investors and others.
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REGULATIONS
Many laws and governmental regulations apply to the ownership and/or operation of the Properties and changes in these laws and regulations, or their interpretation by agencies and the courts, occur frequently.
Under various laws and regulations relating to the protection of the environment and human health, an owner of real estate may be held liable for the costs of removal or remediation of certain hazardous or toxic substances located on or in the property. These laws often impose liability without regard to whether the owner was responsible for, or even knew of, the presence of such substances. The presence of such substances may adversely affect the owner’s ability to rent or sell the property or to borrow using such property as collateral and may expose it to liability resulting from any release of, or exposure to, such substances. Persons who arrange for the disposal or treatment of hazardous or toxic substances at another location may also be liable for the costs of 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 Company may be considered an owner or operator of such properties or as having arranged for the disposal or treatment of hazardous or toxic substances and, therefore, potentially liable for removal or remediation costs, as well as certain other related costs, including governmental penalties and injuries to persons and property.
There can be no assurance that (i) future laws, ordinances or regulations will not impose any material environmental liability, (ii) the current environmental condition of the Properties will not be affected by tenants, by the condition of land or operations in the vicinity of the Properties (such as the presence of underground storage tanks), or by third parties unrelated to the Company, or (iii) the Company’s assessments reveal all environmental liabilities and that there are no material environmental liabilities of which the Company is aware. If compliance with the various laws and regulations, now existing or hereafter adopted, exceeds the Company’s budgets for such items, the Company’s ability to make expected distributions to stockholders could be adversely affected.
There are no other laws or regulations which have a material effect on the Company’s operations, other than typical federal, state and local laws affecting the development and operation of real property, such as zoning laws.
INDUSTRY SEGMENTS
The Company operates in three industry segments: (i) commercial and other real estate, (ii) multi-family real estate, and (iii) multi-family services. As of December 31, 2015, the Company does not have any foreign operations and its business is not seasonal. Please see our financial statements attached hereto and incorporated by reference herein for financial information relating to our industry segments.
SIGNIFICANT TENANTS
As of December 31, 2015, no tenant accounted for more than 10 percent of the Company’s consolidated revenues.
RECENT DEVELOPMENTS
Acquisitions
On December 23, 2015, the Company acquired a vacant 147,241 square-foot office property located in the Mack-Cali Business Campus in Parsippany, New Jersey, for approximately $10.3 million, which was funded primarily through borrowings under the Company’s unsecured revolving credit facility. This property is currently in redevelopment by the Company.
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On November 12, 2015, the Company acquired a 196,128 square-foot, 95.6 percent leased office property adjacent to an existing Mack-Cali property located in Edison, New Jersey, for approximately $53.1 million, which was funded primarily through borrowings under the Company’s unsecured revolving credit facility.
Dispositions
On June 26, 2015, the Company sold its 203,506 square foot office property located at 14 Sylvan Way in Parsippany, New Jersey for net sales proceeds of approximately $80 million, with a gain of approximately $24.7 million from the sale.
Impairments on Properties Held and Used
In September 2015, the Company announced a three-year strategic initiative to transform the Company into a more concentrated owner of New Jersey Hudson River waterfront and transit-oriented office properties and a regional owner of luxury multi-family residential properties. In connection with the transformation of the Company’s portfolio, management began developing a disposition plan in September 2015, which will be an ongoing assessment process. Through this plan, the Company, in the coming years, expects to dispose of primarily office properties considered non-core to its ongoing operations. As a result, at September 30, 2015, the Company evaluated the recoverability of the carrying values of these non-core properties, and determined that due to the shortening of the expected periods of ownership, it was necessary to reduce the carrying values of 22 rental properties to their estimated fair values. Accordingly, the Company recorded an impairment charge of $158.6 million at September 30, 2015 reducing the aggregate carrying values of these properties from $554.3 million to their estimated fair values of $395.7 million. At December 31, 2015, as a result of its periodic evaluation of the recoverability of the carrying values resulting from its ongoing assessment of non-core properties, the Company recorded an additional impairment charge of $33.7 million.
Four of the Company’s office properties are collateral for a mortgage loan that matured on August 11, 2014, with a principal balance of $63.3 million as of December 31, 2015. The loan was not repaid at maturity and the Company is in discussions with the lender regarding potential options in satisfaction of the obligation (see Note 10: Mortgages, Loans Payable and Other Obligations). As of September 30, 2015, the Company estimated that the carrying value of three of these properties, aggregating 479,877 square feet and located in Roseland and Parsippany, New Jersey, may not be recoverable over their anticipated holding periods. In order to reduce the carrying values of the properties to their estimated fair values, the Company recorded impairment charges of $5.6 million at September 30, 2015, which resulted from the current decline in leasing activity and market rents of the properties identified. The Company had previously recorded impairment charges on these properties at September 30, 2013 of $12.5 million.
Development Activity
On October 6, 2015, the Company entered into a joint venture partnership with XS Port Imperial Hotel, LLC (“XS”) to form XS Hotel Urban Renewal Associates LLC (“XS Hotel URA”) for the development and ownership of a 364-key dual branded hotel property located in Weehawken, New Jersey (“Port Imperial Hotel”). Concurrently, the Company and XS entered into a separate joint venture partnership to form XS Hotel Associates, L.L.C. (“XS Hotel”) for the management and operations of the completed hotel development. The Company holds a 90 percent interest and XS holds the remaining 10 percent interest in the consolidated joint ventures, XS Hotel URA and XS Hotel, with the Company having full and complete authority, power, and discretion to manage and control the ventures’ business, affairs, and property. The construction of the Port Imperial Hotel is estimated to cost a total of $105.9 million, which will be funded by a $94 million construction loan with the balance to be funded with members’ capital. Upon closing, Mack-Cali’s initial contribution was $27.3 million, which included a capital credit of $23.7 million for its contributed Hotel Condominium Land unit, and XS Hotel’s initial contribution was $3 million. As of December 31, 2015, the Company incurred development costs of $1.5 million and estimates it will need to fund an additional $3.3 million for the completion of the project.
The Company owns developable land to accommodate a multi-phase development project of approximately 1,034-unit multi-family rental property located in Malden, Massachusetts. The initial phase commenced construction of 292 units in the third quarter of 2015 (the “Chase II Project”). The Chase II Project is estimated to cost a total of $74.9 million (of which the Company has incurred $22.1 million through December 31, 2015) and is expected to be ready for occupancy by second quarter 2017. The Company estimates it will need to fund additional costs of $4.8 million for the completion of the Chase II Project. On December 16, 2015, the Company obtained a construction loan with a maximum borrowing amount of $48 million (with no outstanding balance as of December 31, 2015), which bears interest at a rate of LIBOR plus 2.25 percent, reducing to LIBOR plus 2.0 percent subject to achieving certain conditions and matures in December 2018.
On April 1, 2015, the Company acquired vacant land to accommodate a two-phase development of 365 multi-family residential units located in Worcester, Massachusetts (“the CitySquare Project”) for a purchase price of $3.1 million with an additional $1.25 million to be paid (which is accrued as of December 31, 2015), subject to certain conditions, in accordance with the terms of the purchase and sale agreement. The purchase price for the acquisition was funded primarily through borrowing under the Company’s unsecured revolving credit facility. The first phase with 237 units started construction in the third quarter 2015 with anticipated initial deliveries in the second quarter 2017. The second phase, with 128 units, is projected to begin construction in 2017. On December 10, 2015, the Company obtained a construction loan with a maximum borrowing amount of $41.5 million (with no outstanding balance as of December 31, 2015), which bears interest at a rate of LIBOR plus 2.5 percent, reducing to LIBOR plus 2.25 percent subject to achieving certain conditions and matures in December 2018. Total development costs are estimated to be approximately $92.5 million (of which $9.1 million was incurred by the Company through December 31, 2015 and estimates it will need to fund an additional $41.9 million for the completion of the project).
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On May 21, 2014, the Company entered into a joint venture agreement with Ironstate Harborside-A LLC (“ISA”) to form Harborside Unit A Urban Renewal, L.L.C. (“URL-Harborside”), a newly-formed joint venture that will develop, own and operate a high-rise tower of approximately 763 multi-family apartment units above a parking pedestal to be located on land contributed by the Company at its Harborside complex in Jersey City, New Jersey (the “URL Project”). The Company owns an 85 percent interest in URL-Harborside and the remaining interest is owned by ISA, with shared control over major decisions such as approval of budgets, property financings and leasing guidelines. The construction of the URL Project is estimated to cost a total of approximately $320 million (of which development costs of $210.2 million have been incurred by URL-Harborside through December 31, 2015). The URL Project is projected to be ready for occupancy by the fourth quarter of 2016. The venture has a construction/permanent loan with a maximum borrowing amount of $192 million (with $63.9 million outstanding as of December 31, 2015), which bears interest at a rate of 5.197 percent and matures in August 2029. The Company does not expect to fund any future development costs of the project, as future development costs will be funded by using the loan financing.
The Company owns a 76.25 percent interest in a consolidated joint venture which is constructing a 108-unit multi-family development rental property located in Eastchester, New York (the “Eastchester Project”). The project is expected to be ready for occupancy by the second quarter of 2016. The Eastchester Project is estimated to cost a total of $50 million (of which development costs of $29.6 million have been incurred through December 31, 2015). The venture has a $28.8 million construction loan (with $10.9 million outstanding as of December 31, 2015). The Company expects to fund approximately $20.9 million for the development of the project (of which, as of December 31, 2015, the Company has incurred $14.7 million of the development costs and estimates it will need to fund an additional $6.2 million for the completion of the project.
Appointment of executive officers
On June 3, 2015, the Company announced the appointments of Mitchell E. Rudin as chief executive officer and Michael J. DeMarco as president and chief operating officer of the Company, effective immediately. The Company entered into employment agreements dated June 3, 2015 with each of Messrs. Rudin and DeMarco (together, the “Executive Employment Agreements”) that each provide as follows:
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A term that ends on December 31, 2018 (the “Employment Term”) unless earlier terminated;
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An annual base salary for each of Messrs. Rudin and DeMarco of $700,000, subject to potential merit increases (but not decreases) each year;
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A target annual bonus opportunity of one hundred percent (100%) of base salary, or $700,000, for each of Messrs. Rudin and DeMarco, with a threshold bonus of fifty percent (50%) of base salary, or $350,000, and a maximum bonus of two hundred percent (200%) of base salary, or $1,400,000, a pro rata bonus opportunity for 2015 based on the assessment of the Executive Compensation and Option Committee of the Board of Directors (“Committee”) of each executive’s development of a strategic plan for the Company and bonuses for 2016 and subsequent years to be based on objective performance goals to be established annually by the Committee;
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2015 long-term incentive (“LTI”) awards under the Company’s 2013 Incentive Stock Plan (the “2015 LTI Awards”), consisting of the granting to each of Messrs. Rudin and DeMarco on June 5, 2015 of 18,775.27 restricted stock units (“RSUs”) subject to time-based vesting over three years, and of 56,325.82 performance share units (“PSUs”) which will vest from 0 to 150 percent of the number of PSUs granted based on the Company’s total shareholder return relative to a peer group of equity office REITs over a three-year performance period; and
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The grant on June 5, 2015 (the “Grant Date”) to each of Messrs. Rudin and DeMarco of options to purchase 400,000 shares of the Company’s common stock, exercisable for a period of ten years with an exercise price equal to the closing price of the Company’s common stock on the NYSE on the Grant Date (which price was $17.31 per share), with 200,000 of such options vesting in three equal annual installments commencing on the first anniversary of the Grant Date, and 200,000 of such options vesting if the Company’s common stock trades at or above $25.00 per share for 30 consecutive trading days while Mr. Rudin and Mr. DeMarco is employed, as applicable, or on or before June 30, 2019 if Mr. Rudin and Mr. DeMarco is employed for the entire Employment Term (except if the executive’s employment has been terminated by the Company for cause following expiration of the Employment Term).
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Operations
Several of the Company’s core office markets have shown signs of recent improvement. The percentage leased in the Company’s consolidated portfolio of stabilized operating commercial properties was 86.2 percent at December 31, 2015, as compared to 84.2 percent at December 31, 2014 and 86.1 percent at December 31, 2013. Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future and leases that expire at the period end date. Leases that expired as of December 31, 2015, 2014 and 2013 aggregate 69,522, 205,220 and 690,895 square feet, respectively, or 0.3, 0.8 and 2.5 percentage of the net rentable square footage, respectively. The Company believes that commercial vacancy rates have stabilized in most of its markets and may decrease in some of its markets through 2016.
FINANCING ACTIVITY
On January 7, 2016, the Company obtained a new $350 million unsecured term loan, which matures in January 2019 with two one-year extension options. The interest rate for the new term loan is currently 140 basis points over LIBOR, subject to adjustment on a sliding scale based on the Company's unsecured debt ratings, or at the Company's option, a defined leverage ratio. The Company entered into interest rate swap arrangements to fix LIBOR for the duration of the term loan. Including costs, the loan provides for a current all-in fixed rate of 3.12 percent. The proceeds from the loan were used primarily to repay outstanding borrowings on its unsecured revolving credit facility and to repay the Company's $200 million, 5.8 percent senior unsecured notes that matured on January 15, 2016.
AVAILABLE INFORMATION
The Company’s internet website is www.mack-cali.com. The Company makes available free of charge on or through its 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 Company’s internet website includes other items related to corporate governance matters, including, among other things, the Company’s corporate governance principles, charters of various committees of the Board of Directors, and the Company’s code of business conduct and ethics applicable to all employees, officers and directors. The Company 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 also may obtain copies of these documents, free of charge, by sending a request in writing to: Mack-Cali Investor Relations Department, 343 Thornall Street, Edison, NJ 08837-2206.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
We consider portions of this report, including the documents incorporated by reference, to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of such act. Such forward-looking statements relate to, without limitation, our future economic performance, plans and objectives for future operations and projections of revenue and other financial items. Forward-looking statements can be identified by the use of words such as “may,” “will,” “plan,” “potential,” “projected,” “should,” “expect,” “anticipate,” “estimate,” “continue” 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:
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risks and uncertainties affecting the general economic climate and conditions, which in turn may have a negative effect on the fundamentals of our business and the financial condition of our tenants and residents;
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the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis;
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the extent of any tenant bankruptcies or of any early lease terminations;
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our ability to lease or re-lease space at current or anticipated rents;
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changes in the supply of and demand for our properties;
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changes in interest rate levels and volatility in the securities markets;
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our ability to complete construction and development activities on time and within budget, including without limitation obtaining regulatory permits and the availability and cost of materials, labor and equipment;
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forward-looking financial and operational information, including information relating to future development projects, potential acquisitions or dispositions, and projected revenue and income;
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changes in operating costs;
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our ability to obtain adequate insurance, including coverage for terrorist acts;
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our credit worthiness and the availability of financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities and refinance existing debt and our future interest expense;
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changes in governmental regulation, tax rates and similar matters; and
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other risks associated with the development and acquisition of properties, including risks that the development may not be completed on schedule, that the tenants or residents will not take occupancy or pay rent, or that development or operating costs may be greater than anticipated.
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For further information on factors which could impact us and the statements contained herein, see Item 1A: Risk Factors. We assume no obligation to update and supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.
ITEM 1A. RISK FACTORS
Our results from operations and ability to make distributions on our equity and debt service on our indebtedness may be affected by the risk factors set forth below. All investors should consider the following risk factors before deciding to purchase securities of the Company. The Company refers to itself as “we” or “our” in the following risk factors.
Adverse economic and geopolitical conditions in general and the Northeastern suburban office markets in particular could have a material adverse effect on our results of operations, financial condition and our ability to pay distributions to you.
Our business may be affected by the continuing volatility in the financial and credit markets, the general global economic conditions, continuing high unemployment, and other market or economic challenges experienced by the U.S. economy or the real estate industry as a whole. Our business also may be adversely affected by local economic conditions, as substantially all of our revenues are derived from our properties located in the Northeast, particularly in New Jersey and New York. Because our portfolio currently consists primarily of office and office/flex buildings (as compared to a more diversified real estate portfolio) located principally in the Northeast, if economic conditions persist or deteriorate, then our results of operations, financial condition and ability to service current debt and to pay distributions to our shareholders may be adversely affected by the following, among other potential conditions:
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significant job losses in the financial and professional services industries may occur, which may decrease demand for our office space, causing market rental rates and property values to be negatively impacted;
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our ability to borrow on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from both our existing operations and our acquisition and development activities and increase our future interest expense;
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reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans;
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the value and liquidity of our short-term investments and cash deposits could be reduced as a result of a deterioration of the financial condition of the institutions that hold our cash deposits or the institutions or assets in which we have made short-term investments, the dislocation of the markets for our short-term investments, increased volatility in market rates for such investments or other factors;
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reduced liquidity in debt markets and increased credit risk premiums for certain market participants may impair our ability to access capital; and
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one or more lenders under our line of credit could refuse or be unable to fund their financing commitment to us and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all.
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These conditions, which could have a material adverse effect on our results of operations, financial condition and ability to pay distributions, may continue or worsen in the future.
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Our performance is subject to risks associated with the real estate industry.
General: Our business and our ability to make distributions or payments to our investors depend on the ability of our properties to generate funds in excess of operating expenses (including scheduled principal payments on debt and capital expenditures). Events or conditions that are beyond our control may adversely affect our operations and the value of our Properties. Such events or conditions could include:
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changes in the general economic climate and conditions;
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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;
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an oversupply or reduced demand for multi-family apartments caused by a decline in household formation, decline in employment or otherwise;
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· decreased attractiveness of our properties to tenants and residents;
· competition from other office and office/flex and multi-family properties;
· development by competitors of competing multi-family communities;
· unwillingness of tenants to pay rent increases;
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rent control or rent stabilization laws, or other housing laws and regulations that could prevent us from raising multi-family rents to offset increases in operating costs;
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· our inability to provide adequate maintenance;
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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;
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changes in laws and regulations (including tax, environmental, zoning and building codes, landlord/tenant and other housing laws and regulations) and agency or court interpretations of such laws and regulations and the related costs of compliance;
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changes in interest rate levels and the availability of financing;
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the inability of a significant number of tenants or residents to pay rent;
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our inability to rent office or multi-family rental space on favorable terms; and
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civil unrest, earthquakes, acts of terrorism and other natural disasters or acts of God that may result in uninsured losses.
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We may suffer adverse consequences if our revenues decline since our operating costs do not necessarily decline in proportion to our revenue: We earn a significant portion of our income from renting our properties. Our operating costs, however, do not necessarily fluctuate in relation to changes in our rental revenue. This means that our costs will not necessarily decline even if our revenues do. Our operating costs could also increase while our revenues do not. If our operating costs increase but our rental revenues do not, we may be forced to borrow to cover our costs and we may incur losses. Such losses may adversely affect our ability to make distributions or payments to our investors.
Financially distressed tenants may be unable to pay rent: If a tenant defaults, we may experience delays and incur substantial costs in enforcing our rights as landlord and protecting our investments. If a tenant files for bankruptcy, we cannot evict the tenant solely because of the bankruptcy and a potential court judgment rejecting and terminating such tenant’s lease (which would subject all future unpaid rent to a statutory cap) could adversely affect our ability to make distributions or payments to our investors as we may be unable to replace the defaulting tenant with a new tenant at a comparable rental rate without incurring significant expenses or a reduction in rental income.
Renewing leases or re-letting space could be costly: If a tenant does not renew its lease upon expiration or terminates its lease early, we may not be able to re-lease the space on favorable terms or at all. If a tenant does renew its lease or we re-lease the space, the terms of the renewal or new lease, including the cost of required renovations or concessions to the tenant, may be less favorable than the current lease terms, which could adversely affect our ability to make distributions or payments to our investors.
Adverse developments concerning some of our major tenants and industry concentrations could have a negative impact on our revenue: We have tenants concentrated in various industries that may be experiencing adverse effects of current economic conditions. For instance, 14.8 percent of our revenue is derived from tenants in the Securities, Commodity Contracts and Other Financial industry, 10.7 percent from tenants in the Insurance Carriers and Related Activities industry and 7.5 percent from tenants in the Manufacturing industry. Our business could be adversely affected if any of these industries suffered a downturn and/or these tenants or any other tenants became insolvent, declared bankruptcy or otherwise refused to pay rent in a timely manner or at all.
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Our insurance coverage on our properties may be inadequate or our insurance providers may default on their obligations to pay claims: We currently carry comprehensive insurance on all of our properties, including insurance for liability, fire and flood. We cannot guarantee that the limits of our current policies will be sufficient in the event of a catastrophe to our properties. We cannot guarantee that we will be able to renew or duplicate our current insurance coverage in adequate amounts or at reasonable prices. In addition, while our current insurance policies insure us against loss from terrorist acts and toxic mold, in the future, insurance companies may no longer offer coverage against these types of losses, or, if offered, these types of insurance may be prohibitively expensive. If any or all of the foregoing should occur, we may not have insurance coverage against certain types of losses and/or there may be decreases in the limits of insurance available. Should an uninsured loss or a loss in excess of our insured limits occur, we could lose all or a portion of the capital we have invested in a property or properties, as well as the anticipated future revenue from the property or properties. Nevertheless, we might remain obligated for any mortgage debt or other financial obligations related to the property or properties. We cannot guarantee that material losses in excess of insurance proceeds will not occur in the future. If any of our properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property. Such events could adversely affect our ability to make distributions or payments to our investors. If one or more of our insurance providers were to fail to pay a claim as a result of insolvency, bankruptcy or otherwise, the nonpayment of such claims could have an adverse effect on our financial condition and results of operations. In addition, if one or more of our insurance providers were to become subject to insolvency, bankruptcy or other proceedings and our insurance policies with the provider were terminated or canceled as a result of those proceedings, we cannot guarantee that we would be able to find alternative coverage in adequate amounts or at reasonable prices. In such case, we could experience a lapse in any or adequate insurance coverage with respect to one or more properties and be exposed to potential losses relating to any claims that may arise during such period of lapsed or inadequate coverage.
Illiquidity of real estate limits our ability to act quickly: Real estate investments are relatively illiquid. Such illiquidity may limit our ability to react quickly in response to changes in economic and other conditions. If we want to sell an investment, we might not be able to dispose of that investment in the time period we desire, and the sales price of that investment might not recoup or exceed the amount of our investment. The prohibition in the Internal Revenue Code of 1986, as amended (the “Code”), and related regulations on a real estate investment trust holding property for sale also may restrict our ability to sell property. In addition, we acquired a significant number of our properties from individuals to whom the Operating Partnership issued Units as part of the purchase price. In connection with the acquisition of these properties, in order to preserve such individual’s income tax deferral, we contractually agreed not to sell or otherwise transfer the properties for a specified period of time, except in a manner which does not result in recognition of any built-in-gain (which may result in an income tax liability) or which reimburses the appropriate individuals for the income tax consequences of the recognition of such built-in-gains. As of December 31, 2015, seven of our properties, with an aggregate net book value of approximately $57.1 million, were subject to these restrictions which expire in 2016. For those properties where such restrictions have lapsed, we are generally required to use commercially reasonable efforts to prevent any sale, transfer or other disposition of the subject properties from resulting in the recognition of built-in gain to the appropriate individuals. 110 of our properties, with an aggregate net book value of approximately $1.3 billion, have lapsed restrictions and are subject to these conditions. The above limitations on our ability to sell our investments could adversely affect our ability to make distributions or payments to our investors.
We may not be able to dispose of non-core office assets within our anticipated timeframe or at favorable prices: In connection with our three year strategic initiative announced in September 2015, we identified non-core office properties that we may sell over time at total estimated sales proceeds we believe will range between $600 million and $800 million. While we intend to dispose of these properties opportunistically over time, there can be no assurance that these dispositions will be completed during the three year period of our strategic initiative. In addition, market conditions will impact our ability to dispose of these properties, and there can be no assurance that we will be successful in disposing of these properties for their estimated sales prices. A failure to dispose of these properties for their estimated market values as planned could have a material adverse effect on our ability to finance our acquisition and development plans.
New acquisitions, including acquisitions of multi-family rental real estate, may fail to perform as expected and will subject us to additional new risks: We intend to and may acquire new properties, primarily in the multi-family rental sector, assuming that we are able to obtain capital on favorable terms. Such newly acquired properties may not perform as expected and may subject us to unknown liability with respect to liabilities relating to such properties for clean-up of undisclosed environmental contamination or claims by tenants, residents, vendors or other persons against the former owners of the properties. Inaccurate assumptions regarding future rental or occupancy rates could result in overly optimistic estimates of future revenues. In addition, future operating expenses or the costs necessary to bring an acquired property up to standards established for its intended market position may be underestimated. The search for and process of acquiring such properties will also require a substantial amount of management’s time and attention. As our portfolio shifts from primarily commercial office properties to increasingly more multi-family rental properties we will face additional and new risks such as:
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shorter-term leases of one-year on average for multi-family rental communities, which allow residents to leave after the term of the lease without penalty;
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increased competition from other housing sources such as other multi-family rental communities, condominiums and single-family houses that are available for rent as well as for sale;
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dependency on the convenience and attractiveness of the communities or neighborhoods in which our multi-family rental properties are located and the quality of local schools and other amenities;
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dependency on the financial condition of Fannie Mae or Freddie Mac which provide a major source of financing to the multi-family rental sector; and
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compliance with housing and other new regulations.
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Americans with Disabilities Act compliance could be costly: Under the Americans with Disabilities Act of 1990 (“ADA”), all public accommodations and commercial facilities must meet certain federal requirements related to access and use by disabled persons. Compliance with the ADA requirements could involve removal of structural barriers from certain disabled persons’ entrances. Other federal, state and local laws may require modifications to or restrict further renovations of our properties with respect to such accesses. Although we believe that our properties are substantially in compliance with present requirements, noncompliance with the ADA or related laws or regulations could result in the United States government imposing fines or private litigants being awarded damages against us. Such costs may adversely affect our ability to make distributions or payments to our investors.
Environmental problems are possible and may be costly: Various federal, state and local laws and regulations subject property owners or operators to liability for the costs of removal or remediation of certain hazardous or toxic substances located on or in the property. These laws often impose liability without regard to whether the owner or operator was responsible for or even knew of the presence of such substances. The presence of or failure to properly remediate hazardous or toxic substances (such as toxic mold, lead paint and asbestos) may adversely affect our ability to rent, sell or borrow against contaminated property and may impose liability upon us for personal injury to persons exposed to such substances. Various laws and regulations also impose liability on persons who arrange for the disposal or treatment of hazardous or toxic substances at another location for the costs of removal or remediation of such substances at the disposal or treatment facility. These laws often impose liability whether or not the person arranging for such disposal ever owned or operated the disposal facility. Certain other environmental laws and regulations impose liability on owners or operators of property for injuries relating to the release of asbestos-containing or other materials into the air, water or otherwise into the environment. As owners and operators of property and as potential arrangers for hazardous substance disposal, we may be liable under such laws and regulations for removal or remediation costs, governmental penalties, property damage, personal injuries and related expenses. Payment of such costs and expenses could adversely affect our ability to make distributions or payments to our investors.
We face risks associated with property acquisitions: We have acquired in the past, and our long-term strategy is to continue to pursue the acquisition of properties and portfolios of properties in New Jersey, New York and Pennsylvania and in the Northeast generally, and particularly residential properties, including large real estate portfolios that could increase our size and result in alterations to our capital structure. We may be competing for investment opportunities with entities that have greater financial resources. Several developers and real estate companies may compete with us in seeking properties for acquisition, land for development and prospective tenants. Such competition may adversely affect our ability to make distributions or payments to our investors by:
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reducing the number of suitable investment opportunities offered to us;
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increasing the bargaining power of property owners;
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interfering with our ability to attract and retain tenants;
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increasing vacancies which lowers market rental rates and limits our ability to negotiate rental rates; and/or
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adversely affecting our ability to minimize expenses of operation.
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Our acquisition activities and their success are subject to the following risks:
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adequate financing to complete acquisitions may not be available on favorable terms or at all as a result of the continuing volatility in the financial and credit markets;
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even if we enter into an acquisition agreement for a property, we may be unable to complete that acquisition and risk the loss of certain non-refundable deposits and incurring certain other acquisition-related costs;
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the actual costs of repositioning or redeveloping acquired properties may be greater than our estimates;
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any acquisition agreement will likely contain conditions to closing, including completion of due diligence investigations to our satisfaction or other conditions that are not within our control, which may not be satisfied; and
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we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and acquired properties may fail to perform as expected; which may adversely affect our results of operations and financial condition.
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Development of real estate, including the development of multi-family rental real estate could be costly: As part of our operating strategy, we may acquire land for development or construct on owned land, under certain conditions. Included among the risks of the real estate development business are the following, which may adversely affect our ability to make distributions or payments to our investors:
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financing for development projects may not be available on favorable terms;
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long-term financing may not be available upon completion of construction;
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failure to complete construction and lease-up on schedule or within budget may increase debt service expense and construction and other costs; and
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failure to rent the development at all or at rent levels originally contemplated.
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Property ownership through joint ventures could subject us to the contrary business objectives of our co-venturers: We, from time to time, invest in joint ventures or partnerships in which we do not hold a controlling interest in the assets underlying the entities in which we invest, including joint ventures in which (i) we own a direct interest in an entity which controls such assets, or (ii) we own a direct interest in an entity which owns indirect interests, through one or more intermediaries, of such assets. These investments involve risks that do not exist with properties in which we own a controlling interest with respect to the underlying assets, including the possibility that (i) our co-venturers or partners may, at any time, become insolvent or otherwise refuse to make capital contributions when due, (ii) we may be responsible to our co-venturers or partners for indemnifiable losses, (iii) we may become liable with respect to guarantees of payment or performance by the joint ventures, (iv) we may become subject to buy-sell arrangements which could cause us to sell our interests or acquire our co-venturer’s or partner’s interests in a joint venture, or (v) our co-venturers or partners may, at any time, have business, economic or other objectives that are inconsistent with our objectives. Because we lack a controlling interest, our co-venturers or partners may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives. While we seek protective rights against such contrary actions, there can be no assurance that we will be successful in procuring any such protective rights, or if procured, that the rights will be sufficient to fully protect us against contrary actions. Our organizational documents do not limit the amount of available funds that we may invest in joint ventures or partnerships. If the objectives of our co-venturers or partners are inconsistent with ours, it may adversely affect our ability to make distributions or payments to our investors.
Our performance is subject to risks associated with repositioning a significant portion of the Company’s portfolio from office to multi-family rental properties.
Repositioning the Company’s office portfolio may result in impairment charges or less than expected returns on office properties: There can be no assurance that the Company, as it seeks to reposition a portion of its portfolio from office to the multi-family rental sector will be able to sell office properties and purchase multi-family rental properties at prices that in the aggregate are profitable for the Company or are efficient use of its capital or that would not result in a reduction of the Company’s cash flow. Because real estate investments are relatively illiquid, it also may be difficult for the Company to promptly sell its office properties that are held or may be designated for sale promptly or on favorable terms, which could have a material adverse effect on the Company’s financial condition. In addition, as the Company identifies non-core office properties that may be held for sale or that it intends to hold for a shorter period of time than previously, it may determine that the carrying value of a property is not recoverable over the anticipated holding period of the property. As a result, the Company may incur impairment charges for certain of these properties to reduce their carrying values to the estimated fair market values. See Note 3: Recent Transactions – Impairments on Properties Held and Used. Moreover, as the Company seeks to reposition a portion of its portfolio from office to the multi-family rental sector, the Company may be subject to a Federal income tax on gain from sales of properties due to limitations in the Code and related regulations on a real estate investment trust’s ability to sell properties. The Company intends to structure its property dispositions in a tax-efficient manner and avoid the prohibition in the Code against a real estate investment trust holding properties for sale. There is no guaranty, however, that such dispositions can be achieved without the imposition of federal income tax on any gain recognized.
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Unfavorable changes in market and economic conditions could adversely affect multi-family rental occupancy, rental rates, operating expenses, and the overall market value of our assets, including joint ventures. Local conditions that may adversely affect conditions in multi-family residential markets include the following:
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plant closings, industry slowdowns and other factors that adversely affect the local economy;
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an oversupply of, or a reduced demand for, apartment units;
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a decline in household formation or employment or lack of employment growth;
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the inability or unwillingness of residents to pay rent increases;
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rent control or rent stabilization laws, or other laws regulating housing, that could prevent us from raising rents to offset increases in operating costs; and
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economic conditions that could cause an increase in our operating expenses, such as increases in property taxes, utilities, compensation of on-site associates and routine maintenance.
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Changes in applicable laws, or noncompliance with applicable laws, could adversely affect our operations or expose us to liability: We must develop, construct and operate our communities in compliance with numerous federal, state and local laws and regulations, some of which may conflict with one another or be subject to limited judicial or regulatory interpretations. These laws and regulations may include zoning laws, building codes, landlord tenant laws and other laws generally applicable to business operations. Noncompliance with applicable laws could expose us to liability. Lower revenue growth or significant unanticipated expenditures may result from our need to comply with changes in (i) laws imposing remediation requirements and the potential liability for environmental conditions existing on properties or the restrictions on discharges or other conditions, (ii) rent control or rent stabilization laws or other residential landlord/tenant laws, or (iii) other governmental rules and regulations or enforcement policies affecting the development, use and operation of our communities, including changes to building codes and fire and life-safety codes.
Failure to succeed in new markets, or with new brands and community formats, or in activities other than the development, ownership and operation of residential rental communities may have adverse consequences: We are actively engaged in development and acquisition activity in new submarkets within our core, Northeast markets where we have owned and operated our historical portfolio of office properties. Our historical experience with properties in our core, Northeast markets in developing, owning and operating properties does not ensure that we will be able to operate successfully in the new multi-family submarkets. We will be exposed to a variety of risks in the multi-family submarkets, including:
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an inability to accurately evaluate local apartment market conditions;
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an inability to obtain land for development or to identify appropriate acquisition opportunities;
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an acquired property may fail to perform as we expected in analyzing our investment;
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our estimate of the costs of repositioning or developing an acquired property may prove inaccurate; and
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lack of familiarity with local governmental and permitting procedures.
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Our real estate construction management activities are subject to risks particular to third-party construction projects.
As we may perform fixed price construction services for third parties, we are subject to a variety of risks unique to these activities. If construction costs of a project exceed original estimates, such costs may have to be absorbed by us, thereby making the project less profitable than originally estimated, or possibly not profitable at all. In addition, a construction project may be delayed due to government or regulatory approvals, supply shortages, or other events and circumstances beyond our control, or the time required to complete a construction project may be greater than originally anticipated. If any such excess costs or project delays were to be material, such events may adversely affect our cash flow and liquidity and thereby impact our ability to make distributions or payments to our investors.
Debt financing could adversely affect our economic performance.
Scheduled debt payments and refinancing could adversely affect our financial condition: We are subject to the risks normally associated with debt financing. These risks, including the following, may adversely affect our ability to make distributions or payments to our investors:
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our cash flow may be insufficient to meet required payments of principal and interest;
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payments of principal and interest on borrowings may leave us with insufficient cash resources to pay operating expenses;
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we may not be able to refinance indebtedness on our properties at maturity; and
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|
if refinanced, the terms of refinancing may not be as favorable as the original terms of the related indebtedness.
|
15
As of December 31, 2015, we had total outstanding indebtedness of $2.2 billion comprised of $1.3 billion of senior unsecured notes, outstanding borrowings of $155 million under our unsecured revolving credit facility and approximately $731 million of mortgages, loans payable and other obligations. We may have to refinance the principal due on our current or future indebtedness at maturity, and we may not be able to do so.
If we are unable to refinance our indebtedness on acceptable terms, or at all, events or conditions that may adversely affect our ability to make distributions or payments to our investors include the following:
|
·
|
we may need to dispose of one or more of our properties upon disadvantageous terms or adjust our capital expenditures in general or with respect to our strategy of acquiring multi-family residential properties and development opportunities in particular;
|
|
·
|
prevailing interest rates or other factors at the time of refinancing could increase interest rates and, therefore, our interest expense;
|
|
·
|
we may be subject to an event of default pursuant to covenants for our indebtedness;
|
|
·
|
if we mortgage property to secure payment of indebtedness and are unable to meet mortgage payments, the mortgagee could foreclose upon such property or appoint a receiver to receive an assignment of our rents and leases; and
|
|
·
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foreclosures upon mortgaged property could create taxable income without accompanying cash proceeds and, therefore, hinder our ability to meet the real estate investment trust distribution requirements of the Code.
|
We 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 revolving credit facility and unsecured term loan each contains customary requirements, including restrictions and other limitations on our ability to incur debt, debt to assets ratios, secured debt to total assets ratios, interest coverage ratios and minimum ratios of unencumbered assets to unsecured debt. The indentures under which our senior unsecured debt have been issued contain financial and operating covenants including coverage ratios and limitations on our ability to incur secured and unsecured debt. These covenants limit our flexibility in conducting our operations and create a risk of default on our indebtedness if we cannot continue to satisfy them. Some of our debt instruments are cross-collateralized and contain cross default provisions with other debt instruments. Due to this cross-collateralization, a failure or default with respect to certain debt instruments or properties could have an adverse impact on us or our properties that are subject to the cross-collateralization under the applicable debt instrument. Failure to comply with these covenants could cause a default under the agreements and, in certain circumstances, our lenders may be entitled to accelerate our debt obligations. Defaults under our debt agreements could materially and adversely affect our financial condition and results of operations.
Rising interest rates may adversely affect our cash flow: As of December 31, 2015, outstanding borrowings of approximately $155 million under our revolving credit facility and approximately $137 million of our mortgage indebtedness bear interest at variable rates. We may incur additional indebtedness in the future that bears interest at variable rates. Variable rate debt creates higher debt service requirements if market interest rates increase. Higher debt service requirements could adversely affect our ability to make distributions or payments to our investors and/or cause us to default under certain debt covenants.
Our degree of leverage could adversely affect our cash flow: We fund acquisition opportunities and development partially through short-term borrowings (including our 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. Our Board of Directors has a general policy of limiting the ratio of our indebtedness to total undepreciated assets (total debt as a percentage of total undepreciated assets) to 50 percent or less, although there is no limit in the Operating Partnership’s or our organizational documents on the amount of indebtedness that we may incur. However, we have entered into certain financial agreements which contain financial and operating covenants that limit our ability under certain circumstances to incur additional secured and unsecured indebtedness. The Board of Directors could alter or eliminate its current policy on borrowing at any time at its discretion. If this policy were changed, we could become more highly leveraged, resulting in an increase in debt service that could adversely affect our cash flow and our ability to make distributions or payments to our investors and/or could cause an increased risk of default on our obligations.
16
We are dependent on external sources of capital for future growth: To qualify as a real estate investment trust under the Code, we must distribute to our shareholders each year at least 90 percent of our net taxable income, excluding any net capital gain. Because of this distribution requirement, it is not likely that we will be able to fund all future capital needs, including for acquisitions and developments, from income from operations. Therefore, we will have to rely on third-party sources of capital, which may or may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of things, including the market’s perception of our growth potential and our current and potential future earnings. Moreover, additional equity offerings may result in substantial dilution of our shareholders’ interests, and additional debt financing may substantially increase our leverage.
Adverse changes in our credit ratings could adversely affect our business and financial condition: The credit ratings assigned to our senior unsecured notes by nationally recognized statistical rating organizations (the “NRSROs”) are based on our operating performance, liquidity and leverage ratios, overall financial position and other factors employed by the NRSROs in their rating analyses of us. These ratings and similar ratings of us and any debt or preferred securities we may issue are subject to ongoing evaluation by the NRSROs, and we cannot assure you that any such ratings will not be changed by the NRSROs if, in their judgment, circumstances warrant. Our credit ratings can affect the amount of capital we can access, as well as the terms of any financings we may obtain. There can be no assurance that we will be able to maintain our current credit ratings, and in the event our current credit ratings are downgraded, we would likely incur higher borrowing costs and may encounter difficulty in obtaining additional financing.
Competition for skilled personnel could increase our labor costs.
We compete with various other companies in attracting and retaining qualified and skilled personnel. We depend on our ability to attract and retain skilled management personnel who are responsible for the day-to-day operations of our company. Competitive pressures may require that we enhance our pay and benefits package to compete effectively for such personnel. We may not be able to offset such added costs by increasing the rates we charge our tenants. If there is an increase in these costs or if we fail to attract and retain qualified and skilled personnel, our business and operating results could be harmed.
We are dependent on our key personnel whose continued service is not guaranteed.
We are dependent upon key personnel for strategic business direction and real estate experience, including our chief executive officer, our president and chief operating officer, and our chief financial officer, chief investment officer, chief legal officer and chairman of Roseland. While we believe that we could find replacements for these key personnel, loss of their services could adversely affect our operations. We do not have key man life insurance for our key personnel. In addition, as the Company seeks to reposition a portion of its portfolio from office to the multi-family rental sector, the Company may become increasingly dependent on non-executive personnel with residential development and leasing expertise to effectively execute the Company’s long-term strategy.
Certain provisions of Maryland law and our charter and bylaws could hinder, delay or prevent changes in control.
Certain provisions of Maryland law, our charter and our bylaws have the effect of discouraging, delaying or preventing transactions that involve an actual or threatened change in control. These provisions include the following:
Classified Board of Directors: Our Board of Directors is divided into three classes with staggered terms of office of three years each.
At our 2014 annual meeting of stockholders, stockholders approved amendments to our charter and bylaws to declassify our Board of Directors over a three year period from 2015 through 2017 such that each director whose term expires at the annual meeting of stockholders in 2015 through 2017 will be elected to hold office until the next annual meeting of stockholders following their election, instead of the third-succeeding annual meeting, and until their successors are elected and qualify. During this transition period, our Board of Directors will remain classified with respect to the directors whose three year terms have not yet expired during such period, and Maryland law permits the Board of Directors to re-classify the Board of Directors at any time. The classification and staggered terms of office of our directors make it more difficult for a third party to gain control of our board of directors. At least two annual meetings of stockholders, instead of one, generally would be required to affect a change in a majority of the board of directors.
Removal of Directors: Under our charter, subject to the rights of one or more classes or series of preferred stock to elect one or more directors, a director may be removed only for cause and only by the affirmative vote of at least two-thirds of all votes entitled to be cast by our stockholders generally in the election of directors. Neither the Maryland General Corporation Law nor our charter define the term “cause.” As a result, removal for “cause” is subject to Maryland common law and to judicial interpretation and review in the context of the facts and circumstances of any particular situation.
Number of Directors, Board Vacancies, Terms of Office: We have, in our bylaws, elected to be subject to certain provisions of Maryland law which vest in the Board of Directors the exclusive right to determine the number of directors and the exclusive right, by the affirmative vote of a majority of the remaining directors, even if the remaining directors do not constitute a quorum, to fill vacancies on the board. These provisions of Maryland law, which are applicable even if other provisions of Maryland law or the charter or bylaws provide to the contrary, also provide that any director elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred, rather than the next annual meeting of stockholders as would otherwise be the case, and until his or her successor is elected and qualifies. We have, in our corporate governance principles, adopted a mandatory retirement age of 80 years old for directors.
17
Stockholder Requested Special Meetings: Our bylaws provide that our stockholders have the right to call a special meeting only upon the written request of the stockholders entitled to cast not less than a majority of all the votes entitled to be cast by the stockholders at such meeting.
Advance Notice Provisions for Stockholder Nominations and Proposals: Our bylaws require advance written notice for stockholders to nominate persons for election as directors at, or to bring other business before, any meeting of stockholders. This bylaw provision limits the ability of stockholders to make nominations of persons for election as directors or to introduce other proposals unless we are notified in a timely manner prior to the meeting.
Exclusive Authority of the Board to Amend the Bylaws: Our bylaws provide that our board of directors has the exclusive power to adopt, alter or repeal any provision of the bylaws or to make new bylaws. Thus, our stockholders may not effect any changes to our bylaws.
Preferred Stock: Under our charter, our 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 our stockholders. As a result, our Board of Directors may establish a series of preferred stock that could delay or prevent a transaction or a change in control.
Duties of Directors with Respect to Unsolicited Takeovers: Maryland law provides protection for Maryland corporations against unsolicited takeovers by limiting, among other things, the duties of the directors in unsolicited takeover situations. The duties of directors of Maryland corporations do not require them to (a) accept, recommend or respond to any proposal by a person seeking to acquire control of the corporation, (b) authorize the corporation to redeem any rights under, or modify or render inapplicable, any stockholders rights plan, (c) make a determination under the Maryland Business Combination Act or the Maryland Control Share Acquisition Act, or (d) act or fail to act solely because of the effect the act or failure to act may have on an acquisition or potential acquisition of control of the corporation or the amount or type of consideration that may be offered or paid to the stockholders in an acquisition. Maryland law also contains a statutory presumption that an act of a director of a Maryland corporation satisfies the applicable standards of conduct for directors under Maryland law.
Ownership Limit: In order to preserve our status as a real estate investment trust under the Code, our 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 our Board of Directors waives or modifies this ownership limit.
Maryland Business Combination Act: The Maryland Business Combination Act provides that unless exempted, a Maryland corporation may not engage in certain business combinations, including mergers, consolidations, share exchanges or, in circumstances specified in the statute, asset transfers, issuances or reclassifications of shares of stock and other specified transactions, with an “interested stockholder” or an affiliate of an interested stockholder, for five years after the most recent date on which the interested stockholder became an interested stockholder, and thereafter unless specified criteria are met. An interested stockholder is generally a person owning or controlling, directly or indirectly, 10 percent or more of the voting power of the outstanding stock of the Maryland corporation. Our board of directors has exempted from this statute business combinations between the Company and certain affiliated individuals and entities. However, unless our board adopts other exemptions, the provisions of the Maryland Business Combination Act will be applicable to business combinations with other persons.
Maryland Control Share Acquisition Act: Maryland law provides that holders of “control shares” of a corporation acquired in a “control share acquisition” shall have no voting rights with respect to the control shares except to the extent approved by a vote of two-thirds of the votes eligible to cast on the matter under the Maryland Control Share Acquisition Act. “Control shares” means shares of stock that, if aggregated with all other shares of stock previously acquired by the acquirer, would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of the voting power: one-tenth or more but less than one-third, one-third or more but less than a majority or a majority or more of all voting power. A “control share acquisition” means the acquisition of control shares, subject to certain exceptions.
18
If voting rights of control shares acquired in a control share acquisition are not approved at a stockholder’s meeting, then subject to certain conditions and limitations, the issuer may redeem any or all of the control shares for fair value. If voting rights of such control shares are approved at a stockholder’s meeting and the acquirer becomes entitled to vote a majority of the shares of stock entitled to vote, all other stockholders may exercise appraisal rights. Our 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 the Company 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 our bylaws will be subject to the Maryland Control Share Acquisition Act.
Consequences of failure to qualify as a real estate investment trust could adversely affect our financial condition.
Failure to maintain ownership limits could cause us to lose our qualification as a real estate investment trust: In order for us to maintain our qualification as a real estate investment trust under the Code, not more than 50 percent in value of our outstanding stock may be actually and/or constructively owned by five or fewer individuals (as defined in the Code to include certain entities). We have limited the ownership of our outstanding shares of our common stock by any single stockholder to 9.8 percent of the outstanding shares of our common stock. Our Board of Directors could waive this restriction if they were satisfied, based upon the advice of tax counsel or otherwise, that such action would be in our best interests and would not affect our qualification as a real estate investment trust under the Code. Common stock acquired or transferred in breach of the limitation may be redeemed by us for the lesser of the price paid and the average closing price for the 10 trading days immediately preceding redemption or sold at the direction of us. We may elect to redeem such shares of common stock for Units, which are nontransferable except in very limited circumstances. Any transfer of shares of common stock which, as a result of such transfer, causes us to be in violation of any ownership limit, will be deemed void. Although we currently intend to continue to operate in a manner which will enable us to continue to qualify as a real estate investment trust under the Code, it is possible that future economic, market, legal, tax or other considerations may cause our Board of Directors to revoke the election for us to qualify as a real estate investment trust. Under our organizational documents, our Board of Directors can make such revocation without the consent of our stockholders.
In addition, the consent of the holders of at least 85 percent of the Operating Partnership’s partnership units is required: (i) to merge (or permit the merger of) us with another unrelated person, pursuant to a transaction in which the Operating Partnership is not the surviving entity; (ii) to dissolve, liquidate or wind up the Operating Partnership; or (iii) to convey or otherwise transfer all or substantially all of the Operating Partnership’s assets. As of February 22, 2016, as general partner, we own approximately 89.5 percent of the Operating Partnership’s outstanding common partnership units.
Tax liabilities as a consequence of failure to qualify as a real estate investment trust: We have elected to be treated and have operated so as to qualify as a real estate investment trust for federal income tax purposes since our taxable year ended December 31, 1994. Although we believe we will continue to operate in such manner, we cannot guarantee that we 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 Code. Because few judicial or administrative interpretations of such provisions exist and qualification determinations are fact sensitive, we cannot assure you that we will qualify as a real estate investment trust for any taxable year.
If we fail to qualify as a real estate investment trust in any taxable year, we will be subject to the following:
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·
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we will not be allowed a deduction for dividends paid to shareholders;
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|
·
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we will be subject to federal income tax at regular corporate rates, including any alternative minimum tax, if applicable; and
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|
·
|
unless we are entitled to relief under certain statutory provisions, we will not be permitted to qualify as a real estate investment trust for the four taxable years following the year during which we were disqualified.
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A loss of our 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 we pay dividends to our stockholders.
Other tax liabilities: Even if we qualify as a real estate investment trust under the Code, we are subject to certain federal, state and local taxes on our income and property and, in some circumstances, certain other state and local taxes. From time to time changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability. A shortfall in tax revenues for states and municipalities in which we operate may lead to an increase in the frequency and amount of such increase. These actions could adversely affect our financial condition and results of operations. In addition, our taxable REIT subsidiaries will be subject to federal, state and local income tax for income received in connection with certain non-customary services performed for tenants and/or third parties.
19
Risk of changes in the tax law applicable to real estate investment trusts: Since the Internal Revenue Service, the United States Treasury Department and Congress frequently review federal income tax legislation, we cannot predict whether, when or to what extent new federal tax laws, regulations, interpretations or rulings will be adopted. Any such legislative action may prospectively or retroactively modify our and the Operating Partnership’s tax treatment and, therefore, may adversely affect taxation of us, the Operating Partnership, and/or our investors.
Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.
In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our tenants and business partners, including personally identifiable information of our tenants and employees, in our data centers and on our networks. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations, and damage our reputation, which could adversely affect our business.
We face possible risks associated with the physical effects of climate change.
We cannot predict with certainty whether climate change is occurring and, if so, at what rate. However, the physical effects of climate change could have a material adverse effect on our properties, operations and business. For example, many of our properties are located along the East coast, particularly those in New Jersey, New York and Connecticut. To the extent climate change causes changes in weather patterns, our markets could experience increases in storm intensity and rising sea-levels. Over time, these conditions could result in declining demand for office space in our buildings or the inability of us to operate the buildings at all. Climate change may also have indirect effects on our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of energy and increasing the cost of snow removal or related costs at our properties. Proposed legislation to address climate change could increase utility and other costs of operating our properties which, if not offset by rising rental income, would reduce our net income. There can be no assurance that climate change will not have a material adverse effect on our properties, operations or business.
Changes in market conditions could adversely affect the market price of our common stock.
As with other publicly traded equity securities, the value of our common stock depends on various market conditions, which may change from time to time. The market price of our common stock could change in ways that may or may not be related to our business, our industry or our operating performance and financial condition. Among the market conditions that may affect the value of our common stock are the following:
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·
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the extent of your interest in us;
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·
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the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies;
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·
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our financial performance; and
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·
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general stock and bond market conditions.
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The market value of our common stock is based primarily upon the market’s perception of our growth potential and our current and potential future earnings and cash dividends. Consequently, our common stock may trade at prices that are higher or lower than our net asset value per share of common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
20
ITEM 2. PROPERTIES
PROPERTY LIST
As of December 31, 2015, the Company’s Consolidated Properties consisted of 217 in-service office and flex properties, as well as six multi-family properties. The Consolidated Properties are located primarily in the Northeast. The Consolidated Properties are easily accessible from major thoroughfares and are in close proximity to numerous amenities. The Consolidated Properties contain a total of approximately 24.2 million square feet of commercial space and 1,301 apartments with the individual commercial properties ranging from 6,216 to 1,246,283 square feet. The Consolidated Properties, managed by on-site employees, generally have attractively landscaped sites and atriums in addition to quality design and construction. The Company’s commercial tenants include many service sector employers, including a large number of professional firms and national and international businesses. The Company believes that all of its properties are well-maintained and do not require significant capital improvements.
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Office Properties
|
||||||||
|
Percentage
|
2015
|
2015
|
2015
|
|||||
|
Net
|
Leased
|
Base
|
Average
|
Average
|
||||
|
Rentable
|
as of
|
Rent
|
Percentage
|
Base Rent
|
Effective Rent
|
|||
|
Year
|
Area
|
12/31/15
|
($000’s)
|
of Total 2015
|
Per Sq. Ft.
|
Per Sq. Ft.
|
||
|
Property Location
|
Built
|
(Sq. Ft.)
|
(%) (a)
|
(b) (c)
|
Base Rent (%)
|
($) (c) (d)
|
($) (c) (e)
|
|
|
NEW JERSEY
|
||||||||
|
BERGEN COUNTY
|
||||||||
|
Fort Lee
|
||||||||
|
One Bridge Plaza
|
1981
|
200,000
|
92.2
|
4,642
|
0.97
|
25.17
|
22.30
|
|
|
2115 Linwood Avenue
|
1981
|
68,000
|
98.2
|
1,171
|
0.24
|
17.54
|
13.93
|
|
|
Montvale
|
||||||||
|
135 Chestnut Ridge Road
|
1981
|
66,150
|
66.6
|
922
|
0.19
|
20.93
|
18.09
|
|
|
Paramus
|
||||||||
|
15 East Midland Avenue
|
1988
|
259,823
|
53.6
|
3,105
|
0.65
|
22.30
|
18.65
|
|
|
140 East Ridgewood Avenue
|
1981
|
239,680
|
100.0
|
4,116
|
0.86
|
17.17
|
13.81
|
|
|
461 From Road
|
1988
|
253,554
|
98.1
|
4,210
|
0.88
|
16.93
|
13.94
|
|
|
650 From Road
|
1978
|
348,510
|
79.4
|
6,102
|
1.27
|
22.05
|
18.26
|
|
|
61 South Paramus Road (f)
|
1985
|
269,191
|
81.7
|
4,171
|
0.87
|
18.97
|
16.36
|
|
|
Rochelle Park
|
||||||||
|
120 West Passaic Street
|
1972
|
52,000
|
46.2
|
709
|
0.15
|
29.51
|
27.76
|
|
|
365 West Passaic Street
|
1976
|
212,578
|
82.9
|
3,535
|
0.74
|
20.06
|
17.89
|
|
|
395 West Passaic Street
|
1979
|
100,589
|
75.6
|
1,376
|
0.29
|
18.09
|
15.27
|
|
|
Upper Saddle River
|
||||||||
|
10 Mountainview Road
|
1986
|
192,000
|
63.6
|
2,954
|
0.62
|
24.19
|
20.55
|
|
|
Woodcliff Lake
|
||||||||
|
400 Chestnut Ridge Road
|
1982
|
89,200
|
100.0
|
2,142
|
0.45
|
24.01
|
21.04
|
|
|
50 Tice Boulevard
|
1984
|
235,000
|
95.6
|
5,544
|
1.16
|
24.68
|
21.30
|
|
|
300 Tice Boulevard
|
1991
|
230,000
|
95.4
|
6,069
|
1.27
|
27.66
|
24.90
|
|
|
ESSEX COUNTY
|
||||||||
|
Millburn
|
||||||||
|
150 J.F. Kennedy Parkway
|
1980
|
247,476
|
97.2
|
4,758
|
0.99
|
19.78
|
16.07
|
|
|
Borough of Roseland
|
||||||||
|
4 Becker Farm Road
|
1983
|
281,762
|
94.9
|
6,975
|
1.45
|
26.09
|
24.97
|
|
|
6 Becker Farm Road
|
1982
|
129,732
|
77.5
|
2,567
|
0.54
|
25.53
|
24.36
|
|
|
101 Eisenhower Parkway
|
1980
|
237,000
|
80.6
|
4,394
|
0.92
|
23.00
|
18.86
|
|
|
103 Eisenhower Parkway
|
1985
|
151,545
|
77.7
|
2,402
|
0.50
|
20.40
|
16.23
|
|
|
105 Eisenhower Parkway
|
2001
|
220,000
|
38.1
|
2,065
|
0.43
|
24.64
|
18.47
|
|
|
75 Livingston Avenue
|
1985
|
94,221
|
64.2
|
1,253
|
0.26
|
20.71
|
18.47
|
|
|
85 Livingston Avenue
|
1985
|
124,595
|
81.8
|
2,462
|
0.51
|
24.16
|
22.06
|
|
|
HUDSON COUNTY
|
||||||||
|
Jersey City
|
||||||||
|
Harborside Plaza 1
|
1983
|
400,000
|
100.0
|
11,331
|
2.36
|
28.33
|
24.67
|
|
|
Harborside Plaza 2
|
1990
|
761,200
|
58.1
|
11,281
|
2.35
|
25.51
|
21.29
|
|
|
Harborside Plaza 3
|
1990
|
725,600
|
83.5
|
19,650
|
4.10
|
32.43
|
29.50
|
|
|
Harborside Plaza 4-A
|
2000
|
207,670
|
98.6
|
6,546
|
1.36
|
31.97
|
24.72
|
|
|
Harborside Plaza 5
|
2002
|
977,225
|
99.0
|
32,442
|
6.77
|
33.53
|
29.63
|
|
|
101 Hudson Street
|
1992
|
1,246,283
|
90.2
|
29,668
|
6.19
|
26.39
|
23.29
|
|
21
|
Office Properties
|
||||||||
|
(Continued)
|
||||||||
|
Percentage
|
2015
|
2015
|
2015
|
|||||
|
Net
|
Leased
|
Base
|
Average
|
Average
|
||||
|
Rentable
|
as of
|
Rent
|
Percentage
|
Base Rent
|
Effective Rent
|
|||
|
Year
|
Area
|
12/31/15
|
($000’s)
|
of Total 2015
|
Per Sq. Ft.
|
Per Sq. Ft.
|
||
|
Property Location
|
Built
|
(Sq. Ft.)
|
(%) (a)
|
(b) (c)
|
Base Rent (%)
|
($) (c) (d)
|
($) (c) (e)
|
|
|
MERCER COUNTY
|
||||||||
|
Hamilton Township
|
||||||||
|
3 AAA Drive
|
1981
|
35,270
|
83.0
|
611
|
0.13
|
20.87
|
16.36
|
|
|
600 Horizon Drive
|
2002
|
95,000
|
100.0
|
1,191
|
0.25
|
12.54
|
11.53
|
|
|
700 Horizon Drive
|
2007
|
120,000
|
100.0
|
2,529
|
0.53
|
21.08
|
18.73
|
|
|
2 South Gold Drive
|
1974
|
33,962
|
72.0
|
575
|
0.12
|
23.51
|
20.37
|
|
|
Princeton
|
||||||||
|
103 Carnegie Center
|
1984
|
96,000
|
90.3
|
2,183
|
0.46
|
25.18
|
20.80
|
|
|
2 Independence Way
|
1981
|
67,401
|
0.0
|
333
|
0.07
|
0.00
|
0.00
|
|
|
3 Independence Way
|
1983
|
111,300
|
100.0
|
2,278
|
0.48
|
20.47
|
14.84
|
|
|
100 Overlook Center
|
1988
|
149,600
|
89.6
|
3,804
|
0.79
|
28.38
|
25.37
|
|
|
5 Vaughn Drive
|
1987
|
98,500
|
91.9
|
2,619
|
0.55
|
28.93
|
25.22
|
|
|
MIDDLESEX COUNTY
|
||||||||
|
East Brunswick
|
||||||||
|
377 Summerhill Road
|
1977
|
40,000
|
100.0
|
372
|
0.08
|
9.30
|
8.98
|
|
|
Edison
|
||||||||
|
333 Thornall Street (g) (h)
|
1984
|
196,128
|
95.6
|
733
|
0.15
|
28.54
|
25.27
|
|
|
343 Thornall Street (c)
|
1991
|
195,709
|
100.0
|
4,002
|
0.84
|
20.45
|
17.06
|
|
|
Plainsboro
|
||||||||
|
500 College Road East (f)
|
1984
|
158,235
|
55.8
|
2,019
|
0.42
|
22.87
|
19.60
|
|
|
Woodbridge
|
||||||||
|
581 Main Street
|
1991
|
200,000
|
99.3
|
5,169
|
1.08
|
26.03
|
22.07
|
|
|
MONMOUTH COUNTY
|
||||||||
|
Freehold
|
||||||||
|
2 Paragon Way
|
1989
|
44,524
|
62.6
|
538
|
0.11
|
19.30
|
16.43
|
|
|
3 Paragon Way
|
1991
|
66,898
|
89.2
|
1,181
|
0.25
|
19.79
|
17.13
|
|
|
4 Paragon Way
|
2002
|
63,989
|
91.7
|
679
|
0.14
|
11.57
|
10.52
|
|
|
100 Willow Brook Road
|
1988
|
60,557
|
55.0
|
830
|
0.17
|
24.92
|
22.88
|
|
|
Holmdel
|
||||||||
|
23 Main Street
|
1977
|
350,000
|
100.0
|
4,178
|
0.87
|
11.94
|
9.11
|
|
|
Middletown
|
||||||||
|
One River Centre Bldg 1
|
1983
|
122,594
|
97.6
|
3,030
|
0.63
|
25.32
|
21.03
|
|
|
One River Centre Bldg 2
|
1983
|
120,360
|
97.5
|
2,881
|
0.60
|
24.55
|
20.39
|
|
|
One River Centre Bldg 3 and 4
|
1984
|
214,518
|
88.7
|
4,551
|
0.95
|
23.92
|
21.57
|
|
|
Neptune
|
||||||||
|
3600 Route 66
|
1989
|
180,000
|
100.0
|
4,165
|
0.87
|
23.14
|
17.97
|
|
|
Wall Township
|
||||||||
|
1305 Campus Parkway
|
1988
|
23,350
|
92.4
|
503
|
0.10
|
23.31
|
18.26
|
|
|
1350 Campus Parkway
|
1990
|
79,747
|
99.9
|
920
|
0.19
|
11.55
|
10.97
|
|
|
MORRIS COUNTY
|
||||||||
|
Florham Park
|
||||||||
|
325 Columbia Turnpike
|
1987
|
168,144
|
100.0
|
3,916
|
0.82
|
23.29
|
19.66
|
|
|
Morris Plains
|
||||||||
|
201 Littleton Road
|
1979
|
88,369
|
75.4
|
1,254
|
0.26
|
18.82
|
14.80
|
|
|
Parsippany
|
||||||||
|
4 Campus Drive
|
1983
|
147,475
|
78.8
|
2,136
|
0.45
|
18.38
|
14.30
|
|
|
6 Campus Drive
|
1983
|
148,291
|
79.4
|
2,588
|
0.54
|
21.98
|
18.68
|
|
|
7 Campus Drive
|
1982
|
154,395
|
86.3
|
2,889
|
0.60
|
21.68
|
18.04
|
|
|
8 Campus Drive
|
1987
|
215,265
|
69.5
|
3,799
|
0.79
|
25.39
|
22.20
|
|
|
9 Campus Drive
|
1983
|
156,495
|
87.1
|
962
|
0.20
|
7.06
|
6.05
|
|
|
4 Century Drive
|
1981
|
100,036
|
52.3
|
1,060
|
0.22
|
20.26
|
17.28
|
|
|
5 Century Drive
|
1981
|
79,739
|
59.7
|
1,009
|
0.21
|
21.20
|
18.36
|
|
|
6 Century Drive
|
1981
|
100,036
|
50.5
|
837
|
0.17
|
16.57
|
14.71
|
|
|
2 Dryden Way
|
1990
|
6,216
|
100.0
|
99
|
0.02
|
15.93
|
14.64
|
|
|
4 Gatehall Drive
|
1988
|
248,480
|
93.0
|
5,302
|
1.11
|
22.94
|
19.92
|
22
|
Office Properties
|
||||||||
|
(Continued)
|
||||||||
|
Percentage
|
2015
|
2015
|
2015
|
|||||
|
Net
|
Leased
|
Base
|
Average
|
Average
|
||||
|
Rentable
|
as of
|
Rent
|
Percentage
|
Base Rent
|
Effective Rent
|
|||
|
Year
|
Area
|
12/31/15
|
($000’s)
|
of Total 2015
|
Per Sq. Ft.
|
Per Sq. Ft.
|
||
|
Property Location
|
Built
|
(Sq. Ft.)
|
(%) (a)
|
(b) (c)
|
Base Rent (%)
|
($) (c) (d)
|
($) (c) (e)
|
|
|
2 Hilton Court
|
1991
|
181,592
|
100.0
|
6,525
|
1.36
|
35.93
|
32.84
|
|
|
600 Parsippany Road
|
1978
|
96,000
|
95.5
|
1,717
|
0.36
|
18.73
|
15.59
|
|
|
1 Sylvan Way
|
1989
|
150,557
|
97.7
|
4,178
|
0.87
|
28.40
|
22.90
|
|
|
5 Sylvan Way
|
1989
|
151,383
|
85.8
|
2,992
|
0.62
|
23.04
|
20.25
|
|
|
7 Sylvan Way
|
1987
|
145,983
|
0.0
|
10
|
0.00
|
0.00
|
0.00
|
|
|
20 Waterview Boulevard
|
1988
|
225,550
|
95.0
|
4,734
|
0.99
|
22.09
|
19.97
|
|
|
35 Waterview Boulevard
|
1990
|
172,498
|
95.7
|
4,062
|
0.85
|
24.61
|
22.23
|
|
|
5 Wood Hollow Road
|
1979
|
317,040
|
98.6
|
4,102
|
0.86
|
13.12
|
10.21
|
|
|
PASSAIC COUNTY
|
||||||||
|
Totowa
|
||||||||
|
999 Riverview Drive
|
1988
|
56,066
|
86.4
|
885
|
0.18
|
18.27
|
14.66
|
|
|
SOMERSET COUNTY
|
||||||||
|
Basking Ridge
|
||||||||
|
222 Mount Airy Road
|
1986
|
49,000
|
82.2
|
810
|
0.17
|
20.11
|
15.99
|
|
|
233 Mount Airy Road
|
1987
|
66,000
|
67.5
|
903
|
0.19
|
20.27
|
16.59
|
|
|
Bridgewater
|
||||||||
|
440 Route 22 East
|
1990
|
198,376
|
91.1
|
4,662
|
0.97
|
25.80
|
21.64
|
|
|
721 Route 202/206
|
1989
|
192,741
|
97.5
|
4,596
|
0.96
|
24.46
|
21.63
|
|
|
UNION COUNTY
|
||||||||
|
Clark
|
||||||||
|
100 Walnut Avenue
|
1985
|
182,555
|
94.1
|
4,361
|
0.91
|
25.39
|
22.38
|
|
|
Cranford
|
||||||||
|
6 Commerce Drive
|
1973
|
56,000
|
88.7
|
1,095
|
0.23
|
22.04
|
18.62
|
|
|
11 Commerce Drive
|
1981
|
90,000
|
67.0
|
1,577
|
0.33
|
26.15
|
22.75
|
|
|
12 Commerce Drive
|
1967
|
72,260
|
84.7
|
929
|
0.19
|
15.18
|
13.17
|
|
|
14 Commerce Drive
|
1971
|
67,189
|
100.0
|
1,295
|
0.27
|
19.27
|
16.40
|
|
|
20 Commerce Drive
|
1990
|
176,600
|
100.0
|
4,123
|
0.86
|
23.35
|
19.99
|
|
|
25 Commerce Drive
|
1971
|
67,749
|
77.2
|
1,179
|
0.25
|
22.54
|
19.62
|
|
|
65 Jackson Drive
|
1984
|
82,778
|
34.2
|
847
|
0.18
|
29.92
|
23.49
|
|
|
New Providence
|
||||||||
|
890 Mountain Avenue
|
1977
|
80,000
|
49.6
|
1,207
|
0.25
|
30.42
|
27.95
|
|
|
Total New Jersey Office
|
16,035,084
|
85.0
|
323,076
|
67.41
|
24.05
|
20.75
|
||
|
NEW YORK
|
||||||||
|
NEW YORK COUNTY
|
||||||||
|
New York
|
||||||||
|
125 Broad Street
|
1970
|
524,476
|
100.0
|
17,745
|
3.70
|
33.83
|
28.13
|
|
|
WESTCHESTER COUNTY
|
||||||||
|
Elmsford
|
||||||||
|
100 Clearbrook Road (c)
|
1975
|
60,000
|
91.7
|
1,048
|
0.22
|
19.05
|
17.34
|
|
|
Hawthorne
|
||||||||
|
1 Skyline Drive
|
1980
|
20,400
|
99.0
|
423
|
0.09
|
20.94
|
19.86
|
|
|
2 Skyline Drive
|
1987
|
30,000
|
100.0
|
542
|
0.11
|
18.07
|
13.73
|
23
|
Office Properties
|
||||||||
|
(Continued)
|
||||||||
|
Percentage
|
2015
|
2015
|
2015
|
|||||
|
Net
|
Leased
|
Base
|
Average
|
Average
|
||||
|
Rentable
|
as of
|
Rent
|
Percentage
|
Base Rent
|
Effective Rent
|
|||
|
Year
|
Area
|
12/31/15
|
($000’s)
|
of Total 2015
|
Per Sq. Ft.
|
Per Sq. Ft.
|
||
|
Property Location
|
Built
|
(Sq. Ft.)
|
(%) (a)
|
(b) (c)
|
Base Rent (%)
|
($) (c) (d)
|
($) (c) (e)
|
|
|
7 Skyline Drive
|
1987
|
109,000
|
85.9
|
2,121
|
0.44
|
22.65
|
19.32
|
|
|
17 Skyline Drive (f)
|
1989
|
85,000
|
100.0
|
1,932
|
0.40
|
22.73
|
22.28
|
|
|
White Plains
|
||||||||
|
1 Barker Avenue
|
1975
|
68,000
|
87.3
|
1,483
|
0.31
|
24.98
|
22.29
|
|
|
3 Barker Avenue
|
1983
|
65,300
|
93.9
|
1,377
|
0.29
|
22.46
|
19.68
|
|
|
50 Main Street
|
1985
|
309,000
|
86.4
|
7,593
|
1.58
|
28.44
|
23.81
|
|
|
11 Martine Avenue
|
1987
|
180,000
|
70.7
|
4,117
|
0.86
|
32.35
|
28.37
|
|
|
1 Water Street
|
1979
|
45,700
|
57.6
|
748
|
0.16
|
28.42
|
24.88
|
|
|
Yonkers
|
||||||||
|
1 Executive Boulevard
|
1982
|
112,000
|
100.0
|
2,764
|
0.58
|
24.68
|
22.27
|
|
|
3 Executive Boulevard
|
1987
|
58,000
|
100.0
|
1,719
|
0.36
|
29.64
|
27.71
|
|
|
Total New York Office
|
1,666,876
|
91.2
|
43,612
|
9.10
|
28.70
|
24.66
|
||
|
DISTRICT OF COLUMBIA
|
||||||||
|
WASHINGTON
|
||||||||
|
1201 Connecticut Avenue, NW
|
1940
|
169,549
|
92.6
|
6,736
|
1.41
|
42.90
|
37.74
|
|
|
1400 L Street, NW
|
1987
|
159,000
|
100.0
|
6,238
|
1.30
|
39.23
|
35.16
|
|
|
Total District of Columbia Office
|
328,549
|
96.2
|
12,974
|
2.71
|
41.06
|
36.44
|
||
|
MARYLAND
|
||||||||
|
PRINCE GEORGE'S COUNTY
|
||||||||
|
Greenbelt
|
||||||||
|
9200 Edmonston Road
|
1973
|
38,690
|
100.0
|
1,057
|
0.22
|
27.32
|
26.78
|
|
|
6301 Ivy Lane
|
1979
|
112,003
|
68.8
|
1,646
|
0.34
|
21.36
|
19.31
|
|
|
6303 Ivy Lane
|
1980
|
112,047
|
17.7
|
415
|
0.09
|
20.93
|
18.66
|
|
|
6305 Ivy Lane
|
1982
|
112,022
|
82.2
|
1,912
|
0.40
|
20.76
|
18.31
|
|
|
6404 Ivy Lane
|
1987
|
165,234
|
68.8
|
2,561
|
0.54
|
22.53
|
18.75
|
|
|
6406 Ivy Lane
|
1991
|
163,857
|
77.0
|
2,995
|
0.62
|
23.74
|
19.05
|
|
|
6411 Ivy Lane
|
1984
|
138,405
|
74.7
|
2,311
|
0.48
|
22.35
|
19.36
|
|
|
Lanham
|
||||||||
|
4200 Parliament Place
|
1989
|
122,000
|
31.8
|
1,768
|
0.37
|
45.57
|
43.51
|
|
|
Total Maryland Office
|
964,258
|
63.2
|
14,665
|
3.06
|
24.05
|
21.00
|
||
|
TOTAL OFFICE PROPERTIES
|
18,994,767
|
84.6
|
394,327
|
82.28
|
24.82
|
21.44
|
24
|
Office/Flex Properties
|
||||||||
|
Percentage
|
2015
|
2015
|
2015
|
|||||
|
Net
|
Leased
|
Base
|
Average
|
Average
|
||||
|
Rentable
|
as of
|
Rent
|
Percentage
|
Base Rent
|
Effective Rent
|
|||
|
Year
|
Area
|
12/31/15
|
($000’s)
|
of Total 2015
|
Per Sq. Ft.
|
Per Sq. Ft.
|
||
|
Property Location
|
Built
|
(Sq. Ft.)
|
(%) (a)
|
(b) (c)
|
Base Rent (%)
|
($) (c) (d)
|
($) (c) (e)
|
|
|
NEW JERSEY
|
||||||||
|
BURLINGTON COUNTY
|
||||||||
|
Burlington
|
||||||||
|
3 Terri Lane
|
1991
|
64,500
|
93.2
|
568
|
0.12
|
9.45
|
8.27
|
|
|
5 Terri Lane
|
1992
|
74,555
|
100.0
|
621
|
0.13
|
8.33
|
6.72
|
|
|
Moorestown
|
||||||||
|
2 Commerce Drive
|
1986
|
49,000
|
74.1
|
232
|
0.05
|
6.39
|
5.45
|
|
|
101 Commerce Drive
|
1988
|
64,700
|
100.0
|
275
|
0.06
|
4.25
|
3.85
|
|
|
102 Commerce Drive
|
1987
|
38,400
|
100.0
|
269
|
0.06
|
7.01
|
5.57
|
|
|
201 Commerce Drive
|
1986
|
38,400
|
45.8
|
103
|
0.02
|
5.86
|
4.09
|
|
|
202 Commerce Drive
|
1988
|
51,200
|
83.6
|
136
|
0.03
|
3.18
|
2.94
|
|
|
1 Executive Drive
|
1989
|
20,570
|
100.0
|
208
|
0.04
|
10.11
|
7.29
|
|
|
2 Executive Drive
|
1988
|
60,800
|
81.9
|
382
|
0.08
|
7.67
|
5.80
|
|
|
101 Executive Drive
|
1990
|
29,355
|
99.7
|
300
|
0.06
|
10.25
|
9.36
|
|
|
102 Executive Drive
|
1990
|
64,000
|
100.0
|
474
|
0.10
|
7.41
|
7.30
|
|
|
225 Executive Drive
|
1990
|
50,600
|
64.6
|
149
|
0.03
|
4.56
|
3.70
|
|
|
97 Foster Road
|
1982
|
43,200
|
83.3
|
148
|
0.03
|
4.11
|
3.31
|
|
|
1507 Lancer Drive
|
1995
|
32,700
|
100.0
|
146
|
0.03
|
4.46
|
3.43
|
|
|
1245 North Church Street
|
1998
|
52,810
|
83.3
|
221
|
0.05
|
5.02
|
4.27
|
|
|
1247 North Church Street
|
1998
|
52,790
|
93.8
|
230
|
0.05
|
4.64
|
3.70
|
|
|
1256 North Church Street
|
1984
|
63,495
|
100.0
|
477
|
0.10
|
7.51
|
6.58
|
|
|
840 North Lenola Road
|
1995
|
38,300
|
47.0
|
145
|
0.03
|
8.06
|
7.39
|
|
|
844 North Lenola Road
|
1995
|
28,670
|
100.0
|
206
|
0.04
|
7.19
|
5.93
|
|
|
915 North Lenola Road
|
1998
|
52,488
|
100.0
|
291
|
0.06
|
5.54
|
5.01
|
|
|
2 Twosome Drive
|
2000
|
48,600
|
100.0
|
411
|
0.09
|
8.46
|
7.57
|
|
|
30 Twosome Drive
|
1997
|
39,675
|
99.0
|
260
|
0.05
|
6.62
|
5.12
|
|
|
31 Twosome Drive
|
1998
|
84,200
|
100.0
|
423
|
0.09
|
5.02
|
4.50
|
|
|
40 Twosome Drive
|
1996
|
40,265
|
100.0
|
317
|
0.07
|
7.87
|
6.93
|
|
|
41 Twosome Drive
|
1998
|
43,050
|
88.9
|
273
|
0.06
|
7.13
|
5.77
|
|
|
50 Twosome Drive
|
1997
|
34,075
|
56.0
|
122
|
0.02
|
6.39
|
5.87
|
|
|
MERCER COUNTY
|
||||||||
|
Hamilton Township
|
||||||||
|
100 Horizon Center Boulevard
|
1989
|
13,275
|
100.0
|
151
|
0.03
|
11.37
|
6.78
|
|
|
200 Horizon Drive
|
1991
|
45,770
|
92.9
|
706
|
0.15
|
16.60
|
14.84
|
|
|
300 Horizon Drive
|
1989
|
69,780
|
74.2
|
574
|
0.12
|
11.09
|
8.92
|
|
|
500 Horizon Drive
|
1990
|
41,205
|
93.8
|
577
|
0.12
|
14.93
|
13.01
|
|
|
MONMOUTH COUNTY
|
||||||||
|
Wall Township
|
||||||||
|
1325 Campus Parkway
|
1988
|
35,000
|
100.0
|
612
|
0.13
|
17.49
|
14.20
|
|
|
1340 Campus Parkway
|
1992
|
72,502
|
68.8
|
898
|
0.19
|
18.00
|
15.50
|
|
|
1345 Campus Parkway
|
1995
|
76,300
|
87.6
|
949
|
0.20
|
14.20
|
11.48
|
|
|
1433 Highway 34
|
1985
|
69,020
|
98.1
|
702
|
0.15
|
10.37
|
7.61
|
|
|
1320 Wyckoff Avenue
|
1986
|
20,336
|
100.0
|
228
|
0.05
|
11.21
|
8.65
|
|
|
1324 Wyckoff Avenue
|
1987
|
21,168
|
92.7
|
185
|
0.04
|
9.43
|
6.78
|
|
|
PASSAIC COUNTY
|
||||||||
|
Totowa
|
||||||||
|
1 Center Court
|
1999
|
38,961
|
100.0
|
571
|
0.12
|
14.66
|
12.55
|
|
|
2 Center Court
|
1998
|
30,600
|
100.0
|
389
|
0.08
|
12.71
|
6.11
|
|
|
11 Commerce Way
|
1989
|
47,025
|
100.0
|
552
|
0.11
|
11.74
|
8.68
|
|
|
20 Commerce Way
|
1992
|
42,540
|
95.5
|
477
|
0.10
|
11.74
|
10.98
|
|
25
|
Office/Flex Properties
|
||||||||
|
(Continued)
|
||||||||
|
Percentage
|
2015
|
2015
|
2015
|
|||||
|
Net
|
Leased
|
Base
|
Average
|
Average
|
||||
|
Rentable
|
as of
|
Rent
|
Percentage
|
Base Rent
|
Effective Rent
|
|||
|
Year
|
Area
|
12/31/15
|
($000’s)
|
of Total 2015
|
Per Sq. Ft.
|
Per Sq. Ft.
|
||
|
Property Location
|
Built
|
(Sq. Ft.)
|
(%) (a)
|
(b) (c)
|
Base Rent (%)
|
($) (c) (d)
|
($) (c) (e)
|
|
|
29 Commerce Way
|
1990
|
48,930
|
100.0
|
584
|
0.12
|
11.94
|
9.83
|
|
|
40 Commerce Way
|
1987
|
50,576
|
86.3
|
559
|
0.12
|
12.81
|
9.10
|
|
|
45 Commerce Way
|
1992
|
51,207
|
100.0
|
575
|
0.12
|
11.23
|
9.92
|
|
|
60 Commerce Way
|
1988
|
50,333
|
44.1
|
359
|
0.06
|
16.17
|
11.89
|
|
|
80 Commerce Way
|
1996
|
22,500
|
100.0
|
264
|
0.05
|
11.73
|
9.73
|
|
|
100 Commerce Way
|
1996
|
24,600
|
88.6
|
288
|
0.06
|
13.21
|
10.97
|
|
|
120 Commerce Way
|
1994
|
9,024
|
100.0
|
106
|
0.02
|
11.75
|
10.42
|
|
|
140 Commerce Way
|
1994
|
26,881
|
99.5
|
317
|
0.07
|
11.85
|
10.54
|
|
|
Total New Jersey Office/Flex
|
2,167,931
|
89.2
|
18,010
|
3.76
|
9.31
|
7.69
|
||
|
NEW YORK
|
||||||||
|
WESTCHESTER COUNTY
|
||||||||
|
Elmsford
|
||||||||
|
11 Clearbrook Road
|
1974
|
31,800
|
100.0
|
407
|
0.08
|
12.80
|
9.94
|
|
|
75 Clearbrook Road
|
1990
|
32,720
|
100.0
|
205
|
0.04
|
6.27
|
5.44
|
|
|
125 Clearbrook Road
|
2002
|
33,000
|
100.0
|
576
|
0.12
|
17.45
|
11.33
|
|
|
150 Clearbrook Road
|
1975
|
74,900
|
100.0
|
996
|
0.21
|
13.30
|
11.71
|
|
|
175 Clearbrook Road
|
1973
|
98,900
|
96.7
|
1,575
|
0.33
|
16.47
|
14.90
|
|
|
200 Clearbrook Road
|
1974
|
94,000
|
93.5
|
1,248
|
0.26
|
14.20
|
12.72
|
|
|
250 Clearbrook Road
|
1973
|
155,000
|
96.8
|
1,265
|
0.26
|
8.43
|
7.08
|
|
|
50 Executive Boulevard
|
1969
|
45,200
|
62.8
|
274
|
0.06
|
9.65
|
8.10
|
|
|
77 Executive Boulevard
|
1977
|
13,000
|
100.0
|
249
|
0.05
|
19.15
|
17.77
|
|
|
85 Executive Boulevard
|
1968
|
31,000
|
50.0
|
217
|
0.04
|
14.00
|
10.39
|
|
|
300 Executive Boulevard
|
1970
|
60,000
|
100.0
|
729
|
0.15
|
12.15
|
11.18
|
|
|
350 Executive Boulevard
|
1970
|
15,400
|
99.4
|
230
|
0.05
|
15.03
|
12.80
|
|
|
399 Executive Boulevard
|
1962
|
80,000
|
100.0
|
1,063
|
0.22
|
13.29
|
12.71
|
|
|
400 Executive Boulevard
|
1970
|
42,200
|
63.1
|
528
|
0.11
|
19.83
|
15.74
|
|
|
500 Executive Boulevard
|
1970
|
41,600
|
100.0
|
765
|
0.16
|
18.39
|
16.73
|
|
|
525 Executive Boulevard
|
1972
|
61,700
|
100.0
|
1,049
|
0.22
|
17.00
|
15.46
|
|
|
1 Westchester Plaza
|
1967
|
25,000
|
100.0
|
352
|
0.07
|
14.08
|
11.16
|
|
|
2 Westchester Plaza
|
1968
|
25,000
|
100.0
|
397
|
0.08
|
15.88
|
12.48
|
|
|
3 Westchester Plaza
|
1969
|
93,500
|
85.1
|
852
|
0.18
|
10.71
|
8.32
|
|
|
4 Westchester Plaza
|
1969
|
44,700
|
100.0
|
705
|
0.15
|
15.77
|
12.68
|
|
|
5 Westchester Plaza
|
1969
|
20,000
|
100.0
|
308
|
0.06
|
15.40
|
12.65
|
|
|
6 Westchester Plaza
|
1968
|
20,000
|
100.0
|
287
|
0.06
|
14.35
|
10.80
|
|
|
7 Westchester Plaza
|
1972
|
46,200
|
100.0
|
720
|
0.15
|
15.58
|
14.85
|
|
|
8 Westchester Plaza
|
1971
|
67,200
|
99.7
|
1,225
|
0.26
|
18.28
|
15.30
|
|
|
Hawthorne
|
||||||||
|
200 Saw Mill River Road
|
1965
|
51,100
|
100.0
|
726
|
0.15
|
14.21
|
13.03
|
|
|
4 Skyline Drive
|
1987
|
80,600
|
93.0
|
1,280
|
0.27
|
17.08
|
13.70
|
|
|
5 Skyline Drive
|
1980
|
124,022
|
99.8
|
1,851
|
0.39
|
14.95
|
13.12
|
|
|
6 Skyline Drive
|
1980
|
44,155
|
100.0
|
530
|
0.11
|
12.00
|
7.93
|
|
|
8 Skyline Drive
|
1985
|
50,000
|
48.1
|
667
|
0.14
|
27.73
|
23.49
|
|
|
10 Skyline Drive
|
1985
|
20,000
|
100.0
|
392
|
0.08
|
19.60
|
15.75
|
|
|
11 Skyline Drive (f)
|
1989
|
45,000
|
100.0
|
997
|
0.21
|
22.16
|
21.47
|
|
|
12 Skyline Drive (f)
|
1999
|
46,850
|
85.1
|
588
|
0.12
|
14.75
|
13.19
|
|
|
15 Skyline Drive (f)
|
1989
|
55,000
|
86.6
|
364
|
0.08
|
7.64
|
7.01
|
|
|
Yonkers
|
||||||||
|
100 Corporate Boulevard
|
1987
|
78,000
|
98.3
|
1,572
|
0.33
|
20.50
|
19.24
|
|
|
200 Corporate Boulevard South
|
1990
|
84,000
|
58.2
|
931
|
0.19
|
19.04
|
15.67
|
|
|
4 Executive Plaza
|
1986
|
80,000
|
100.0
|
1,523
|
0.32
|
19.04
|
16.49
|
|
|
6 Executive Plaza
|
1987
|
80,000
|
95.8
|
1,680
|
0.35
|
21.92
|
19.96
|
|
|
1 Odell Plaza
|
1980
|
106,000
|
100.0
|
1,725
|
0.36
|
16.27
|
14.83
|
|
|
3 Odell Plaza
|
1984
|
71,065
|
100.0
|
1,596
|
0.33
|
22.46
|
20.83
|
26
|
Office/Flex Properties (continued)
|
||||||||
|
and Industrial/Warehouse, Retail Properties, and Land Leases
|
||||||||
|
Percentage
|
2015
|
2015
|
2015
|
|||||
|
Net
|
Leased
|
Base
|
Average
|
Average
|
||||
|
Rentable
|
as of
|
Rent
|
Percentage
|
Base Rent
|
Effective Rent
|
|||
|
Year
|
Area
|
12/31/15
|
($000’s)
|
of Total 2015
|
Per Sq. Ft.
|
Per Sq. Ft.
|
||
|
Property Location
|
Built
|
(Sq. Ft.)
|
(%) (a)
|
(b) (c)
|
Base Rent (%)
|
($) (c) (d)
|
($) (c) (e)
|
|
|
5 Odell Plaza
|
1983
|
38,400
|
99.6
|
650
|
0.14
|
17.00
|
15.45
|
|
|
7 Odell Plaza
|
1984
|
42,600
|
100.0
|
699
|
0.15
|
16.41
|
13.97
|
|
|
Total New York Office/Flex
|
2,348,812
|
93.1
|
33,993
|
7.09
|
15.55
|
13.55
|
||
|
CONNECTICUT
|
||||||||
|
FAIRFIELD COUNTY
|
||||||||
|
Stamford
|
||||||||
|
419 West Avenue
|
1986
|
88,000
|
100.0
|
1,550
|
0.32
|
17.61
|
14.98
|
|
|
500 West Avenue
|
1988
|
25,000
|
100.0
|
482
|
0.10
|
19.28
|
16.00
|
|
|
550 West Avenue
|
1990
|
54,000
|
81.3
|
794
|
0.17
|
18.09
|
16.86
|
|
|
600 West Avenue
|
1999
|
66,000
|
100.0
|
670
|
0.14
|
10.15
|
9.55
|
|
|
650 West Avenue
|
1998
|
40,000
|
100.0
|
600
|
0.13
|
15.00
|
11.75
|
|
|
Total Connecticut Office/Flex
|
273,000
|
96.3
|
4,096
|
0.86
|
15.58
|
13.53
|
||
|
TOTAL OFFICE/FLEX PROPERTIES
|
4,789,743
|
91.5
|
56,099
|
11.71
|
12.80
|
10.96
|
||
|
NEW YORK
|
||||||||
|
WESTCHESTER COUNTY
|
||||||||
|
Elmsford
|
||||||||
|
1 Warehouse Lane (f)
|
1957
|
6,600
|
100.0
|
107
|
0.02
|
16.21
|
15.00
|
|
|
2 Warehouse Lane (f)
|
1957
|
10,900
|
100.0
|
160
|
0.03
|
14.68
|
13.76
|
|
|
3 Warehouse Lane (f)
|
1957
|
77,200
|
100.0
|
399
|
0.08
|
5.17
|
4.96
|
|
|
4 Warehouse Lane (f)
|
1957
|
195,500
|
97.0
|
2,236
|
0.47
|
11.79
|
10.50
|
|
|
5 Warehouse Lane (f)
|
1957
|
75,100
|
97.1
|
962
|
0.20
|
13.19
|
11.93
|
|
|
6 Warehouse Lane (f)
|
1982
|
22,100
|
100.0
|
555
|
0.12
|
25.11
|
24.43
|
|
|
Total Industrial/Warehouse Properties
|
387,400
|
97.9
|
4,419
|
0.92
|
11.65
|
10.63
|
||
|
NEW JERSEY
|
||||||||
|
HUDSON COUNTY
|
||||||||
|
Weehawken
|
||||||||
|
500 Avenue at Port Imperial
|
2013
|
16,736
|
61.2
|
0
|
0.00
|
0.00
|
0.00
|
|
|
Total New Jersey Retail Properties
|
16,736
|
61.2
|
0
|
0.00
|
0.00
|
0.00
|
||
|
NEW YORK
|
||||||||
|
WESTCHESTER COUNTY
|
||||||||
|
Tarrytown
|
||||||||
|
230 White Plains Road
|
1984
|
9,300
|
100.0
|
67
|
0.01
|
7.20
|
6.99
|
|
|
Yonkers
|
||||||||
|
2 Executive Boulevard
|
1986
|
8,000
|
100.0
|
305
|
0.07
|
38.13
|
37.88
|
|
|
Total New York Retail Properties
|
17,300
|
100.0
|
372
|
0.08
|
21.50
|
21.27
|
||
|
Total Retail Properties
|
34,036
|
80.9
|
372
|
0.08
|
13.51
|
13.36
|
||
|
NEW YORK
|
||||||||
|
WESTCHESTER COUNTY
|
||||||||
|
Elmsford
|
||||||||
|
700 Executive Boulevard
|
-
|
-
|
-
|
160
|
0.03
|
-
|
--
|
|
27
|
Land Leases
|
||||||||
|
(continued)
|
||||||||
|
Percentage
|
2015
|
2015
|
2015
|
|||||
|
Net
|
Leased
|
Base
|
Average
|
Average
|
||||
|
Rentable
|
as of
|
Rent
|
Percentage
|
Base Rent
|
Effective Rent
|
|||
|
Year
|
Area
|
12/31/15
|
($000’s)
|
of Total 2015
|
Per Sq. Ft.
|
Per Sq. Ft.
|
||
|
Property Location
|
Built
|
(Sq. Ft.)
|
(%) (a)
|
(b) (c)
|
Base Rent (%)
|
($) (c) (d)
|
($) (c) (e)
|
|
|
Yonkers
|
||||||||
|
1 Enterprise Boulevard
|
-
|
-
|
-
|
197
|
0.04
|
-
|
-
|
|
|
Total New York Land Leases
|
-
|
-
|
357
|
0.07
|
-
|
-
|
||
|
MARYLAND
|
||||||||
|
PRINCE GEORGE'S COUNTY
|
||||||||
|
Greenbelt
|
||||||||
|
Capital Office Park Parcel A
|
-
|
-
|
-
|
153
|
0.03
|
-
|
-
|
|
|
Total Maryland Land Leases
|
-
|
-
|
153
|
0.03
|
-
|
-
|
||
|
Total Land Leases
|
-
|
-
|
510
|
0.10
|
-
|
-
|
||
|
TOTAL COMMERCIAL PROPERTIES
|
24,205,946
|
86.2
|
455,727
|
95.09
|
22.07
|
19.06
|
||
|
Multi-Family Properties
|
||||||||
|
Net
|
Percentage
|
2015
|
Percentage
|
2015
|
||||
|
Rentable
|
Leased
|
Base
|
of Total
|
Average
|
||||
|
Commercial
|
as of
|
Rent
|
2015
|
Base Rent
|
||||
|
Year
|
Area
|
Number
|
12/31/15
|
($000’s)
|
Base Rent
|
Per Home
|
||
|
Built
|
(Sq. Ft.)
|
of Units
|
(%) (a)
|
(b) (c)
|
(%)
|
($) (c) (i)
|
||
|
NEW JERSEY
|
||||||||
|
MIDDLESEX COUNTY
|
||||||||
|
New Brunswick
|
||||||||
|
Richmond Court
|
1997
|
-
|
82
|
95.1
|
1,444
|
0.30
|
1,543
|
|
|
Riverwatch Commons
|
1995
|
-
|
118
|
93.2
|
2,080
|
0.43
|
1,576
|
|
|
UNION COUNTY
|
||||||||
|
Rahway
|
||||||||
|
Park Square
|
2011
|
5,934
|
159
|
95.0
|
3,679
|
0.77
|
2,030
|
|
|
Total New Jersey Multi-Family
|
5,934
|
359
|
94.4
|
7,203
|
1.50
|
1,771
|
||
|
MASSACHUSETTS
|
||||||||
|
ESSEX COUNTY
|
||||||||
|
Andover
|
||||||||
|
Andover Place
|
1988
|
-
|
220
|
99.1
|
3,396
|
0.71
|
1,298
|
|
|
SUFFOLK COUNTY
|
||||||||
|
Revere
|
||||||||
|
Alterra at Overlook Ridge IA
|
2004
|
-
|
310
|
95.8
|
5,511
|
1.15
|
1,546
|
|
|
Alterra at Overlook Ridge IB
|
2008
|
-
|
412
|
97.1
|
7,439
|
1.55
|
1,550
|
|
|
Total Massachusetts Multi-Family
|
-
|
942
|
97.1
|
16,346
|
3.41
|
1,489
|
||
|
Total Multi-Family Properties
|
5,934
|
1,301
|
96.4
|
23,549
|
4.91
|
1,565
|
||
|
TOTAL PROPERTIES
|
24,211,880
|
1,301
|
479,276
|
(j)
|
100.00
|
28
Footnotes to Property List (dollars in thousands except per square foot amounts):
|
(a)
|
Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future and leases expiring December 31, 2015 aggregating 69,522 square feet (representing 0.3 percent of the Company’s total net rentable square footage) for which no new leases were signed.
|
|
(b)
|
Total base rent for the 12 months ended December 31, 2015, determined in accordance with generally accepted accounting principles (“GAAP”). Substantially all of the commercial leases provide for annual base rents plus recoveries and escalation charges based upon the tenant’s proportionate share of and/or increases in real estate taxes and certain operating costs, as defined, and the pass through of charges for electrical usage. For the 12 months ended December 31, 2015, total escalations and recoveries from tenants were: $49,480, or $3.11 per leased square foot, for office properties; $10,213, or $2.33 per leased square foot, for office/flex properties; and $1,769, or $4.30 per leased square foot, for other properties.
|
|
(c)
|
Excludes space leased by the Company.
|
|
(d)
|
Base rent for the 12 months ended December 31, 2015 divided by net rentable commercial square feet leased at December 31, 2015.
|
|
(e)
|
Total base rent for 2015 minus 2015 amortization of tenant improvements, leasing commissions and other concessions and costs, determined in accordance with GAAP, divided by net rentable square feet leased at December 31, 2015.
|
|
(f)
|
This property is located on land leased by the Company.
|
|
(g)
|
As this property was acquired, commenced initial operations or initially consolidated by the Company during the 12 months ended December 31, 2015, the amounts represented in 2015 base rent reflect only that portion of those 12 months during which the Company owned or consolidated the property. Accordingly, these amounts may not be indicative of the property’s full year results. For comparison purposes, the amounts represented in 2015 average base rent per sq. ft. and per unit for this property have been calculated by taking the 12 months ended December 31, 2015 base rent for such property and annualizing these partial-year results, dividing such annualized amounts by the net rentable square feet leased or occupied units at December 31, 2015. These annualized per square foot and per unit amounts may not be indicative of the property’s results had the Company owned or consolidated the property for the entirety of the 12 months ended December 31, 2015.
|
|
(h)
|
Acquired on November 12, 2015. Amounts reflect period of ownership.
|
|
(i)
|
Annualized base rent for the 12 months ended December 31, 2015 divided by units occupied at December 31, 2015, divided by 12.
|
|
(j)
|
Excludes $7.8 million from properties which were sold during the year ended December 31, 2015.
|
PERCENTAGE LEASED
The following table sets forth the year-end percentages of commercial square feet leased in the Company’s stabilized operating Consolidated Properties for the last five years:
|
Percentage of
|
|
|
December 31,
|
Square Feet Leased (%) (a)
|
|
2015
|
86.2
|
|
2014
|
84.2
|
|
2013
|
86.1
|
|
2012
|
87.2
|
|
2011
|
88.3
|
|
(a)
|
Percentage of square-feet leased includes all leases in effect as of the period end date, some of which have commencement dates in the future and leases that expire at the period end date. Excludes properties being prepared for lease up.
|
29
SIGNIFICANT TENANTS
The following table sets forth a schedule of the Company’s 50 largest commercial tenants for the Consolidated Properties as of December 31, 2015 based upon annualized base rental revenue:
|
Percentage of
|
||||||
|
Annualized
|
Company
|
Square
|
Percentage
|
Year of
|
||
|
Number of
|
Base Rental
|
Annualized Base
|
Feet
|
Total Company
|
Lease
|
|
|
Properties
|
Revenue ($) (a)
|
Rental Revenue (%)
|
Leased
|
Leased Sq. Ft. (%)
|
Expiration
|
|
|
DB Services New Jersey, Inc.
|
2
|
12,335,216
|
2.5
|
409,166
|
2.0
|
2017
|
|
National Union Fire Insurance
|
||||||
|
Company of Pittsburgh, PA
|
2
|
11,191,057
|
2.3
|
388,651
|
1.9
|
(b)
|
|
Bank Of Tokyo-Mitsubishi FUJI, Ltd.
|
1
|
10,540,716
|
2.1
|
282,606
|
1.4
|
(c)
|
|
United States of America-GSA
|
12
|
9,357,707
|
1.9
|
287,169
|
1.4
|
(d)
|
|
Forest Research Institute, Inc.
|
1
|
9,070,892
|
1.8
|
215,659
|
1.1
|
2017
|
|
ICAP Securities USA, LLC
|
2
|
7,608,702
|
1.5
|
180,946
|
0.9
|
(e)
|
|
Montefiore Medical Center
|
7
|
7,432,828
|
1.5
|
314,049
|
1.5
|
(f)
|
|
KPMG, LLP
|
3
|
6,483,411
|
1.3
|
224,364
|
1.1
|
(g)
|
|
Daiichi Sankyo, Inc.
|
1
|
6,381,982
|
1.3
|
171,900
|
0.8
|
2022
|
|
TD Ameritrade Online Holdings
|
1
|
6,223,323
|
1.3
|
188,776
|
0.9
|
2020
|
|
Merrill Lynch Pierce Fenner
|
2
|
6,173,816
|
1.2
|
303,545
|
1.5
|
(h)
|
|
CohnReznick, LLP
|
3
|
4,983,681
|
1.0
|
170,141
|
0.8
|
(i)
|
|
New Cingular Wireless PCS, LLC
|
2
|
4,841,564
|
1.0
|
212,816
|
1.0
|
(j)
|
|
HQ Global Workplaces, LLC
|
15
|
4,691,873
|
0.9
|
244,120
|
1.2
|
(k)
|
|
Vonage America, Inc.
|
1
|
4,515,000
|
0.9
|
350,000
|
1.7
|
2023
|
|
Arch Insurance Company
|
1
|
4,005,563
|
0.8
|
106,815
|
0.5
|
2024
|
|
AECOM Technology Corporation
|
1
|
3,707,752
|
0.7
|
91,414
|
0.4
|
2029
|
|
Brown Brothers Harriman & Co.
|
1
|
3,673,536
|
0.7
|
114,798
|
0.6
|
2026
|
|
Morgan Stanley Smith Barney
|
3
|
3,665,965
|
0.7
|
129,896
|
0.6
|
(l)
|
|
UBS Financial Services, Inc.
|
3
|
3,606,759
|
0.7
|
127,429
|
0.6
|
(m)
|
|
Allstate Insurance Company
|
5
|
3,250,962
|
0.7
|
135,816
|
0.7
|
(n)
|
|
SunAmerica Asset Management, LLC
|
1
|
3,167,756
|
0.6
|
69,621
|
0.3
|
2018
|
|
Alpharma, LLC
|
1
|
3,142,580
|
0.6
|
112,235
|
0.6
|
2018
|
|
Tullett Prebon Holdings Corp.
|
1
|
3,127,970
|
0.6
|
100,759
|
0.5
|
2023
|
|
TierPoint New York, LLC
|
2
|
3,014,150
|
0.6
|
131,078
|
0.6
|
2024
|
|
E*Trade Financial Corporation
|
1
|
2,930,757
|
0.6
|
106,573
|
0.5
|
2022
|
|
Natixis North America, Inc.
|
1
|
2,823,569
|
0.6
|
89,907
|
0.4
|
2021
|
|
AAA Mid-Atlantic, Inc.
|
2
|
2,779,829
|
0.6
|
129,784
|
0.6
|
(o)
|
|
SUEZ Water Management & Services Inc.
|
1
|
2,727,383
|
0.6
|
121,217
|
0.6
|
(p)
|
|
Plymouth Rock Management Company
|
||||||
|
of New Jersey
|
2
|
2,725,811
|
0.6
|
106,618
|
0.5
|
2020
|
|
Tradeweb Markets, LLC
|
1
|
2,721,070
|
0.6
|
65,242
|
0.3
|
2027
|
|
New Jersey Turnpike Authority
|
1
|
2,605,798
|
0.5
|
100,223
|
0.5
|
2017
|
|
Continental Casualty Company
|
2
|
2,596,584
|
0.5
|
94,224
|
0.5
|
(q)
|
|
Lowenstein Sandler LLP
|
1
|
2,565,602
|
0.5
|
98,677
|
0.5
|
2017
|
|
Connell Foley, LLP
|
2
|
2,475,314
|
0.5
|
95,130
|
0.5
|
(r)
|
|
Bunge Management Services, Inc.
|
1
|
2,372,387
|
0.5
|
91,509
|
0.4
|
(s)
|
|
Movado Group, Inc.
|
1
|
2,359,824
|
0.5
|
98,326
|
0.5
|
2018
|
|
Bozzuto & Associates, Inc.
|
1
|
2,359,542
|
0.5
|
104,636
|
0.5
|
2025
|
|
Herzfeld & Rubin, P.C.
|
1
|
2,337,363
|
0.5
|
56,322
|
0.3
|
2030
|
|
AMTrust Financial Services, Inc.
|
1
|
2,306,760
|
0.5
|
76,892
|
0.4
|
2023
|
|
Savvis Communications Corporation
|
1
|
2,287,168
|
0.5
|
71,474
|
0.4
|
2025
|
|
Norris, McLaughlin & Marcus, PA
|
1
|
2,259,738
|
0.5
|
86,913
|
0.4
|
2017
|
|
Barr Laboratories, Inc.
|
1
|
2,209,107
|
0.4
|
89,510
|
0.4
|
2016
|
|
Sumitomo Mitsui Banking Corp.
|
2
|
2,170,167
|
0.4
|
71,153
|
0.3
|
2021
|
|
New Jersey City University
|
1
|
2,084,614
|
0.4
|
68,348
|
0.3
|
2035
|
|
Sun Chemical Management, LLC
|
1
|
2,034,798
|
0.4
|
66,065
|
0.3
|
2019
|
|
Syncsort, Inc.
|
1
|
1,991,439
|
0.4
|
73,757
|
0.4
|
2018
|
|
Jeffries, LLC
|
1
|
1,945,653
|
0.4
|
62,763
|
0.3
|
2023
|
|
American General Life Insurance Company
|
1
|
1,854,975
|
0.4
|
74,199
|
0.4
|
2024
|
|
Bressler, Amery & Ross, P.C.
|
1
|
1,766,850
|
0.4
|
70,674
|
0.3
|
2023
|
|
Totals
|
205,486,863
|
41.5
|
7,233,905
|
35.1
|
See footnotes on subsequent page.
30
Significant Tenants Footnotes
|
(a)
|
Annualized base rental revenue is based on actual December 2015 billings times 12. For leases whose rent commences after January 1, 2016, annualized base rental revenue is based on the first full month’s billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above.
|
|
(b)
|
271,533 square feet expire in 2018; 117,118 square feet expire in 2019.
|
|
(c)
|
20,649 square feet expire in 2018; 24,607 square feet expire in 2019; 237,350 square feet expire in 2029.
|
|
(d)
|
70,163 square feet expire in 2016; 147,606 square feet expire in 2018; 28,102 square feet expire in 2020; 21,596 square feet expire in 2022; 19,702 square feet expire in 2023.
|
|
(e)
|
159,834 square feet expire in 2017; 21,112 square feet expire in 2025.
|
|
(f)
|
26,535 square feet expire in 2016; 75,814 square feet expire in 2017; 36,385 square feet expire in 2018; 133,763 square feet expire in 2019; 8,600 square feet expire in 2020; 14,842 square feet expire in 2021; 9,610 square feet expire in 2022; 8,500 square feet expire in 2023.
|
|
(g)
|
88,652 square feet expire in 2017; 81,371 square feet expire in 2019; 54,341 square feet expire in 2026.
|
|
(h)
|
294,189 square feet expire in 2017; 9,356 square feet expire in 2019.
|
|
(i)
|
15,085 square feet expire in 2017; 1,021 square feet expire in 2018; 154,035 square feet expire in 2020.
|
|
(j)
|
65,751 square feet expire in 2016; 147,065 square feet expire in 2018.
|
|
(k)
|
12,407 square feet expire in 2017; 41,549 square feet expire in 2019; 21,008 square feet expire in 2020; 32,579 square feet expire in 2021; 15,523 square feet expire in 2023; 105,646 square feet expire in 2024; 15,408 square feet expire in 2027.
|
|
(l)
|
26,262 square feet expire in 2018; 61,239 square feet expire in 2025; 42,395 square feet expire in 2026.
|
|
(m)
|
42,360 square feet expire in 2016; 13,340 square feet expire in 2022; 26,713 square feet expire in 2024; 45,016 square feet expire in 2026.
|
|
(n)
|
4,014 square feet expire in 2016; 75,740 square feet expire in 2017; 51,606 square feet expire in 2018; 4,456 square feet expire in 2019.
|
|
(o)
|
9,784 square feet expire in 2017; 120,000 square feet expire in 2027.
|
|
(p)
|
4,857 square feet expire in 2016; 116,360 square feet expire in 2035.
|
|
(q)
|
19,416 square feet expire in 2016; 74,808 square feet expire in 2031.
|
|
(r)
|
77,719 square feet expire in 2016; 17,411 square feet expire in 2026.
|
|
(s)
|
25,206 square feet expire in 2016; 66,303 square feet expire in 2025.
|
31
SCHEDULE OF LEASE EXPIRATIONS
The following table sets forth a schedule of lease expirations for the total of the Company’s office, office/flex, industrial/warehouse and stand-alone retail properties included in the Consolidated Properties beginning January 1, 2016, assuming that none of the tenants exercise renewal or termination options:
|
Average
|
|||||||
|
Annual Base
|
|||||||
|
Percentage Of
|
Rent Per Net
|
||||||
|
Net Rentable
|
Total Leased
|
Annualized
|
Rentable
|
Percentage Of
|
|||
|
Area Subject
|
Square Feet
|
Base Rental
|
Square Foot
|
Annual Base
|
|||
|
Number Of
|
To Expiring
|
Represented
|
Revenue Under
|
Represented
|
Rent Under
|
||
|
Year Of
|
Leases
|
Leases
|
By Expiring
|
Expiring
|
By Expiring
|
Expiring
|
|
|
Expiration
|
Expiring (a)
|
(Sq. Ft.)
|
Leases (%)
|
Leases ($) (b)
|
Leases ($)
|
Leases (%)
|
|
|
2016
|
267
|
1,572,681
|
7.7
|
36,045,597
|
22.92
|
7.3
|
|
|
2017
|
329
|
3,591,173
|
17.6
|
90,429,372
|
25.18
|
18.3
|
|
|
2018
|
297
|
2,893,301
|
14.2
|
66,931,429
|
23.13
|
13.5
|
|
|
2019
|
252
|
2,459,708
|
12.1
|
53,078,243
|
21.58
|
10.7
|
|
|
2020
|
218
|
1,748,600
|
8.6
|
38,862,232
|
22.22
|
7.9
|
|
|
2021
|
156
|
1,511,466
|
7.4
|
39,344,311
|
26.03
|
8.0
|
|
|
2022
|
104
|
1,100,641
|
5.4
|
27,239,446
|
24.75
|
5.5
|
|
|
2023
|
77
|
1,580,626
|
7.8
|
36,177,980
|
22.89
|
7.3
|
|
|
2024
|
63
|
1,127,620
|
5.5
|
28,279,528
|
25.08
|
5.7
|
|
|
2025
|
37
|
679,680
|
3.3
|
15,737,169
|
23.15
|
3.2
|
|
|
2026
|
39
|
803,722
|
4.0
|
22,626,630
|
28.15
|
4.6
|
|
|
2027 and thereafter
|
29
|
1,303,149
|
6.4
|
39,674,099
|
30.44
|
8.0
|
|
|
Totals/Weighted
|
|||||||
|
Average
|
1,868
|
20,372,367
|
(c) (d)
|
100.0
|
494,426,036
|
24.27
|
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 2015 billings times 12. For leases whose rent commences after January 1, 2016 annualized base rental revenue is based on the first full month’s billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above.
|
|
(c)
|
Includes leases expiring December 31, 2015 aggregating 69,522 square feet and representing annualized rent of $1,564,211 for which no new leases were signed.
|
|
(d)
|
Reconciliation to Company’s total net rentable commercial square footage is as follows:
|
|
Square Feet
|
||
|
Square footage leased to commercial tenants
|
20,372,367
|
|
|
Square footage used for corporate offices, management offices, building use, retail tenants, food services, other ancillary service tenants and occupancy adjustments
|
492,866
|
|
|
Square footage unleased
|
3,346,647
|
|
|
Total net rentable commercial square footage (does not include land leases)
|
24,211,880
|
|
32
INDUSTRY DIVERSIFICATION
The following table lists the Company’s 30 largest commercial tenants industry classifications based on annualized contractual base rent of the Consolidated Properties:
|
Annualized
|
Percentage of
|
Percentage of
|
||
|
Base Rental
|
Company
|
Square
|
Total Company
|
|
|
Revenue
|
Annualized Base
|
Feet Leased
|
Leased
|
|
|
Industry Classification (a)
|
($) (b) (c) (d)
|
Rental Revenue (%)
|
(c) (d)
|
Sq. Ft. (%)
|
|
Securities, Commodity Contracts & Other Financial
|
73,300,946
|
14.8
|
2,411,919
|
11.8
|
|
Insurance Carriers & Related Activities
|
53,005,697
|
10.7
|
1,909,858
|
9.4
|
|
Manufacturing
|
37,064,034
|
7.5
|
1,727,033
|
8.5
|
|
Legal Services
|
33,985,830
|
6.9
|
1,256,507
|
6.2
|
|
Credit Intermediation & Related Activities
|
31,980,298
|
6.5
|
1,043,929
|
5.1
|
|
Computer System Design Services
|
23,435,938
|
4.7
|
998,329
|
4.9
|
|
Accounting/Tax Prep.
|
22,512,824
|
4.6
|
811,535
|
4.0
|
|
Health Care & Social Assistance
|
21,929,119
|
4.4
|
1,141,578
|
5.6
|
|
Wholesale Trade
|
17,043,454
|
3.4
|
1,145,478
|
5.6
|
|
Telecommunications
|
16,633,309
|
3.4
|
904,012
|
4.4
|
|
Scientific Research/Development
|
15,345,895
|
3.1
|
506,622
|
2.5
|
|
Public Administration
|
15,001,287
|
3.0
|
532,084
|
2.6
|
|
Architectural/Engineering
|
13,795,448
|
2.8
|
535,368
|
2.6
|
|
Admin & Support, Waste Mgt. & Remediation Services
|
13,677,967
|
2.8
|
669,030
|
3.3
|
|
Management/Scientific
|
11,518,092
|
2.3
|
440,580
|
2.2
|
|
Other Services (except Public Administration)
|
11,505,422
|
2.3
|
464,951
|
2.3
|
|
Other Professional
|
10,851,013
|
2.2
|
495,727
|
2.4
|
|
Real Estate & Rental & Leasing
|
8,304,371
|
1.7
|
441,061
|
2.2
|
|
Advertising/Related Services
|
7,942,701
|
1.6
|
286,754
|
1.4
|
|
Retail Trade
|
7,842,352
|
1.6
|
467,833
|
2.3
|
|
Utilities
|
7,376,726
|
1.5
|
325,889
|
1.6
|
|
Transportation
|
6,309,982
|
1.3
|
315,484
|
1.5
|
|
Construction
|
4,983,050
|
1.0
|
276,448
|
1.4
|
|
Educational Services
|
4,651,356
|
0.9
|
192,576
|
0.9
|
|
Data Processing Services
|
3,963,335
|
0.8
|
144,947
|
0.7
|
|
Publishing Industries
|
3,776,840
|
0.8
|
185,577
|
0.9
|
|
Arts, Entertainment & Recreation
|
3,300,499
|
0.7
|
240,102
|
1.2
|
|
Agriculture, Forestry, Fishing & Hunting
|
2,372,387
|
0.5
|
91,509
|
0.4
|
|
Information Services
|
2,031,789
|
0.4
|
67,021
|
0.3
|
|
Broadcasting
|
1,812,224
|
0.4
|
52,732
|
0.3
|
|
Other
|
7,171,851
|
1.4
|
289,894
|
1.5
|
|
TOTAL
|
494,426,036
|
100.0
|
20,372,367
|
100.0
|
|
(a)
|
The Company’s tenants are classified according to the U.S. Government’s North American Industrial Classification System (NAICS).
|
|
(b)
|
Annualized base rental revenue is based on actual December 2015 billings times 12. For leases whose rent commences after January 1, 2016, annualized base rental revenue is based on the first full month's billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above.
|
|
(c)
|
Includes leases in effect as of the period end date, some of which have commencement dates in the future, and leases expiring December 31, 2015 aggregating 69,522 square feet and representing annualized rent of $1,564,211 for which no new leases were signed.
|
|
(d)
|
Includes office, office/flex, industrial/warehouse and stand-alone retail tenants only. Excludes leases for amenity, retail, parking and month-to-month tenants. Some tenants have multiple leases.
|
33
MARKET DIVERSIFICATION
The following table lists the Company’s markets, based on annualized commercial contractual base rent of the Consolidated Properties:
|
Percentage Of
|
|||||
|
Company
|
|||||
|
Annualized Base
|
Annualized
|
Total Property
|
|||
|
Rental Revenue
|
Base Rental
|
Size Rentable
|
Percentage Of
|
||
|
Market
|
($) (a) (b) (c)
|
Revenue (%)
|
Area (b) (c)
|
Rentable Area (%)
|
|
|
Jersey City, NJ
|
119,195,761
|
24.1
|
4,334,714
|
17.9
|
|
|
Newark, NJ
|
|||||
|
(Essex-Morris-Union Counties)
|
110,195,104
|
22.3
|
5,420,940
|
22.4
|
|
|
Westchester-Rockland, NY
|
69,084,337
|
14.0
|
3,895,912
|
16.1
|
|
|
Bergen-Passaic, NJ
|
63,016,235
|
12.7
|
3,315,518
|
13.7
|
|
|
Middlesex-Somerset-Hunterdon, NJ
|
29,242,482
|
5.9
|
1,316,655
|
5.4
|
|
|
Monmouth-Ocean, NJ
|
28,543,735
|
5.8
|
1,620,863
|
6.7
|
|
|
Washington, DC-MD-VA-WV
|
26,863,635
|
5.4
|
1,292,807
|
5.3
|
|
|
Trenton, NJ
|
18,347,675
|
3.7
|
956,597
|
4.0
|
|
|
New York (Manhattan)
|
17,966,697
|
3.6
|
524,476
|
2.2
|
|
|
Southern NJ
|
7,746,322
|
1.6
|
1,260,398
|
5.2
|
|
|
Stamford-Norwalk, CT
|
4,224,053
|
0.9
|
273,000
|
1.1
|
|
|
Totals
|
494,426,036
|
100.0
|
24,211,880
|
100.0
|
|
|
(a)
|
Annualized base rental revenue is based on actual December 2015 billings times 12. For leases whose rent commences after January 1, 2016, annualized base rental revenue is based on the first full month’s billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above.
|
|
(b)
|
Includes leases in effect as of the period end date, some of which have commencement dates in the future, and leases expiring December 31, 2015 aggregating 69,522 square feet and representing annualized rent of $1,564,211 for which no new leases were signed.
|
|
(c)
|
Includes office, office/flex, industrial/warehouse and stand-alone retail tenants only. Excludes leases for amenity, retail, parking and month-to-month tenants. Some tenants have multiple leases.
|
34
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary routine litigation incidental to the Company’s business, to which the Company is a party or to which any of the Properties is subject.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
35
PART II
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
MARKET INFORMATION
The shares of the Company’s common stock are traded on the New York Stock Exchange (“NYSE”) under the symbol “CLI.”
The following table sets forth the quarterly high, low, and closing price per share of Common Stock reported on the NYSE for the years ended December 31, 2015 and 2014, respectively:
|
For the Year Ended December 31, 2015
|
||||||||
|
High
|
Low
|
Close
|
||||||
|
First Quarter
|
$
|
20.11
|
$
|
18.01
|
$
|
19.28
|
||
|
Second Quarter
|
$
|
19.73
|
$
|
16.85
|
$
|
18.43
|
||
|
Third Quarter
|
$
|
21.12
|
$
|
18.01
|
$
|
18.88
|
||
|
Fourth Quarter
|
$
|
24.26
|
$
|
18.67
|
$
|
23.35
|
||
|
For the Year Ended December 31, 2014
|
||||||||
|
High
|
Low
|
Close
|
||||||
|
First Quarter
|
$
|
23.23
|
$
|
19.75
|
$
|
20.79
|
||
|
Second Quarter
|
$
|
22.44
|
$
|
19.98
|
$
|
21.48
|
||
|
Third Quarter
|
$
|
22.05
|
$
|
18.95
|
$
|
19.11
|
||
|
Fourth Quarter
|
$
|
20.11
|
$
|
17.92
|
$
|
19.06
|
On February 22, 2016, the closing Common Stock price reported on the NYSE was $18.88 per share.
On May 18, 2015, the Company filed with the NYSE its annual CEO Certification and Annual Written Affirmation pursuant to Section 303A.12 of the NYSE Listed Company Manual, each certifying that the Company was in compliance with all of the listing standards of the NYSE.
HOLDERS
On February 22, 2016, the Company had 373 common shareholders of record. This does not include beneficial owners for whom Cede & Co. or others act as nominee.
RECENT SALES OF UNREGISTERED SECURITIES; USES OF PROCEEDS FROM REGISTERED SECURITIES
During the three months ended December 31, 2015, the Company issued 273,298 shares of common stock to holders of common units in the Operating Partnership upon the redemption of such common units in private offerings pursuant to Section 4(a)(2) of the Securities Act. The holders of the common units were limited partners of the Operating Partnership and accredited investors under Rule 501 of the Securities Act. The common units were converted into an equal number of shares of common stock. The Company has registered the resale of such shares under the Securities Act.
DIVIDENDS AND DISTRIBUTIONS
During the year ended December 31, 2015, the Company declared four quarterly cash dividends on its common stock and common units of $0.15 per share and unit for each of the first to the fourth quarters.
During the year ended December 31, 2014, the Company declared four quarterly cash dividends on its common stock and common units of $0.30 per share and unit for the first quarter and $0.15 per share and unit for each of the second to the fourth quarters.
36
The declaration and payment of dividends and distributions will continue to be determined by the Board of Directors in light of conditions then existing, including the Company’s earnings, cash flows, financial condition, capital requirements, debt maturities, the availability of debt and equity capital, applicable REIT and legal restrictions and the general overall economic conditions and other factors.
|
PERFORMANCE GRAPH
|
The following graph compares total stockholder returns from the last five fiscal years to the Standard & Poor’s 500 Index (“S&P 500”) and to the National Association of Real Estate Investment Trusts, Inc.’s FTSE NAREIT Equity REIT Index (“NAREIT”). The graph assumes that the value of the investment in the Company’s Common Stock and in the S&P 500 and NAREIT indices was $100 at December 31, 2010 and that all dividends were reinvested. The price of the Company’s Common Stock on December 31, 2010 (on which the graph is based) was $33.06. The past stockholder return shown on the following graph is not necessarily indicative of future performance.
Comparison of Five-Year Cumulative Total Return
37
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
Equity Compensation Plan Information
The following table summarizes information, as of December 31, 2015, relating to equity compensation plans of the Company (including individual compensation arrangements) pursuant to which equity securities of the Company are authorized for issuance.
|
Plan Category
|
(a)
Number of Securities to be
Issued Upon Exercise of
Outstanding Options and
Rights
|
(b)
Weighted-Average
Exercise Price of
Outstanding Options
and Rights
|
(c)
Number of Securities
Remaining Available
for Future Issuance
Under Equity Compensation
Plans (excluding
securities reflected
in column(a))
|
|||||
|
Equity Compensation Plans
|
||||||||
|
Approved by
|
||||||||
|
Stockholders……………………
|
1,056,213
|
(2)
|
17.33
|
(3)
|
3,416,581
|
|||
|
Equity Compensation Plans
|
||||||||
|
Not Approved by
|
||||||||
|
Stockholders(1)…………………
|
178,039
|
N/A
|
N/A
|
(4)
|
||||
|
Total
|
1,234,252
|
N/A
|
3,416,581
|
|||||
|
(1)
|
The only plan included in the table that was adopted without stockholder approval was the Directors’ Deferred Compensation Plan. See Note 15: Mack-Cali Realty Corporation Stockholders’ Equity - Deferred Stock Compensation Plan For Directors.
|
|
(2)
|
Includes 98,669 shares of unvested restricted common stock, 805,000 unvested options, 38,136 unvested restricted stock units (RSUs), including unvested dividend equivalents thereon, and 114,408 unvested performance share units (PSUs), including unvested dividend equivalents thereon.
|
|
(3)
|
Weighted average exercise price of outstanding options; excludes restricted common stock, RSUs and PSUs.
|
|
(4)
|
The Directors’ Deferred Compensation Plan does not limit the number of stock units issuable thereunder, but applicable SEC and NYSE rules restricted the aggregate number of stock units issuable thereunder to one percent (1%) of the Company’s outstanding shares when the plan commenced on January 1, 1999.
|
38
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data on a consolidated basis for the Company. The consolidated selected operating and balance sheet data of the Company as of December 31, 2015, 2014, 2013, 2012 and 2011, and for the years then ended have been derived from the Company’s financial statements for the respective periods.
|
Operating Data (a)
|
Year Ended December 31,
|
|||||||||||||
|
In thousands, except per share data
|
2015
|
2014
|
2013
|
2012
|
2011
|
|||||||||
|
Total revenues
|
$
|
594,883
|
$
|
636,799
|
$
|
667,031
|
$
|
650,632
|
$
|
652,235
|
||||
|
Property expenses (b)
|
$
|
246,604
|
$
|
276,193
|
$
|
254,474
|
$
|
241,955
|
$
|
248,107
|
||||
|
Direct construction costs
|
$
|
-
|
$
|
-
|
$
|
14,945
|
$
|
12,647
|
$
|
11,458
|
||||
|
Real estate services expenses
|
$
|
25,583
|
$
|
26,136
|
$
|
22,716
|
$
|
3,746
|
$
|
1,065
|
||||
|
General and administrative (c)
|
$
|
49,147
|
$
|
71,051
|
$
|
47,040
|
$
|
41,891
|
$
|
35,137
|
||||
|
Impairments
|
$
|
197,919
|
$
|
-
|
$
|
110,853
|
$
|
9,845
|
$
|
-
|
||||
|
Interest expense
|
$
|
103,051
|
$
|
112,878
|
$
|
123,701
|
$
|
122,039
|
$
|
123,858
|
||||
|
Realized gains (losses) on disposition of
|
||||||||||||||
|
rental property, net
|
$
|
53,261
|
$
|
54,848
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
|
Income (loss) from continuing operations
|
$
|
(142,052)
|
$
|
31,391
|
$
|
(89,686)
|
$
|
37,566
|
$
|
59,499
|
||||
|
Discontinued operations: Realized gains (losses)
|
||||||||||||||
|
and unrealized losses on disposition of
|
||||||||||||||
|
rental property and impairments, net
|
$
|
-
|
$
|
-
|
$
|
59,520
|
$
|
(13,175)
|
$
|
-
|
||||
|
Net income (loss) available to common shareholders
|
$
|
(125,752)
|
$
|
28,567
|
$
|
(14,909)
|
$
|
40,922
|
$
|
69,684
|
||||
|
Income (loss) from continuing operations
|
||||||||||||||
|
per share – basic
|
$
|
(1.41)
|
$
|
0.32
|
$
|
(0.88)
|
$
|
0.38
|
$
|
0.59
|
||||
|
Income (loss) from continuing operations
|
||||||||||||||
|
per share – diluted
|
$
|
(1.41)
|
$
|
0.32
|
$
|
(0.88)
|
$
|
0.38
|
$
|
0.59
|
||||
|
Net income (loss) per share – basic
|
$
|
(1.41)
|
$
|
0.32
|
$
|
(0.17)
|
$
|
0.47
|
$
|
0.81
|
||||
|
Net income (loss) per share – diluted
|
$
|
(1.41)
|
$
|
0.32
|
$
|
(0.17)
|
$
|
0.47
|
$
|
0.81
|
||||
|
Dividends declared per common share
|
$
|
0.60
|
$
|
0.75
|
$
|
1.35
|
$
|
1.80
|
$
|
1.80
|
||||
|
Basic weighted average shares outstanding
|
89,291
|
88,727
|
87,762
|
87,742
|
86,047
|
|||||||||
|
Diluted weighted average shares outstanding
|
100,222
|
100,041
|
99,785
|
99,996
|
98,962
|
|||||||||
|
Balance Sheet Data
|
December 31,
|
|||||||||||||
|
In thousands
|
2015
|
2014
|
2013
|
2012
|
2011
|
|||||||||
|
Rental property, before accumulated
|
||||||||||||||
|
depreciation and amortization
|
$
|
4,807,718
|
$
|
4,958,179
|
$
|
5,129,933
|
$
|
5,379,436
|
$
|
5,279,770
|
||||
|
Total assets
|
$
|
4,063,490
|
$
|
4,192,247
|
$
|
4,515,328
|
$
|
4,526,045
|
$
|
4,295,759
|
||||
|
Total debt (d)
|
$
|
2,154,920
|
$
|
2,088,654
|
$
|
2,362,766
|
$
|
2,204,389
|
$
|
1,914,215
|
||||
|
Total liabilities
|
$
|
2,379,782
|
$
|
2,310,236
|
$
|
2,596,873
|
$
|
2,457,538
|
$
|
2,141,759
|
||||
|
Total Mack-Cali Realty Corporation
|
||||||||||||||
|
stockholders’ equity
|
$
|
1,455,676
|
$
|
1,624,781
|
$
|
1,642,359
|
$
|
1,766,974
|
$
|
1,889,564
|
||||
|
Total noncontrolling interests in subsidiaries
|
$
|
228,032
|
$
|
257,230
|
$
|
276,096
|
$
|
301,533
|
$
|
264,436
|
||||
|
(a)
|
Certain reclassifications have been made to prior period amounts in order to conform with current period presentation.
|
|
(b)
|
Property expenses is calculated by taking the sum of real estate taxes, utilities and operating services for each of the periods presented.
|
|
(c)
|
Amount for the year ended December 31, 2014 includes $23.8 million of severance costs related to the departure of the Company’s former chief executive officer and departure of certain of the Company’s other executive officers in 2014.
|
|
(d)
|
Total debt is calculated by taking the sum of senior unsecured notes, revolving credit facilities, and mortgages, loans payable and other obligations.
|
39
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated Financial Statements of Mack-Cali Realty Corporation and the notes thereto (collectively, the “Financial Statements”). Certain defined terms used herein have the meaning ascribed to them in the Financial Statements.
Executive Overview
Mack-Cali Realty Corporation together with its subsidiaries, (the “Company”) has been involved in all aspects of commercial real estate development, management and ownership for over 60 years and has been a publicly-traded real estate investment trust (REIT) since 1994. The Company owns or has interests in 275 properties (collectively, the “Properties”), consisting of 147 office and 109 flex properties, primarily class A office and office/flex buildings, totaling approximately 29.9 million square feet, leased to approximately 1,900 commercial tenants and 19 multi-family rental properties containing 5,644 residential units. The Properties are located primarily in the Northeast, some with adjacent, Company-controlled developable land sites able to accommodate up to 5.3 million square feet of additional commercial space and approximately 11,300 apartment units.
The Company’s historical strategy has been to focus its operations, acquisition and development of office properties in high-barrier-to-entry markets and sub-markets where it believes it is, or can become, a significant and preferred owner and operator. In September 2015, the Company announced a three-year strategic initiative to transform into a more concentrated owner of New Jersey Hudson River waterfront and transit-oriented office properties and a regional owner of luxury multi-family residential properties. In furtherance of this strategy, the Company has commenced a comprehensive review of its portfolio and operations and is developing a business strategy that focuses on reshaping its portfolio over time. As part of this plan, the Company anticipates that it may dispose of a significant number of its properties that do not meet its long-term goals, and, in September 2015, compiled a list of its properties that it considers as non-core to its ongoing operations. Specifically, the Company considers a non-core property to have one or more of the following attributes: (1) assets that do not offer an opportunity to create a competitive advantage; (2) assets that produce a low cash yield; (3) assets which have physical attributes that constrain their market competitiveness; and (4) assets located in low growth markets. The Company believes that the potential sales of these non-core properties over time would result in total estimated sales proceeds ranging from approximately $600 million to $800 million.
As a result of this disposition strategy, for the year ended December 31, 2015, the Company evaluated the recoverability of the carrying values of non-core properties and determined that due to the shortening of the expected periods of ownership it was necessary to reduce the carrying values of 22 rental properties to their estimated fair values and recorded an impairment charge on these properties of $192.3 million.
As an owner of real estate, almost all of the Company’s earnings and cash flow are derived from rental revenue received pursuant to leased space at the Properties. Key factors that affect the Company’s business and financial results include the following:
|
·
|
the general economic climate;
|
|
·
|
the occupancy rates of the Properties;
|
|
·
|
rental rates on new or renewed leases;
|
|
·
|
tenant improvement and leasing costs incurred to obtain and retain tenants;
|
|
·
|
the extent of early lease terminations;
|
|
·
|
the value of our office properties and the cash flow from the sale of such properties;
|
|
·
|
operating expenses;
|
|
·
|
anticipated acquisition and development costs for office and multi-family rental properties and the revenues and earnings from these properties;
|
|
·
|
cost of capital; and
|
|
·
|
the extent of acquisitions, development and sales of real estate, including the execution of the Company’s current strategic initiative.
|
Any negative effects of the above key factors could potentially cause a deterioration in the Company’s revenue and/or earnings. Such negative effects could include: (1) failure to renew or execute new leases as current leases expire; (2) failure to renew or execute new leases with rental terms at or above the terms of in-place leases; and (3) tenant defaults.
40
A failure to renew or execute new leases as current leases expire or to execute new leases with rental terms at or above the terms of in-place leases may be affected by several factors such as: (1) the local economic climate, which may be adversely impacted by business layoffs or downsizing, industry slowdowns, changing demographics and other factors; and (2) local real estate conditions, such as oversupply of the Company’s product types or competition within the market.
Of the Company’s 10 core office markets, several have recently shown signs of improvement, while others have stabilized. The percentage leased in the Company’s consolidated portfolio of stabilized operating commercial properties aggregating 24 million, 25 million and 28 million square feet at December 31, 2015, 2014 and 2013, respectively, was 86.2 percent leased at December 31, 2015, as compared to 84.2 percent leased at December 31, 2014 and 86.1 percent leased at December 31, 2013. Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future and leases that expire at the period end date. Leases that expired as of December 31, 2015, 2014 and 2013 aggregate 69,522, 205,220 and 690,895 square feet, respectively, or 0.3, 0.8 and 2.5 percentage of the net rentable square footage, respectively. Rental rates (including escalations) on the Company’s commercial space that was renewed (based on first rents payable) during the year ended December 31, 2015 (on 2,513,087 square feet of renewals) increased an average of 0.2 percent compared to rates that were in effect under the prior leases, as compared to a 4.7 percent decrease during 2014 (on 1,649,145 square feet of renewals) and a 7.1 percent decrease in 2013 (on 2,420,483 square feet of renewals). Estimated lease costs for the renewed leases in 2015 averaged $2.85 per square foot per year for a weighted average lease term of 3.6 years, estimated lease costs for the renewed leases in 2014 averaged $2.33 per square foot per year for a weighted average lease term of 4.0 years and estimated lease costs for the renewed leases in 2013 averaged $2.22 per square foot per year for a weighted average lease term of 3.8 years. The Company has achieved positive leasing results in its core markets recently. It believes that commercial vacancy rates may decrease and commercial rental rates may increase in some of its markets in 2016 and possibly beyond. As of December 31, 2015, commercial leases which comprise approximately 7.3 and 18.3 percent of the Company’s annualized base rent are scheduled to expire during the years ended December 31, 2016 and 2017, respectively. With the positive leasing results the Company has achieved in many of its markets recently, the Company believes that rental rates it is likely to achieve on new leases will generally be, on average, not lower than rates currently being paid. Although the Company has recently achieved positive leasing activity, primarily in its core markets, if the recent leasing results do not prove to be sustaining during 2016 and beyond, the Company’s rental rates it may achieve on new leases may be lower than the rates currently being paid, resulting in the potential for less revenue from the same space.
As part of its strategic initiative described above, the Company may dispose of properties it considers non-core, and it may actively asset manage other low-growth real estate assets in a different way. The Company will selectively purchase assets in markets that it believes will offer above market returns. The Company believes that the opportunity to invest in multi-family development properties at higher returns on cost will position the Company to potentially produce higher levels of net operating income than if the Company were to only purchase stabilized multi-family rental properties at market returns. The Company anticipates that it will be several years before many of its multi-family development projects are income-producing.
The Company believes that there is a potential for Moody’s or Standard & Poor’s to lower their current investment grade ratings on the Company’s senior unsecured debt to sub-investment grade. Amongst other things, any such downgrade by both Moody’s and Standard & Poor’s will increase the interest rate on outstanding borrowings under the Company’s $600 million unsecured revolving credit facility from LIBOR plus 130 basis points to LIBOR plus 170 basis points and the annual credit facility fee it pays will increase from 30 to 35 basis points. In addition, a downgrade in its ratings to sub-investment grade would result in higher interest rates on senior unsecured debt that the Company may issue in the future as compared to issuing such debt with investment grade ratings.
The remaining portion of this Management’s Discussion and Analysis of Financial Condition and Results of Operations should help the reader understand our:
|
·
|
recent transactions;
|
|
·
|
critical accounting policies and estimates;
|
|
·
|
results of operations for the year ended December 31, 2015 as compared to the year ended December 31, 2014;
|
|
·
|
results of operations for the year ended December 31, 2014 as compared to the year ended December 31, 2013; and
|
|
·
|
liquidity and capital resources.
|
41
Recent Transactions
Acquisitions
On January 5, 2016, the Company, which held a 50 percent interest in the property-owning entity, Overlook Ridge Apartment Investors LLC, acquired its remaining interest in a 371-unit multi-family operating property located in Malden, Massachusetts for $39.8 million.
On December 23, 2015, the Company acquired a vacant 147,241 square-foot office property located in the Mack-Cali Business Campus in Parsippany, New Jersey, for approximately $10.3 million, which was funded primarily through borrowings under the Company’s unsecured revolving credit facility. This property is currently in redevelopment by the Company.
On November 12, 2015, the Company acquired a 196,128 square-foot, 95.6 percent leased office property adjacent to an existing Mack-Cali property located in Edison, New Jersey, for approximately $53.1 million, which was funded primarily through borrowings under the Company’s unsecured revolving credit facility.
Dispositions
The Company disposed of the following office properties during the year ended December 31, 2015 (dollars in thousands):
|
Rentable
|
Net
|
Net
|
||||||||||||
|
Disposition
|
# of
|
Square
|
Sales
|
Book
|
Realized
|
|||||||||
|
Date
|
Property/Address
|
Location
|
Bldgs.
|
Feet
|
Proceeds
|
Value
|
Gain
|
|||||||
|
01/15/15
|
1451 Metropolitan Drive
|
West Deptford, New Jersey
|
1
|
21,600
|
$
|
1,072
|
$
|
929
|
$
|
143
|
||||
|
05/27/15
|
10 Independence Blvd
|
Warren, New Jersey
|
1
|
120,528
|
18,351
|
(a)
|
15,114
|
3,237
|
||||||
|
06/11/15
|
4 Sylvan Way
|
Parsippany, New Jersey
|
1
|
105,135
|
15,961
|
(a)
|
9,522
|
6,439
|
||||||
|
06/26/15
|
14 Sylvan Way
|
Parsippany, New Jersey
|
1
|
203,506
|
79,977
|
55,253
|
24,724
|
|||||||
|
07/21/15
|
210 Clay Ave
|
Lyndhurst, New Jersey
|
1
|
121,203
|
14,766
|
(a)
|
5,202
|
9,564
|
||||||
|
08/24/15
|
5 Becker Farm Rd
|
Roseland, New Jersey
|
1
|
118,343
|
18,129
|
(a)
|
8,975
|
9,154
|
||||||
|
Totals
|
6
|
690,315
|
$
|
148,256
|
$
|
94,995
|
$
|
53,261
|
||||||
|
(a) The Company transferred the deeds for these properties to the lender in satisfaction of its mortgage loan obligations totaling $59.7 million. The Company recorded an impairment charge of $25.2 million during the year ended December 31, 2013 as it estimated that the carrying value of the properties may not be recoverable over their anticipated holding periods.
|
||||||||||||||
On January 1, 2014, the Company adopted the new discontinued operations accounting standard and as the properties disposed of during the year ended December 31, 2015 did not represent a strategic shift (as the Company is not entirely exiting markets or property types), they have not been reflected as part of discontinued operations.
Impairments on Properties Held and Used
In September 2015, the Company announced a three-year strategic initiative to transform the Company into a more concentrated owner of New Jersey Hudson River waterfront and transit-oriented office properties and a regional owner of luxury multi-family residential properties. In connection with the transformation of the Company’s portfolio, management began developing a disposition plan in September 2015, which will be an ongoing assessment process. Through this plan, the Company, in the coming years, expects to dispose of primarily office properties considered non-core to its ongoing operations. As a result, at September 30, 2015, the Company evaluated the recoverability of the carrying values of these non-core properties, and determined that due to the shortening of the expected periods of ownership, it was necessary to reduce the carrying values of 22 rental properties to their estimated fair values. Accordingly, the Company recorded an impairment charge of $158.6 million at September 30, 2015 reducing the aggregate carrying values of these properties from $554.3 million to their estimated fair values of $395.7 million. At December 31, 2015, as a result of its periodic evaluation of the recoverability of the carrying values resulting from its ongoing assessment of non-core properties, the Company recorded an additional impairment charge of $33.7 million.
Four of the Company’s office properties are collateral for a mortgage loan that matured on August 11, 2014, with a principal balance of $63.3 million as of December 31, 2015. The loan was not repaid at maturity and the Company is in discussions with the lender regarding potential options in satisfaction of the obligation (see Note 10: Mortgages, Loans Payable and Other Obligations). As of September 30, 2015, the Company estimated that the carrying value of three of these properties, aggregating 479,877 square feet and located in Roseland and Parsippany, New Jersey, may not be recoverable over their anticipated holding periods. In order to reduce the carrying values of the properties to their estimated fair values, the Company recorded impairment charges of $5.6 million at September 30, 2015, which resulted from the current decline in leasing activity and market rents of the properties identified. The Company had previously recorded impairment charges on these properties at September 30, 2013 of $12.5 million.
42
Critical Accounting Policies and Estimates
The accompanying consolidated financial statements include all accounts of the Company, its majority-owned and/or controlled subsidiaries, which consist principally of Mack-Cali Realty, L.P. (the “Operating Partnership”), and variable interest entities for which the Company has determined itself to be the primary beneficiary, if any. See Note 2: Significant Accounting Policies – Investments in Unconsolidated Joint Ventures – to the Financial Statements, for the Company’s treatment of unconsolidated joint venture interests. Intercompany accounts and transactions have been eliminated.
Accounting Standards Codification (“ASC”) 810, Consolidation, provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIEs. Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack (i) the ability to make decisions about the entity's activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the variable interest entity’s performance: and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE.
The Financial Statements have been prepared in conformity with generally accepted accounting principles (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements, and the reported amounts of revenues and expenses during the reported period. Actual results could differ from these estimates. Certain reclassifications have been made to prior period amounts in order to conform with current period presentation. These estimates and assumptions are based on management’s historical experience that are believed to be reasonable at the time. However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgment. The Company’s critical accounting policies are those which require assumptions to be made about matters that are highly uncertain. Different estimates could have a material effect on the Company’s financial results. Judgments and uncertainties affecting the application of these policies and estimates may result in materially different amounts being reported under different conditions and circumstances.
Rental Property:
Rental properties are stated at cost less accumulated depreciation and amortization. Costs directly related to the acquisition, development and construction of rental properties are capitalized. Acquisition-related costs are expensed as incurred. Capitalized development and construction costs include pre-construction costs essential to the development of the property, development and construction costs, interest, property taxes, insurance, salaries and other project costs incurred during the period of development. Interest capitalized by the Company for the years ended December 31, 2015, 2014 and 2013 was $16.2 million, $15.5 million and $12.9 million, respectively. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Fully-depreciated assets are removed from the accounts.
The Company considers a construction project as substantially completed and held available for occupancy upon the substantial completion of tenant improvements, but no later than one year from cessation of major construction activity (as distinguished from activities such as routine maintenance and cleanup). If portions of a rental project are substantially completed and occupied by tenants, or held available for occupancy, and other portions have not yet reached that stage, the substantially completed portions are accounted for as a separate project. The Company allocates costs incurred between the portions under construction and the portions substantially completed and held available for occupancy, primarily based on a percentage of the relative square footage of each portion, and capitalizes only those costs associated with the portion under construction.
Properties are depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:
|
Leasehold interests
|
Remaining lease term
|
|
Buildings and improvements
|
5 to 40 years
|
|
Tenant improvements
|
The shorter of the term of the
|
|
related lease or useful life
|
|
|
Furniture, fixtures and equipment
|
5 to 10 years
|
43
Upon acquisition of rental property, the Company estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities assumed, generally consisting of the fair value of (i) above and below market leases, (ii) in-place leases and (iii) tenant relationships. The Company allocates the purchase price to the assets acquired and liabilities assumed based on their fair values. The Company records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed exceed the purchase consideration of a transaction. In estimating the fair value of the tangible and intangible assets acquired, the Company considers information obtained about each property as a result of its due diligence and marketing and leasing activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.
Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases. The capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining terms of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases.
Other intangible assets acquired include amounts for in-place lease values and tenant relationship values, which are based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the respective tenant. Factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses. Characteristics considered by management in valuing tenant relationships include the nature and extent of the Company’s existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals. The value of in-place leases are amortized to expense over the remaining initial terms of the respective leases. The value of tenant relationship intangibles are amortized to expense over the anticipated life of the relationships.
On a periodic basis, management assesses whether there are any indicators that the value of the Company’s rental properties held for use may be impaired. In addition to identifying any specific circumstances which may affect a property or properties, management considers other criteria for determining which properties may require assessment for potential impairment. The criteria considered by management include reviewing low leased percentages, significant near-term lease expirations, recently acquired properties, current and historical operating and/or cash flow losses, near-term mortgage debt maturities or other factors that might impact the Company’s intent and ability to hold the property. A property’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying value of the property over the fair value of the property. The Company’s estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions. These assumptions are generally based on management’s experience in its local real estate markets and the effects of current market conditions. The assumptions are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved, and actual losses or impairments may be realized in the future. See Note 3: Recent Transactions – Impairments on Properties Held and Used – to the Financial Statements.
Rental Property Held for Sale:
When assets are identified by management as held for sale, the Company discontinues depreciating the assets and estimates the sales price, net of selling costs, of such assets. If, in management’s opinion, the estimated net sales price of the assets which have been identified as held for sale is less than the net book value of the assets, a valuation allowance is established.
44
If circumstances arise that previously were considered unlikely and, as a result, the Company decides not to sell a property previously classified as held for sale, the property is reclassified as held and used. A property that is reclassified is measured and recorded individually at the lower of (a) its carrying value before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.
Investments in Unconsolidated Joint Ventures:
The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting. The Company applies the equity method by initially recording these investments at cost, as Investments in Unconsolidated Joint Ventures, subsequently adjusted for equity in earnings and cash contributions and distributions. The outside basis portion of the Company’s joint ventures is amortized over the anticipated useful lives of the underlying ventures’ tangible and intangible assets acquired and liabilities assumed. Generally, the Company would discontinue applying the equity method when the investment (and any advances) is reduced to zero and would not provide for additional losses unless the Company has guaranteed obligations of the venture or is otherwise committed to providing further financial support for the investee. If the venture subsequently generates income, the Company only recognizes its share of such income to the extent it exceeds its share of previously unrecognized losses.
On a periodic basis, management assesses whether there are any indicators that the value of the Company’s investments in unconsolidated joint ventures may be impaired. An investment is impaired only if management’s estimate of the value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying value of the investment over the value of the investment. The Company’s estimates of value for each investment (particularly in real estate joint ventures) are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and operating costs. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the values estimated by management in its impairment analyses may not be realized, and actual losses or impairment may be realized in the future. See Note 4: Investments in Unconsolidated Joint Ventures – to the Financial Statements.
Revenue Recognition:
Base rental revenue is recognized on a straight-line basis over the terms of the respective leases. Unbilled rents receivable represents the cumulative amount by which straight-line rental revenue exceeds rents currently billed in accordance with the lease agreements.
Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed-rate renewal options for below-market leases. The capitalized above-market lease values for acquired properties are amortized as a reduction of base rental revenue over the remaining terms of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed-rate renewal options of the respective leases.
Escalations and recoveries from tenants are received from tenants for certain costs as provided in the lease agreements. These costs generally include real estate taxes, utilities, insurance, common area maintenance and other recoverable costs.
Construction services revenue includes fees earned and reimbursements received by the Company for providing construction management and general contractor services to clients. Construction services revenue is recognized on the percentage of completion method. Using this method, profits are recorded on the basis of our estimates of the overall profit and percentage of completion of individual contracts. A portion of the estimated profits is accrued based upon estimates of the percentage of completion of the construction contract. This revenue recognition method involves inherent risks relating to profit and cost estimates.
Real estate services revenue includes property management, development, construction and leasing commission fees and other services, and payroll and related costs reimbursed from clients. Fee income derived from the Company’s unconsolidated joint ventures (which are capitalized by such ventures) are recognized to the extent attributable to the unaffiliated ownership interests.
Parking income includes income from parking spaces leased to tenants and others.
45
Other income includes income from tenants for additional services arranged for by the Company and income from tenants for early lease terminations.
Allowance for Doubtful Accounts:
Management performs a detailed review of amounts due from tenants to determine if an allowance for doubtful accounts is required based on factors affecting the collectability of the accounts receivable balances. The factors considered by management in determining which individual tenant receivable balances, or aggregate receivable balances, require a collectability allowance include the age of the receivable, the tenant’s payment history, the nature of the charges, any communications regarding the charges and other related information. Management’s estimate of the allowance for doubtful accounts requires management to exercise significant judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income.
Discontinued Operations:
In April 2014, the Financial Accounting Standards Board (“FASB”) issued guidance related to the reporting of discontinued operation and disclosures of disposals of components of an entity. This guidance defines a discontinued operation as a component or group of components disposed or classified as held for sale and represents a strategic shift that has (or will have) a major effect on an entity’s operations and final result; the guidance states that a strategic shift could include a disposal of a major geographical area of operations, a major line of business, a major equity method investment or other major parts of an entity. The guidance also provides for additional disclosure requirements in connection with both discontinued operations and other dispositions not qualifying as discontinued operations. The guidance is effective for all companies for annual and interim periods beginning on or after December 15, 2014. The guidance applies prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. All entities could early adopt the guidance for new disposals (or new classifications as held for sale) that had not been reported in financial statements previously issued or available for issuance. The Company elected to early adopt this standard effective with the interim period beginning January 1, 2014. Prior to January 1, 2014, properties identified as held for sale and/or disposed of were presented in discontinued operations for all periods presented. See Note 7: Discontinued Operations – to the Financial Statements.
46
Results From Operations
The following comparisons for the year ended December 31, 2015 (“2015”), as compared to the year ended December 31, 2014 (2014), and for 2014 as compared to the year ended December 31, 2013 (“2013”) make reference to the following: (i) the effect of the “Same-Store Properties,” which represent all in-service properties owned by the Company at December 31, 2013, (for the 2015 versus 2014 comparisons), and which represent all in-service properties owned by the Company at December 31, 2012 (for the 2014 versus 2013 comparisons), excluding properties sold, disposed of, removed from service, or being redeveloped or repositioned from January 1, 2014 through December 31, 2015; (ii) the effect of the “Acquired Properties,” which represent all properties acquired by the Company or commencing initial operation from January 1, 2014 through December 31, 2015 (for the 2015 versus 2014 comparisons), and which represents all properties acquired by the Company or commencing initial operations from January 1, 2013 through December 31, 2014 (for the 2014 versus 2013 comparisons), and (iii) the effect of “Properties Sold” which represent properties sold, disposed of, or removed from service (including properties being redeveloped or repositioned) by the Company from January 1, 2014 through December 31, 2015. During the 2015 and 2014 periods, four office properties, aggregating 657,523 square feet, were removed from service as they were being redeveloped by the Company.
Year Ended December 31, 2015 Compared to Year Ended December 31, 2014
|
Year Ended
|
|||||||||||
|
December 31,
|
Dollar
|
Percent |
|
||||||||
|
(dollars in thousands)
|
2015
|
2014
|
Change
|
Change |
|
||||||
|
Revenue from rental operations and other:
|
|||||||||||
|
Base rents
|
$
|
487,041
|
$
|
516,727
|
$
|
(29,686)
|
(5.7)
|
%
|
|||
|
Escalations and recoveries from tenants
|
62,481
|
78,554
|
(16,073)
|
(20.5)
|
|||||||
|
Parking income
|
11,124
|
9,107
|
2,017
|
22.1
|
|||||||
|
Other income
|
4,617
|
3,773
|
844
|
22.4
|
|||||||
|
Total revenues from rental operations
|
565,263
|
608,161
|
(42,898)
|
(7.1)
|
|||||||
|
Property expenses:
|
|||||||||||
|
Real estate taxes
|
82,688
|
90,750
|
(8,062)
|
(8.9)
|
|||||||
|
Utilities
|
55,965
|
72,822
|
(16,857)
|
(23.1)
|
|||||||
|
Operating services
|
107,951
|
112,621
|
(4,670)
|
(4.1)
|
|||||||
|
Total property expenses
|
246,604
|
276,193
|
(29,589)
|
(10.7)
|
|||||||
|
Non-property revenues:
|
|||||||||||
|
Real estate services
|
29,620
|
28,638
|
982
|
3.4
|
|||||||
|
Total non-property revenues
|
29,620
|
28,638
|
982
|
3.4
|
|||||||
|
Non-property expenses:
|
|||||||||||
|
Real estate services expenses
|
25,583
|
26,136
|
(553)
|
(2.1)
|
|||||||
|
General and administrative
|
49,147
|
71,051
|
(21,904)
|
(30.8)
|
|||||||
|
Acquisition-related costs
|
1,560
|
2,118
|
(558)
|
(26.3)
|
|||||||
|
Depreciation and amortization
|
170,402
|
172,490
|
(2,088)
|
(1.2)
|
|||||||
|
Impairments
|
197,919
|
-
|
197,919
|
-
|
|||||||
|
Total non-property expenses
|
444,611
|
271,795
|
172,816
|
63.6
|
|||||||
|
Operating income (loss)
|
(96,332)
|
88,811
|
(185,143)
|
(208.5)
|
|||||||
|
Other (expense) income:
|
|||||||||||
|
Interest expense
|
(103,051)
|
(112,878)
|
9,827
|
8.7
|
|||||||
|
Interest and other investment income
|
794
|
3,615
|
(2,821)
|
(78.0)
|
|||||||
|
Equity in earnings (loss) of unconsolidated joint ventures
|
(3,172)
|
(2,423)
|
(749)
|
(30.9)
|
|||||||
|
Realized gains (losses) on disposition
|
|||||||||||
|
of rental property, net
|
53,261
|
54,848
|
(1,587)
|
(2.9)
|
|||||||
|
Gain on sale of investment in unconsolidated joint venture
|
6,448
|
-
|
6,448
|
-
|
|||||||
|
Loss from early extinguishment of debt
|
-
|
(582)
|
582
|
100.0
|
|||||||
|
Total other (expense) income
|
(45,720)
|
(57,420)
|
11,700
|
20.4
|
|||||||
|
Net income (loss)
|
(142,052)
|
31,391
|
(173,443)
|
(552.5)
|
|||||||
|
Noncontrolling interest in consolidated joint ventures
|
1,044
|
778
|
266
|
34.2
|
|||||||
|
Noncontrolling interest in Operating Partnership
|
15,256
|
(3,602)
|
18,858
|
523.5
|
|||||||
|
Net income (loss) available to common shareholders
|
$
|
(125,752)
|
$
|
28,567
|
$
|
(154,319)
|
(540.2)
|
%
|
|||
47
The following is a summary of the changes in revenue from rental operations and property expenses in 2015 as compared to 2014 divided into Same-Store Properties, Acquired Properties and Properties Sold in 2014 and 2015:
|
Total
|
Same-Store
|
Acquired
|
Properties
|
||||||||||||||||||||
|
Company
|
Properties
|
Properties
|
Sold in 2014 and 2015
|
||||||||||||||||||||
|
Dollar
|
Percent
|
Dollar
|
Percent
|
Dollar
|
Percent
|
Dollar
|
Percent |
|
|||||||||||||||
|
(dollars in thousands)
|
Change
|
Change
|
Change
|
Change
|
Change
|
Change
|
Change
|
Change |
|
||||||||||||||
|
Revenue from rental
|
|||||||||||||||||||||||
|
operations and other:
|
|||||||||||||||||||||||
|
Base rents
|
$
|
(29,686)
|
(5.7)
|
%
|
$
|
6,660
|
1.3
|
%
|
$
|
1,780
|
0.3
|
%
|
$
|
(38,126)
|
(7.3)
|
%
|
|||||||
|
Escalations and recoveries
|
|
||||||||||||||||||||||
|
from tenants
|
(16,073)
|
(20.5)
|
(9,166)
|
(11.7)
|
128
|
0.2
|
(7,035)
|
(9.0)
|
|||||||||||||||
|
Parking income
|
2,017
|
22.1
|
1,100
|
12.1
|
915
|
10.0
|
2
|
-
|
|||||||||||||||
|
Other income
|
844
|
22.4
|
547
|
14.5
|
(24)
|
(0.6)
|
321
|
8.5
|
|||||||||||||||
|
Total
|
$
|
(42,898)
|
(7.1)
|
%
|
$
|
(859)
|
(0.1)
|
%
|
$
|
2,799
|
0.5
|
%
|
$
|
(44,838)
|
(7.5)
|
%
|
|||||||
|
Property expenses:
|
|||||||||||||||||||||||
|
Real estate taxes
|
$
|
(8,062)
|
(8.9)
|
%
|
$
|
(5,314)
|
(5.9)
|
%
|
$
|
2,034
|
2.2
|
%
|
$
|
(4,782)
|
(5.2)
|
%
|
|||||||
|
Utilities
|
(16,857)
|
(23.1)
|
(10,701)
|
(14.7)
|
218
|
0.3
|
(6,374)
|
(8.7)
|
|||||||||||||||
|
Operating services
|
(4,670)
|
(4.1)
|
1,545
|
1.4
|
1,268
|
1.1
|
(7,483)
|
(6.6)
|
|||||||||||||||
|
Total
|
$
|
(29,589)
|
(10.7)
|
%
|
$
|
(14,470)
|
(5.2)
|
%
|
$
|
3,520
|
1.3
|
%
|
$
|
(18,639)
|
(6.8)
|
%
|
|||||||
|
OTHER DATA:
|
|||||||||||||||||||||||
|
Number of Consolidated Properties
|
223
|
221
|
2
|
26
|
|||||||||||||||||||
|
Commercial Square feet (in thousands)
|
24,212
|
24,016
|
196
|
3,959
|
|||||||||||||||||||
|
Multi-family portfolio (number of units)
|
1,301
|
1,081
|
220
|
-
|
|||||||||||||||||||
Base rents. Base rents for the Same-Store Properties increased $6.7 million, or 1.3 percent, for 2015 as compared to 2014, due primarily to an increase in occupancy in 2015 as compared to 2014, which resulted from a 90 basis point increase in the average same store percent leased to 85.0 percent from 84.1 percent and an increase in average rental rents per square foot to $22.27 from $22.23.
Escalations and recoveries. Escalations and recoveries from tenants for the Same-Store Properties decreased $9.2 million, or 11.7 percent, for 2015 over 2014 due primarily to recoveries from tenants of higher electric expenses in 2014 which the Company partially recovers from tenants pursuant to the terms of most of its leases with significantly lower expenses to recover in 2015.
Parking income. Parking income for the Same-Store Properties increased $1.1 million, or 12.1 percent for 2015 as compared to 2014 due primarily to increased usage.
Other income. Other income for the Same-Store Properties increased $0.5 million, or 14.5 percent due primarily to various small income items in 2015.
Real estate taxes. Real estate taxes on the Same-Store Properties decreased $5.3 million, or 5.9 percent, for 2015 as compared to 2014. The change in real estate taxes principally results from an increase in tax appeal proceeds received in 2015 as compared to 2014. Real estate taxes, without the effect of net tax appeal proceeds, increased $2.7 million, or 3.2 percent, for 2015 as compared to 2014 due primarily to increased rates.
Utilities. Utilities for the year decreased $10.7 million, or 14.7 percent, for 2015 as compared to 2014. Extended winter freeze conditions in early 2014 caused record electricity demand, and combined with reduced natural gas production and distribution disruptions, resulted in significant market price increases for electricity during the 2014 period.
Operating services. Operating services for the Same-Store Properties increased $1.5 million, or 1.4 percent, due primarily to an increase in snow removal and other service costs for 2015 as compared to 2014.
Real estate services revenue. Real estate services revenues (primarily reimbursement of property personnel costs) increased $1.0 million, or 3.4 percent, for 2015 as compared to 2014, due primarily to increased third party development and management activity in multi-family services in 2015 as compared to 2014.
48
Real estate services expenses. Real estate services expenses decreased $0.6 million, or 2.1 percent, for 2015 as compared to 2014. This decrease was due primarily to decreased compensation and related costs.
General and administrative. General and administrative expenses decreased $21.9 million, or 30.8 percent, in 2015 as compared to 2014, which was primarily due to severance costs in 2014 of $23.8 million related to the departure of the Company’s Chief Executive Officer and certain of the Company’s other executive officers.
Acquisition-related costs. The Company incurred transaction costs of $1.6 million in 2015 and $2.1 million in 2014 related to the Company’s property and joint venture acquisitions. See Note 3 to the Financial Statements: Recent Transactions – Acquisitions.
Depreciation and amortization. Depreciation and amortization decreased $2.1 million, or 1.2 percent, for 2015 over 2014. This decrease was due primarily to assets of Same-Store Properties becoming fully amortized, and depreciation in 2014 for properties sold in 2014 and early 2015. These were partially offset by accelerated depreciation in 2015 for properties being removed from service.
Impairments. The Company recorded $197.9 million in impairment charges in 2015 on certain properties to reduce the carrying values to their estimated fair market values, with no such charges taken in 2014. See Note 3: Recent Transactions – to the Financial Statements.
Interest expense. Interest expense decreased $9.8 million, or 8.7 percent, for 2015 as compared to 2014. This decrease was primarily the result of lower overall average debt balances in 2015 as compared to 2014.
Interest and other investment income. Interest and other investment income decreased $2.8 million, or 78.0 percent, for 2015 as compared to 2014. This was primarily due to interest income on lower average notes receivable balances in 2015.
Equity in earnings (loss) of unconsolidated joint ventures. Equity in earnings of unconsolidated joint ventures decreased $0.7 million, or 30.9 percent, for 2015 as compared to 2014. The decrease was due primarily to a loss of $3.7 million in 2015 from the Capitol Place Mezz venture (which commenced operations in 2015), and a gain of $2.3 million in 2014 from the Stanford SM venture (the venture’s note receivable was repaid in 2014). These were partially offset by income of $3.8 million in 2015 from distributions received from the Keystone-Penn joint venture due to a loan refinancing of the venture’s property and a decreased loss from the Rosewood Lafayette Holdings joint venture (in which the Company sold its interest in 2015) of $0.8 million for 2015 as compared to 2014.
Realized gains (losses) on disposition of rental property, net. The Company had realized gains on disposition of rental property of $53.3 million in 2015 and $54.8 million in 2014. See Note 3: Recent Transactions – Dispositions – to the Financial Statements.
Gain on sale of investment in unconsolidated joint venture. The Company realized a gain of $6.4 million in 2015 on the sale of its equity interest in the Rosewood Lafayette Holdings L.L.C. joint venture.
Loss from early extinguishment of debt. In 2014, the Company recognized a loss from early extinguishment of debt of $582,000 due to the early redemption of $150 million principal amount of 5.125 percent Notes in December 2014, which were scheduled to mature in January 2015.
Net income (loss). Net income decreased to a loss of approximately $142.0 million in 2015 from income of $31.4 million in 2014. The decrease of $173.4 million was due to the factors discussed above.
Net income (loss) available to common shareholders. Net income available to common shareholders decreased $154.3 million, or 540.2 percent, from income of $28.6 million in 2014 to a loss of approximately $125.7 million in 2015. The decrease was primarily due to a decrease in net income of $173.4 million for 2015 as compared to 2014 (primarily due to the impairment charges in 2015 of $197.9 million). This was partially offset by an increase in noncontrolling interest in Operating Partnership of $18.9 million for 2015 as compared to 2014, and an increase in noncontrolling interest in consolidated joint ventures of approximately $0.2 million for 2015 as compared to 2014.
49
Year Ended December 31, 2014 Compared to Year Ended December 31, 2013
|
Year Ended
|
|||||||||||
|
December 31,
|
Dollar
|
Percent |
|
||||||||
|
(dollars in thousands)
|
2014
|
2013
|
Change
|
Change |
|
||||||
|
Revenue from rental operations and other:
|
|||||||||||
|
Base rents
|
$
|
516,727
|
$
|
540,165
|
$
|
(23,438)
|
(4.3)
|
%
|
|||
|
Escalations and recoveries from tenants
|
78,554
|
72,758
|
5,796
|
8.0
|
|||||||
|
Parking income
|
9,107
|
6,840
|
2,267
|
33.1
|
|||||||
|
Other income
|
3,773
|
4,683
|
(910)
|
(19.4)
|
|||||||
|
Total revenues from rental operations
|
608,161
|
624,446
|
(16,285)
|
(2.6)
|
|||||||
|
Property expenses:
|
|||||||||||
|
Real estate taxes
|
90,750
|
85,574
|
5,176
|
6.0
|
|||||||
|
Utilities
|
72,822
|
63,622
|
9,200
|
14.5
|
|||||||
|
Operating services
|
112,621
|
105,278
|
7,343
|
7.0
|
|||||||
|
Total property expenses
|
276,193
|
254,474
|
21,719
|
8.5
|
|||||||
|
Non-property revenues:
|
|||||||||||
|
Construction services
|
-
|
15,650
|
(15,650)
|
(100.0)
|
|||||||
|
Real estate services
|
28,638
|
26,935
|
1,703
|
6.3
|
|||||||
|
Total non-property revenues
|
28,638
|
42,585
|
(13,947)
|
(32.8)
|
|||||||
|
Non-property expenses:
|
|||||||||||
|
Direct construction costs
|
-
|
14,945
|
(14,945)
|
(100.0)
|
|||||||
|
Real estate services expenses
|
26,136
|
22,716
|
3,420
|
15.1
|
|||||||
|
General and administrative
|
71,051
|
47,040
|
24,011
|
51.0
|
|||||||
|
Acquisition-related costs
|
2,118
|
642
|
1,476
|
229.9
|
|||||||
|
Depreciation and amortization
|
172,490
|
182,766
|
(10,276)
|
(5.6)
|
|||||||
|
Impairments
|
-
|
110,853
|
(110,853)
|
(100.0)
|
|||||||
|
Total non-property expenses
|
271,795
|
378,962
|
(107,167)
|
(28.3)
|
|||||||
|
Operating income (loss)
|
88,811
|
33,595
|
55,216
|
164.4
|
|||||||
|
Other (expense) income:
|
|||||||||||
|
Interest expense
|
(112,878)
|
(123,701)
|
10,823
|
8.7
|
|||||||
|
Interest and other investment income
|
3,615
|
2,903
|
712
|
24.5
|
|||||||
|
Equity in earnings (loss) of unconsolidated joint ventures
|
(2,423)
|
(2,327)
|
(96)
|
(4.1)
|
|||||||
|
Realized gains (losses) on disposition
|
|||||||||||
|
of rental property, net
|
54,848
|
-
|
54,848
|
-
|
|||||||
|
Loss from early extinguishment of debt
|
(582)
|
(156)
|
(426)
|
(273.1)
|
|||||||
|
Total other (expense) income
|
(57,420)
|
(123,281)
|
65,861
|
53.4
|
|||||||
|
Income (loss) from continuing operations
|
31,391
|
(89,686)
|
121,077
|
135.0
|
|||||||
|
Discontinued operations:
|
|||||||||||
|
Income from discontinued operations
|
-
|
11,811
|
(11,811)
|
(100.0)
|
|||||||
|
Loss from early extinguishment of debt
|
-
|
(703)
|
703
|
100.0
|
|||||||
|
Realized gains (losses) and unrealized losses on
|
|||||||||||
|
disposition of rental property and impairments, net
|
-
|
59,520
|
(59,520)
|
(100.0)
|
|||||||
|
Total discontinued operations, net
|
-
|
70,628
|
(70,628)
|
(100.0)
|
|||||||
|
Net income (loss)
|
31,391
|
(19,058)
|
50,449
|
264.7
|
|||||||
|
Noncontrolling interest in consolidated joint ventures
|
778
|
2,199
|
(1,421)
|
(64.6)
|
|||||||
|
Noncontrolling interest in Operating Partnership
|
(3,602)
|
10,459
|
(14,061)
|
(134.4)
|
|||||||
|
Noncontrolling interest in discontinued operations
|
-
|
(8,509)
|
8,509
|
100.0
|
|||||||
|
Net income (loss) available to common shareholders
|
$
|
28,567
|
$
|
(14,909)
|
$
|
43,476
|
291.6
|
%
|
|||
50
The following is a summary of the changes in revenue from rental operations and property expenses in 2014 as compared to 2013 divided into Same-Store Properties, Acquired Properties and Properties Sold in 2014:
|
Total
|
Same-Store
|
Acquired
|
Properties
|
||||||||||||||||||||
|
Company
|
Properties
|
Properties
|
Sold in 2014
|
||||||||||||||||||||
|
Dollar
|
Percent |
|
Dollar
|
Percent |
|
Dollar
|
Percent |
|
Dollar
|
Percent |
|
||||||||||||
|
(dollars in thousands)
|
Change
|
Change |
|
Change
|
Change |
|
Change
|
Change |
|
Change
|
Change |
|
|||||||||||
|
Revenue from rental
|
|||||||||||||||||||||||
|
operations and other:
|
|||||||||||||||||||||||
|
Base rents
|
$
|
(23,438)
|
(4.3)
|
%
|
$
|
(13,831)
|
(2.5)
|
%
|
$
|
13,073
|
2.4
|
%
|
$
|
(22,680)
|
(4.2)
|
%
|
|||||||
|
Escalations and recoveries
|
|
||||||||||||||||||||||
|
from tenants
|
5,796
|
8.0
|
8,840
|
12.2
|
1,042
|
1.4
|
(4,086)
|
(5.6)
|
|||||||||||||||
|
Parking income
|
2,267
|
33.1
|
(210)
|
(3.1)
|
2,485
|
36.3
|
(8)
|
(0.1)
|
|||||||||||||||
|
Other income
|
(910)
|
(19.4)
|
(1,475)
|
(31.5)
|
644
|
13.8
|
(79)
|
(1.7)
|
|||||||||||||||
|
Total
|
$
|
(16,285)
|
(2.6)
|
%
|
$
|
(6,676)
|
(1.0)
|
%
|
$
|
17,244
|
2.7
|
%
|
$
|
(26,853)
|
(4.3)
|
%
|
|||||||
|
Property expenses:
|
|||||||||||||||||||||||
|
Real estate taxes
|
$
|
5,176
|
6.0
|
%
|
$
|
6,113
|
7.1
|
%
|
$
|
2,483
|
2.9
|
%
|
$
|
(3,420)
|
(4.0)
|
%
|
|||||||
|
Utilities
|
9,200
|
14.5
|
11,025
|
17.3
|
862
|
1.4
|
(2,687)
|
(4.2)
|
|||||||||||||||
|
Operating services
|
7,343
|
7.0
|
9,149
|
8.7
|
2,732
|
2.6
|
(4,538)
|
(4.3)
|
|||||||||||||||
|
Total
|
$
|
21,719
|
8.5
|
%
|
$
|
26,287
|
10.3
|
%
|
$
|
6,077
|
2.4
|
%
|
$
|
(10,645)
|
(4.2)
|
%
|
|||||||
|
OTHER DATA:
|
|||||||||||||||||||||||
|
Number of Consolidated Properties
|
232
|
224
|
8
|
16
|
|||||||||||||||||||
|
Commercial Square feet (in thousands)
|
25,363
|
25,137
|
226
|
2,611
|
|||||||||||||||||||
|
Multi-family portfolio (number of units)
|
1,301
|
-
|
1,301
|
-
|
|||||||||||||||||||
Base rents. Base rents for the Same-Store Properties decreased $13.8 million, or 2.5 percent, for 2014 as compared to 2013, due primarily to a decrease in occupancy and rental rates in 2014 as compared to 2013.
Escalations and recoveries. Escalations and recoveries from tenants for the Same-Store Properties increased $8.8 million, or 12.2 percent, for 2014 over 2013 due primarily to recoveries from tenants of higher electric expenses in 2014 which the Company partially recovers from tenants pursuant to the terms of most of its leases. Related to the Company’s recovery from tenants of the increases in 2014 of real estate taxes and operating services, the portion the Company is recovering of those expenses has generally been reduced in 2014 primarily as a result of lower occupancies, in conjunction with the re-set of base years on new and renewed leases, in 2014.
Parking income. Parking income for the Same-Store Properties was relatively unchanged for 2014 as compared to 2013.
Other income. Other income for the Same-Store Properties decreased $1.5 million, or 31.5 percent, due primarily to a decrease in lease breakage fees recognized in 2014 as compared to 2013.
Real estate taxes. Real estate taxes on the Same-Store Properties increased $6.1 million, or 7.1 percent, for 2014 as compared to 2013. The change in real estate taxes principally results from a decrease in tax appeal proceeds received in 2014 as compared to 2013. Real estate taxes, without the effect of net tax appeal proceeds, increased $0.7 million, or 0.9 percent, for 2014 as compared to 2013 due primarily to increased rates.
Utilities. Utilities for the Same-Store Properties increased $11.0 million, or 17.3 percent, for 2014 as compared to 2013. Extended winter freeze conditions in early 2014 caused record electricity demand, and combined with reduced natural gas production and distribution disruptions, resulted in significant market price increases for electricity during the period.
Operating services. Operating services for the Same-Store Properties increased $9.1 million, or 8.7 percent, due primarily to an increase in repairs and maintenance, snow removal and insurance costs for 2014 as compared to 2013.
Construction services revenue. Construction services revenue decreased $15.7 million to zero and direct construction costs decreased $14.9 million to zero in 2014 as compared to 2013 due to the Company’s phase out of this business segment.
51
Real estate services revenue. Real estate services revenues (primarily reimbursement of property personnel costs) increased by $1.7 million, or 6.3 percent, for 2014 as compared to 2013, due primarily to increased development and management activity in multi-family services in 2014 as compared to 2013.
Real estate services expenses. Real estate services expenses increased $3.4 million, or 15.1 percent, for 2014 as compared to 2013. This increase was due primarily to increased compensation and related costs from increased development and management activity in multifamily services in 2014 as compared to 2013.
General and administrative. General and administrative expenses increased $24.0 million in 2014 as compared to 2013, which was primarily due to severance costs related to the pending departure of the Company’s Chief Executive Officer and the departure of certain of the Company’s other executive officers in 2014.
Acquisition-related costs. The Company incurred transaction costs of $2.1 million in 2014 and $0.6 million in 2013 related to the Company’s property and joint venture acquisitions. See Note 3 to the Financial Statements: Recent Transactions – Acquisitions.
Depreciation and amortization. Depreciation and amortization decreased by $10.3 million, or 5.6 percent, for 2014 over 2013. This decrease was due primarily to a decrease of $4.6 million for the Same-Store Properties due to assets becoming fully amortized, and a decrease of $8.7 million for 2014 as compared to 2013 for the properties sold in 2014 (which were not classified as discontinued operations). These were partially offset by an increase of $3.0 million for 2014 as compared to 2013 for the Acquired Properties.
Impairments. The Company recorded $110.9 million in impairment charges in 2013, primarily on 18 properties to reduce their carrying values to their estimated fair market values, with no such charges taken in 2014.
Interest expense. Interest expense decreased by $10.8 million, or 8.7 percent, for 2014 as compared to 2013. This decrease was primarily the result of lower overall average debt balances in 2014 as compared to 2013.
Interest and other investment income. Interest and other investment income increased $0.7 million, or 24.5 percent, for 2014 as compared to 2013. This was primarily due to interest income on higher average notes receivable balances in 2014.
Equity in earnings (loss) of unconsolidated joint ventures. Equity in earnings of unconsolidated joint ventures decreased $0.1 million, or 4.1 percent, for 2014 as compared to 2013. The Company had decreased income in 2014 of $1.4 million from the Stamford SM venture (due to the venture’s note receivable being repaid in 2014), and an increased loss of $1.2 million in 2014 from the PruRose Riverwalk G venture. These were partially offset by increased income of $2.5 million from the Crystal House Apartments Investors venture in 2014 (as a result of the joint venture being entered into in March 2013).
Realized gains (losses) on disposition of rental property, net. The Company had realized gains on disposition of rental property of $54.8 million in 2014 (which were not classified as discontinued operations). See Note 3: Recent Transactions – Dispositions – to the Financial Statements.
Loss from early extinguishment of debt. In 2014, the Company recognized losses from early extinguishment of debt of $582,000 as compared to $156,000 in 2013. The 2014 amount was due to the early redemption of $150 million principal amount of 5.125 percent Notes in December 2014, which were scheduled to mature in January 2015. The 2013 amount was due to the partial early termination and extension of the Company’s revolving credit facility as a result of decreased participation of certain lenders in the facility.
Net income (loss). Income from continuing operations increased to $31.4 million in 2014 from a loss of $89.7 million in 2013. The increase of $121.1 million was due to the factors discussed above.
Net income (loss) available to common shareholders. Net income available to common shareholders increased by $43.5 million, or 291.6 percent, from a loss of $14.9 million in 2013 to income of $28.6 million in 2014. The increase was primarily due to an increase in income from continuing operations of $121.1 million for 2014 as compared to 2013 (mostly due to the impairment charges in 2013 of $110.9 million), an impairment charge of $23.9 million on discontinued operations in 2013, a decrease in noncontrolling interest in discontinued operations of $8.5 million for 2014 as compared to 2013 and a loss on early extinguishment of debt of $0.7 million in 2013. These were partially offset by realized gains on disposition of rental property, net of $83.4 million in 2013 (which were classified as discontinued operations), a decrease in noncontrolling interest in Operating Partnership of $14.1 million for 2014 as compared to 2013, a decrease in income from discontinued operations of $11.8 million for 2014 as compared to 2013, and a decrease in noncontrolling interest in consolidated joint ventures of $1.4 million for 2014 as compared to 2013.
52
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Overview:
Historically, rental revenue has been the Company’s principal source of funds to pay operating expenses, debt service, capital expenditures and dividends, excluding non-recurring capital expenditures. To the extent that the Company’s cash flow from operating activities is insufficient to finance its non-recurring capital expenditures such as property acquisitions, development and construction costs and other capital expenditures, the Company has and expects to continue to finance such activities through borrowings under its revolving credit facility, other debt and equity financings, proceeds from the sale of properties and joint venture capital.
The Company expects to meet its short-term liquidity requirements generally through its working capital, which may include proceeds from the sales of office properties, net cash provided by operating activities and from its revolving credit facility. The Company frequently examines potential property acquisitions and development projects and, at any given time, one or more of such acquisitions or development projects may be under consideration. Accordingly, the ability to fund property acquisitions and development projects is a major part of the Company’s financing requirements. The Company expects to meet its financing requirements through funds generated from operating activities, to the extent available, proceeds from property sales, joint venture capital, long-term and short-term borrowings (including draws on the Company’s revolving credit facility) and the issuance of additional debt and/or equity securities.
Repositioning of the Company’s Portfolio:
As described earlier relative to its current strategic initiative, the Company’s management has been reviewing its portfolio and identifying opportunities to divest of non-core office properties that no longer meet its long-term strategy, have reached their potential, are less efficient to operate, or when market conditions are favorable to be sold at attractive prices. The Company anticipates redeploying the proceeds from non-core rental property sales in the near-term to acquire office properties, enhance amenities and infrastructure at existing office properties, develop, redevelop and acquire multi-family rental properties, as well as reposition certain office properties into multi-family residential and/or mixed use properties, in its core Northeast sub-markets.
Construction Projects:
On October 6, 2015, the Company entered into a joint venture partnership with XS Port Imperial Hotel, LLC (“XS”) to form XS Hotel Urban Renewal Associates LLC (“XS Hotel URA”) for the development and ownership of a 364-key dual branded hotel property located in Weehawken, New Jersey (“Port Imperial Hotel”). Concurrently, the Company and XS entered into a separate joint venture partnership to form XS Hotel Associates, L.L.C. (“XS Hotel”) for the management and operations of the completed hotel development. The Company holds a 90 percent interest and XS holds the remaining 10 percent interest in the consolidated joint ventures, XS Hotel URA and XS Hotel, with the Company having full and complete authority, power, and discretion to manage and control the ventures’ business, affairs, and property. The construction of the Port Imperial Hotel is estimated to cost a total of $105.9 million, which will be funded by a $94 million construction loan with the balance to be funded with members’ capital. Upon closing, Mack-Cali’s initial contribution was $27.3 million, which included a capital credit of $23.7 million for its contributed Hotel Condominium Land unit, and XS Hotel’s initial contribution was $3 million. As of December 31, 2015, the Company incurred development costs of $1.5 million and estimates it will need to fund an additional $3.3 million for the completion of the project.
The Company owns developable land to accommodate a multi-phase development project of approximately 1,034-unit multi-family rental property located in Malden, Massachusetts. The initial phase commenced construction of 292 units in the third quarter of 2015 (the “Chase II Project”). The Chase II Project is estimated to cost a total of $74.9 million (of which the Company has incurred $22.1 million through December 31, 2015) and is expected to be ready for occupancy by second quarter 2017. The Company estimates it will need to fund additional costs of $4.8 million for the completion of the Chase II Project. On December 16, 2015, the Company obtained a construction loan with a maximum borrowing amount of $48 million (with no outstanding balance as of December 31, 2015), which bears interest at a rate of LIBOR plus 2.25 percent, reducing to LIBOR plus 2.0 percent subject to achieving certain conditions and matures in December 2018.
On April 1, 2015, the Company acquired vacant land to accommodate a two-phase development of the CitySquare Project for a purchase price of $3.1 million with an additional $1.25 million to be paid (which is accrued as of December 31, 2015), subject to certain conditions, in accordance with the terms of the purchase and sale agreement. The purchase price for the acquisition was funded primarily through borrowing under the Company’s unsecured revolving credit facility. The first phase with 237 units started construction in the third quarter 2015 with anticipated initial deliveries in the second quarter 2017. The second phase, with 128 units, is projected to begin construction in 2017. Total development costs are estimated to be approximately $92.5 million (of which $9.1 million was incurred by the Company through December 31, 2015 and estimates it will need to fund an additional $41.9 million for the completion of the project). On December 10, 2015, the Company obtained a construction loan with a maximum borrowing amount of $41.5 million (with no outstanding balance as of December 31, 2015), which bears interest at a rate of LIBOR plus 2.5 percent, reducing to LIBOR plus 2.25 percent subject to achieving certain conditions and matures in December 2018.
53
On May 21, 2014, the Company entered into a joint venture agreement with Ironstate Harborside-A LLC (“ISA”) to form Harborside Unit A Urban Renewal, L.L.C. (“URL-Harborside”), a newly-formed joint venture that will develop, own and operate a high-rise tower of approximately 763 multi-family apartment units above a parking pedestal to be located on land contributed by the Company at its Harborside complex in Jersey City, New Jersey (the “URL Project”). The Company owns an 85 percent interest in URL-Harborside and the remaining interest is owned by ISA, with shared control over major decisions such as approval of budgets, property financings and leasing guidelines. The construction of the URL Project is estimated to cost a total of approximately $320 million (of which development costs of $210.2 million have been incurred by URL-Harborside through December 31, 2015). The URL Project is projected to be ready for occupancy by the fourth quarter of 2016. The venture has a construction/permanent loan with a maximum borrowing amount of $192 million (with $63.9 million outstanding as of December 31, 2015), which bears interest at a rate of 5.197 percent and matures in August 2029. The Company does not expect to fund any future development costs of the project, as future development costs will be funded by using the loan financing.
The Company owns a 76.25 percent interest in a consolidated joint venture which is constructing a 108-unit multi-family development rental property located in Eastchester, New York (the “Eastchester Project”). The project is expected to be ready for occupancy by the second quarter of 2016. The Eastchester Project is estimated to cost a total of $50 million (of which development costs of $29.6 million have been incurred through December 31, 2015). The venture has a $28.8 million construction loan (with $10.9 million outstanding as of December 31, 2015). The Company expects to fund approximately $20.9 million for the development of the project (of which, as of December 31, 2015, the Company has incurred $14.7 million of the development costs and estimates it will need to fund an additional $6.2 million for the completion of the project.
REIT Restrictions:
To maintain its qualification as a REIT under the Code, the Company must make annual distributions to its stockholders of at least 90 percent of its REIT taxable income, determined without regard to the dividends paid deduction and by excluding net capital gains. Moreover, the Company intends to continue to make regular quarterly distributions to its common stockholders. Based upon the most recently paid common stock dividend rate of $0.15 per common share, in the aggregate, such distributions would equal approximately $53.8 million ($60.1 million, including common units in the Operating Partnership held by parties other than the Company) on an annualized basis. However, any such distributions, whether for federal income tax purposes or otherwise, would be paid out of available cash, including borrowings and other sources, after meeting operating requirements, preferred stock dividends and distributions, and scheduled debt service on the Company’s debt. If and to the extent the Company retains and does not distribute any net capital gains, the Company will be required to pay federal, state and local taxes on such net capital gains at the rate applicable to capital gains of a corporation.
Property Lock-Ups:
The Company may not dispose of or distribute certain of its properties, currently comprised of seven properties with an aggregate net carrying value of approximately $57.1 million, which were originally contributed by certain unrelated common unitholders of the Operating Partnership, without the express written consent of such common unitholders, as applicable, except in a manner which does not result in recognition of any built-in-gain (which may result in an income tax liability) or which reimburses the appropriate specific common unitholders for the tax consequences of the recognition of such built-in-gains (collectively, the “Property Lock-Ups”). The aforementioned restrictions do not apply in the event that the Company sells all of its properties or in connection with a sale transaction which the Company’s Board of Directors determines is reasonably necessary to satisfy a material monetary default on any unsecured debt, judgment or liability of the Company or to cure any material monetary default on any mortgage secured by a property. The Property Lock-Ups expire in 2016.
Upon the expiration of the Property Lock-Ups, the Company is generally required to use commercially reasonable efforts to prevent any sale, transfer or other disposition of the subject properties from resulting in the recognition of built-in gain to the specific common unitholders, which include members of the Mack Group (which includes William L. Mack, Chairman of the Company’s Board of Directors; David S. Mack, director; and Earle I. Mack, a former director); the Robert Martin Group (which includes Robert F. Weinberg, a former director and current member of its Advisory Board), and the Cali Group (which includes John R. Cali, a former director and current member of its Advisory Board). As of December 31, 2015, 110 of the Company’s properties, with an aggregate net book value of approximately $1.3 billion, have lapsed restrictions and are subject to these conditions.
54
Unencumbered Properties:
As of December 31, 2015, the Company had 204 unencumbered properties with a carrying value of $2.4 billion representing 91.0 percent of the Company’s total consolidated property count.
Cash Flows
Cash and cash equivalents increased by $7.5 million to $37.1 million at December 31, 2015, compared to $29.6 million at December 31, 2014. This increase is comprised of the following net cash flow items:
|
(1)
|
$169.5 million provided by operating activities.
|
|||||||||||
|
(2)
|
$222.5 million used in investing activities, consisting primarily of the following:
|
|||||||||||
|
(a)
|
$78 million used for investments in unconsolidated joint ventures; plus
|
|||||||||||
|
(b)
|
$70.5 million used for rental property acquisitions and related intangibles; plus
|
|||||||||||
|
(c)
|
$94.1 million used for additions to rental property and improvements; plus
|
|||||||||||
|
(d)
|
$81.1 million used for the development of rental property, other related costs and deposits; plus
|
|||||||||||
|
(e)
|
$1.1 million used for restricted cash; minus
|
|||||||||||
|
(f)
|
$81 million from proceeds from the sales of rental property; minus
|
|||||||||||
|
(g)
|
$8.3 million received from payments of notes receivables; minus
|
|||||||||||
|
(h)
|
$6.4 million from proceeds from the sale of investment in unconsolidated joint venture; minus
|
|||||||||||
|
(i)
|
$6.4 million received from distributions in excess of cumulative earnings from unconsolidated joint ventures.
|
|||||||||||
|
(3)
|
$60.6 million provided by financing activities, consisting primarily of the following:
|
|||||||||||
|
(a)
|
$334 million from borrowings under the revolving credit facility; plus
|
|||||||||||
|
(b)
|
$10.8 million from proceeds received from mortgages and loans payable; plus
|
|||||||||||
|
(c)
|
$2.1 million from contributions from noncontrolling interests; minus
|
|||||||||||
|
(d)
|
$179 million used for repayments of revolving credit facility; minus
|
|||||||||||
|
(e)
|
$60 million used for payments of dividends and distributions; minus
|
|||||||||||
|
(f)
|
$43.1 million used for repayments of mortgages, loans payable and other obligations; minus
|
|||||||||||
|
(g)
|
$3 million used for repayment of finance costs.
|
|||||||||||
Debt Financing
Summary of Debt:
The following is a breakdown of the Company’s debt between fixed and variable-rate financing as of December 31, 2015:
|
Balance
|
Weighted Average
|
Weighted Average
|
||||||
|
($000’s)
|
% of Total
|
Interest Rate (a)
|
Maturity in Years
|
|||||
|
Fixed Rate Unsecured Debt and
|
||||||||
|
Other Obligations
|
$
|
1,268,844
|
58.88
|
%
|
4.88
|
%
|
4.16
|
|
|
Fixed Rate Secured Debt
|
593,677
|
27.55
|
%
|
7.15
|
%
|
2.56
|
||
|
Variable Rate Secured Debt
|
137,399
|
6.38
|
%
|
4.09
|
%
|
1.13
|
||
|
Variable Rate Unsecured Debt (b)
|
155,000
|
7.19
|
%
|
1.66
|
%
|
1.58
|
||
|
Totals/Weighted Average:
|
$
|
2,154,920
|
100.00
|
%
|
5.22
|
%
|
(b)
|
3.34
|
|
(a)
|
The actual weighted average LIBOR rate for the Company’s outstanding variable rate debt was 0.35 percent as of December 31, 2015, plus the applicable spread.
|
|
(b)
|
Excludes amortized deferred financing costs pertaining to the Company’s unsecured revolving credit facility which amounted to $3.2 million for the year ended December 31, 2015.
|
55
Debt Maturities:
Scheduled principal payments and related weighted average annual effective interest rates for the Company’s debt as of December 31, 2015 are as follows:
|
Scheduled
|
Principal
|
Weighted Avg.
|
||||||||||
|
Amortization
|
Maturities
|
Total
|
Effective Interest Rate of
|
|||||||||
|
Period
|
($000’s)
|
($000’s)
|
($000’s)
|
Future Repayments (a)
|
||||||||
|
2016
|
$
|
8,125
|
$
|
406,465
|
$
|
414,590
|
6.67
|
%
|
||||
|
2017 (b)
|
7,275
|
557,088
|
564,363
|
3.41
|
%
|
|||||||
|
2018
|
7,311
|
231,536
|
238,847
|
6.67
|
%
|
|||||||
|
2019
|
723
|
331,567
|
332,290
|
7.45
|
%
|
|||||||
|
2020
|
569
|
-
|
569
|
4.82
|
%
|
|||||||
|
Thereafter
|
5,759
|
605,206
|
610,965
|
4.13
|
%
|
|||||||
|
Sub-total
|
29,762
|
2,131,862
|
2,161,624
|
|||||||||
|
Adjustment for unamortized debt
|
||||||||||||
|
discount/premium, net, as of
|
||||||||||||
|
December 31, 2015
|
(6,704)
|
-
|
(6,704)
|
|||||||||
|
Totals/Weighted Average
|
$
|
23,058
|
$
|
2,131,862
|
$
|
2,154,920
|
5.22
|
%
|
(c)
|
|||
|
(a)
|
The actual weighted average LIBOR rate for the Company’s outstanding variable rate debt was 0.35 percent as of December 31, 2015, plus the applicable spread.
|
|
(b)
|
Includes outstanding borrowings of the Company’s unsecured revolving credit facility of $155 million which matures in 2017 with two six-month extension options with the payment of a fee.
|
|
(c)
|
Excludes amortized deferred financing costs pertaining to the Company’s unsecured revolving credit facility which amounted to $3.2 million for the year ended December 31, 2015.
|
Senior Unsecured Notes:
The terms of the Company’s senior unsecured notes (which totaled approximately $1.3 billion as of December 31, 2015) 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 Term Loan:
On January 7, 2016, the Company obtained a new $350 million unsecured term loan, which matures in January 2019 with two one-year extension options. The interest rate for the new term loan is currently 140 basis points over LIBOR, subject to adjustment on a sliding scale based on the Company's unsecured debt ratings, or at the Company's option, a defined leverage ratio. The Company entered into interest rate swap arrangements to fix LIBOR for the duration of the term loan. Including costs, the loan provides for a current all-in fixed rate of 3.12 percent. The proceeds from the loan were used primarily to repay outstanding borrowings on its unsecured revolving credit facility and to repay the Company's $200 million, 5.8 percent senior unsecured notes that matured on January 15, 2016.
Unsecured Revolving Credit Facility:
On July 16, 2013, the Company amended and restated its unsecured revolving credit facility with a group of 17 lenders. The $600 million facility is expandable to $1 billion and matures in July 2017. It has two six month extension options each requiring the payment of a 7.5 basis point fee. The interest rate on outstanding borrowings (not electing the Company’s competitive bid feature) and the facility fee on the current borrowing capacity payable quarterly in arrears are based upon the Operating Partnership’s unsecured debt ratings, as follows:
|
Operating Partnership's
|
Interest Rate -
|
|||
|
Unsecured Debt Ratings:
|
Applicable Basis Points
|
Facility Fee
|
||
|
Higher of S&P or Moody's
|
Above LIBOR
|
Basis Points
|
||
|
No ratings or less than BBB-/Baa3
|
170.0
|
35.0
|
||
|
BBB- or Baa3 (current)
|
130.0
|
30.0
|
||
|
BBB or Baa2
|
110.0
|
20.0
|
||
|
BBB+ or Baa1
|
100.0
|
15.0
|
||
|
A- or A3 or higher
|
92.5
|
12.5
|
56
The facility has a competitive bid feature, which allows the Company to solicit bids from lenders under the facility to borrow up to $300 million at interest rates less than those above.
The terms of the unsecured facility include certain restrictions and covenants which limit, among other things the incurrence of additional indebtedness, the incurrence of liens and the disposition of real estate properties (to the extent that: (i) such property dispositions cause the Company to default on any of the financial ratios of the facility described below, or (ii) the property dispositions are completed while the Company 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 (60 percent), the maximum amount of secured indebtedness (40 percent), the minimum amount of fixed charge coverage (1.5 times), the maximum amount of unsecured indebtedness (60 percent), the minimum amount of unencumbered property interest coverage (2.0 times) and certain investment limitations (generally 15 percent of total capitalization). If an event of default has occurred and is continuing, the Company will not make any excess distributions except to enable the Company to continue to qualify as a REIT under the Code.
Through July 15, 2013, the Company had a $600 million unsecured revolving credit facility, which had an interest rate on outstanding borrowings of LIBOR plus 125 basis points and a facility fee of 25 basis points.
Mortgages, Loans Payable and Other Obligations:
The Company has other mortgages, loans payable and other obligations which consist of various loans collateralized by certain of the Company’s rental properties. Payments on mortgages, loans payable and other obligations are generally due in monthly installments of principal and interest, or interest only.
Debt Strategy:
The Company does not intend to reserve funds to retire the Company’s senior unsecured notes, outstanding borrowings under its unsecured revolving credit facility, its unsecured term loan, or its mortgages, loans payable and other obligations upon maturity. Instead, the Company will seek to refinance such debt at maturity or retire such debt through the issuance of additional equity or debt securities on or before the applicable maturity dates. If it cannot raise sufficient proceeds to retire the maturing debt, the Company may draw on its revolving credit facility to retire the maturing indebtedness, which would reduce the future availability of funds under such facility. As of February 22, 2016, the Company had outstanding borrowings of $100 million under its unsecured revolving credit facility. The Company is reviewing various financing and refinancing options, including the purchase of its senior unsecured notes in privately-negotiated transactions, the issuance of additional, or exchange of current, unsecured debt, common and preferred stock, and/or obtaining additional mortgage debt, some or all of which may be completed in 2016. The Company currently anticipates that its available cash and cash equivalents, cash flows from operating activities and proceeds from the sale of office properties, together with cash available from borrowings and other sources, will be adequate to meet the Company’s capital and liquidity needs in the short term. However, if these sources of funds are insufficient or unavailable, due to current economic conditions or otherwise, or if capital needs to fund acquisition and development opportunities in the multi-family rental sector arise, the Company’s ability to make the expected distributions discussed in “REIT Restrictions” above may be adversely affected.
Equity Financing and Registration Statements
Common Equity:
The following table presents the changes in the Company’s issued and outstanding shares of common stock and the Operating Partnership’s common units from January 1, 2015 to December 31, 2015:
|
Common
|
Common
|
||
|
Stock
|
Units
|
Total
|
|
|
Outstanding at January 1, 2015
|
89,076,578
|
11,083,876
|
100,160,454
|
|
Common units redeemed for common stock
|
567,032
|
(567,032)
|
-
|
|
Shares issued under Dividend Reinvestment
|
|||
|
and Stock Purchase Plan
|
3,641
|
-
|
3,641
|
|
Restricted shares issued
|
45,597
|
-
|
45,597
|
|
Cancellation of restricted shares
|
(108,898)
|
-
|
(108,898)
|
|
Outstanding at December 31, 2015
|
89,583,950
|
10,516,844
|
100,100,794
|
57
Share Repurchase Program:
The Company has a share repurchase program which was renewed and authorized by its Board of Directors in September 2012 to purchase up to $150 million of the Company’s outstanding common stock (“Repurchase Program”), which it may repurchase from time to time in open market transactions at prevailing prices or through privately negotiated transactions. As of December 31, 2015, the Company has a remaining authorization under the Repurchase Program of $139 million. There were no common stock repurchases in the years ended December 31, 2014 and 2015 and through February 22, 2016.
Dividend Reinvestment and Stock Purchase Plan:
The Company has a Dividend Reinvestment and Stock Purchase Plan (the “DRIP”) which commenced in March 1999 under which approximately 5.5 million shares of the Company’s common stock have been reserved for future issuance. The DRIP provides for automatic reinvestment of all or a portion of a participant’s dividends from the Company’s shares of common stock. The DRIP also permits participants to make optional cash investments up to $5,000 a month without restriction and, if the Company waives this limit, for additional amounts subject to certain restrictions and other conditions set forth in the DRIP prospectus filed as part of the Company’s effective registration statement on Form S-3 filed with the Securities and Exchange Commission (“SEC”) for the approximately 5.5 million shares of the Company’s common stock reserved for issuance under the DRIP.
Shelf Registration Statements:
The Company has an effective shelf registration statement on Form S-3 filed with the SEC for an aggregate amount of $2.0 billion in common stock, preferred stock, depositary shares, and/or warrants of the Company, under which no securities have been sold as of February 22, 2016.
The Company 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 Company and debt securities of the Operating Partnership, under which no securities have been sold as of February 22, 2016.
Off-Balance Sheet Arrangements
Unconsolidated Joint Venture Debt:
The debt of the Company’s unconsolidated joint ventures generally provides for recourse to the Company for customary matters such as intentional misuse of funds, environmental conditions and material misrepresentations. The Company has agreed to guarantee repayment of a portion of the debt of its unconsolidated joint ventures. Such debt has a total facility amount of $547.6 million of which the Company has agreed to guarantee up to $74.7 million. As of December 31, 2015, the outstanding balance of such debt totaled $309.9 million of which $53.1 million was guaranteed by the Company. The Company has also posted a $3.6 million letter of credit in support of the Harborside South Pier joint venture, half of which is indemnified by Hyatt Corporation, the Company’s joint venture partner.
The Company’s off-balance sheet arrangements are further discussed in Note 4: Investments in Unconsolidated Joint Ventures to the Financial Statements.
Contractual Obligations
The following table outlines the timing of payment requirements related to the Company’s debt (principal and interest), PILOT agreements, ground lease agreements and other obligations, as of December 31, 2015:
|
Payments Due by Period
|
|||||||||||||||||
|
Less than 1
|
2 – 3
|
4 – 5
|
6 – 10
|
After 10
|
|||||||||||||
|
(dollars in thousands)
|
Total
|
Year
|
Years
|
Years
|
Years
|
Years
|
|||||||||||
|
Senior unsecured notes
|
$
|
1,523,519
|
$
|
253,588
|
$
|
339,325
|
$
|
313,700
|
$
|
616,906
|
-
|
||||||
|
Revolving credit facility (a)
|
159,085
|
2,580
|
156,505
|
-
|
-
|
-
|
|||||||||||
|
Mortgages, loans payable
|
|||||||||||||||||
|
and other obligations (b)
|
828,067
|
250,071
|
442,012
|
87,179
|
14,274
|
$
|
34,531
|
||||||||||
|
Payments in lieu of taxes
|
|||||||||||||||||
|
(PILOT)
|
28,123
|
4,407
|
13,222
|
8,815
|
1,679
|
-
|
|||||||||||
|
Ground lease payments
|
16,704
|
387
|
734
|
463
|
1,172
|
13,948
|
|||||||||||
|
Other
|
1,655
|
1,655
|
-
|
-
|
-
|
-
|
|||||||||||
|
Total
|
$
|
2,557,153
|
$
|
512,688
|
$
|
951,798
|
$
|
410,157
|
$
|
634,031
|
$
|
48,479
|
|||||
58
|
(a)
|
Interest payments assume LIBOR rate of 0.35 percent, which is the weighted average rate on this outstanding variable rate debt at December 31, 2015, plus the applicable spread.
|
|
(b)
|
Interest payments assume LIBOR rate of 0.33 percent, which is the weighted average rate on its outstanding variable rate mortgage debt at December 31, 2015, plus the applicable spread.
|
Departure of Executive Officer:
On November 4, 2014, the Company announced that Mitchell E. Hersh would step down as president and chief executive officer of the Company effective May 11, 2015 and would not stand for re-election to the Company’s Board of Directors (the “Board of Directors”) at the 2015 annual meeting of the Company’s stockholders. Pursuant to the terms of the Separation Agreement, the Company elected to extend the separation date to June 30, 2015 (the “Separation Date”). In connection with Mr. Hersh’s departure from the Company, the Company and Mr. Hersh entered into a Separation and General Release Agreement (the “Separation Agreement”) dated November 4, 2014 (the “Effective Date”). The Separation Agreement provided that Mr. Hersh’s employment with the Company was being terminated without cause, and further provided, pursuant to the terms of Mr. Hersh’s employment agreement, multi-year performance award agreement, TSR-based performance award agreement and deferred retirement compensation agreement, for (i) a cash payment to Mr. Hersh of $8 million, (ii) payment of the premiums for the continuation of Mr. Hersh’s health, dental and vision insurance for 48 months following the Separation Date, (iii) vesting of 210,000 shares of restricted common stock pursuant to Mr. Hersh’s multi-year performance award agreement, (iv) a cash payment equal to the sum of (X) $504,000, plus (Y) the product of (1) 210,000 multiplied by (2) the aggregate amount of dividends on the Company’s common stock that were declared and paid between the Effective Date and the Separation Date in payment of accrued but unpaid dividend equivalents pursuant to his multi-year performance award agreement, (v) issuance of 41,811 shares of common stock of the Company (the “Deferred Shares”) pursuant to the acceleration of vesting of 675 performance shares pursuant to Mr. Hersh’s TSR-based performance award agreement, and (vi) a cash payment of $2,311,792 pursuant to Mr. Hersh’s deferred retirement compensation award agreement. All such cash amounts and Deferred Shares were paid to Mr. Hersh on January 4, 2016. Under the terms of the Separation Agreement, Mr. Hersh continued to receive his base salary in accordance with his employment agreement and to be eligible to participate in the Company’s executive incentive compensation and bonus programs. In addition, upon departure Mr. Hersh was entitled to receive his accrued but unpaid base salary and to have his expenses reimbursed.
Funds from Operations
Funds from operations (“FFO”) is defined as net income (loss) before noncontrolling interest of unitholders, computed in accordance with GAAP, excluding sales or disposals of depreciable rental property, and impairments related to depreciable rental property, plus real estate-related depreciation and amortization. The Company believes that FFO is helpful to investors as one of several measures of the performance of an equity REIT. The Company further believes that as FFO excludes the effect of depreciation, gains (or losses) from sales of properties and impairments related to depreciable rental property (all of which are based on historical costs which may be of limited relevance in evaluating current performance), FFO can facilitate comparison of operating performance between equity REITs.
FFO should not be considered as an alternative to net income available to common shareholders as an indication of the Company’s performance or to cash flows as a measure of liquidity. FFO presented herein is not necessarily comparable to FFO presented by other real estate companies due to the fact that not all real estate companies use the same definition. However, the Company’s FFO is comparable to the FFO of real estate companies that use the current definition of the National Association of Real Estate Investment Trusts (“NAREIT”).
As the Company considers its primary earnings measure, net income available to common shareholders, as defined by GAAP, to be
59
the most comparable earnings measure to FFO, the following table presents a reconciliation of net income available to common shareholders to FFO, as calculated in accordance with NAREIT’s current definition, for the years ended December 31, 2015, 2014 and 2013 (in thousands):
|
Years Ended December 31,
|
|||||||||
|
2015
|
2014
|
2013
|
|||||||
|
Net income (loss) available to common shareholders
|
$
|
(125,752)
|
$
|
28,567
|
$
|
(14,909)
|
|||
|
Add (deduct): Noncontrolling interests in Operating Partnership
|
(15,256)
|
3,602
|
(10,459)
|
||||||
|
Noncontrolling interests in discontinued operations
|
-
|
-
|
8,509
|
||||||
|
Real estate-related depreciation and amortization on
|
|||||||||
|
continuing operations (a)
|
190,875
|
185,339
|
194,741
|
||||||
|
Real estate-related depreciation and amortization
|
|||||||||
|
on discontinued operations
|
-
|
-
|
8,218
|
||||||
|
Impairments
|
197,919
|
-
|
134,704
|
||||||
|
Realized (gains) losses and unrealized losses
|
|||||||||
|
on disposition of rental property, net
|
(53,261)
|
(54,848)
|
(83,371)
|
||||||
|
Gain on sale of investment in unconsolidated
|
|||||||||
|
joint venture
|
(6,448)
|
-
|
-
|
||||||
|
Funds from operations
|
$
|
188,077
|
$
|
162,660
|
$
|
237,433
|
|||
|
(a)
|
Includes the Company’s share from unconsolidated joint ventures of $21.6 million, $13.7 million and $13.8 million for the years ended December 31, 2015, 2014 and 2013, respectively. Excludes non-real estate-related depreciation and amortization of $350,000, $348,000 and $287,000 for the years ended December 31, 2015, 2014 and 2013, respectively and $604,000, $492,000 and zero of depreciation expense allocable to the Company’s noncontrolling interest in consolidated joint ventures for the years ended December 31, 2015, 2014 and 2013, respectively.
|
Inflation
The Company’s leases with the majority of its commercial tenants provide for recoveries and escalation charges based upon the tenant’s proportionate share of, and/or increases in, real estate taxes and certain operating costs, which reduce the Company’s exposure to increases in operating costs resulting from inflation. The Company believes that inflation did not materially impact the Company’s results of operations and financial condition for the periods presented.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
We consider portions of this information, including the documents incorporated by reference, to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of such act. Such forward-looking statements relate to, without limitation, our future economic performance, plans and objectives for future operations and projections of revenue and other financial items. Forward-looking statements can be identified by the use of words such as “may,” “will,” “plan,” “potential,” “projected,” “should,” “expect,” “anticipate,” “estimate,” “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:
|
·
|
risks and uncertainties affecting the general economic climate and conditions, which in turn may have a negative effect on the fundamentals of our business and the financial condition of our tenants and residents;
|
|
·
|
the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis;
|
|
·
|
the extent of any tenant bankruptcies or of any early lease terminations;
|
|
·
|
our ability to lease or re-lease space at current or anticipated rents;
|
|
·
|
changes in the supply of and demand for our properties;
|
|
·
|
changes in interest rate levels and volatility in the securities markets;
|
|
·
|
our ability to complete construction and development activities on time and within budget, including without limitation obtaining regulatory permits and the availability and cost of materials, labor and equipment;
|
|
·
|
forward-looking financial and operational information, including information relating to future development projects, potential acquisitions or dispositions, and projected revenue and income;
|
|
·
|
changes in operating costs;
|
|
·
|
our ability to obtain adequate insurance, including coverage for terrorist acts;
|
|
·
|
our credit worthiness and the availability of financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities and refinance existing debt and our future interest expense;
|
|
·
|
changes in governmental regulation, tax rates and similar matters; and
|
|
·
|
other risks associated with the development and acquisition of properties, including risks that the development may not be completed on schedule, that the tenants or residents will not take occupancy or pay rent, or that development or operating costs may be greater than anticipated.
|
60
For further information on factors which could impact us and the statements contained herein, see Item 1A: Risk Factors. We assume no obligation to update and supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.
|
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, commodity prices and equity prices. In pursuing its business plan, the primary market risk to which the Company is exposed is interest rate risk. Changes in the general level of interest rates prevailing in the financial markets may affect the spread between the Company’s yield on invested assets and cost of funds and, in turn, its ability to make distributions or payments to its investors.
Approximately $1.9 billion of the Company’s long-term debt as of December 31, 2015 bears interest at fixed rates and therefore the fair value of these instruments is affected by changes in market interest rates. The following table presents principal cash flows (in thousands) based upon maturity dates of the debt obligations and the related weighted-average interest rates by expected maturity dates for the fixed rate debt. The interest rates on the Company’s variable rate debt as of December 31, 2015 ranged from LIBOR plus 130 basis points to LIBOR plus 950 basis points. Assuming interest-rate caps are not in effect, if market rates of interest on the Company’s variable rate debt increased or decreased by 100 basis points, then the increase or decrease in interest costs on the Company’s variable rate debt would be approximately $2.9 million annually and the increase or decrease in the fair value of the Company’s fixed rate debt as of December 31, 2015 would be approximately $58 million.
|
December 31, 2015
|
|||||||||||||||||||||||||||||
|
Debt,
including current portion
|
Fair
|
||||||||||||||||||||||||||||
|
($s in thousands)
|
2016
|
2017
|
2018
|
2019
|
2020
|
Thereafter
|
Sub-total
|
Other (a)
|
Total
|
Value
|
|||||||||||||||||||
|
Fixed Rate
|
$
|
315,628
|
$
|
397,493
|
$
|
237,447
|
$
|
307,123
|
$
|
569
|
$
|
610,965
|
$
|
1,869,225
|
$
|
(6,704)
|
$
|
1,862,521
|
$
|
1,867,635
|
|||||||||
|
Average Interest Rate
|
8.06
|
%
|
4.12
|
%
|
6.70
|
%
|
7.88
|
%
|
4.82
|
%
|
4.13
|
%
|
5.60
|
%
|
|||||||||||||||
|
Variable Rate
|
$
|
98,962
|
$
|
166,870
|
(b)
|
$
|
1,400
|
$
|
25,167
|
$
|
-
|
-
|
$
|
292,399
|
-
|
$
|
292,399
|
$
|
292,399
|
||||||||||
|
(a) Adjustment for unamortized debt discount/premium, net, as of December 31, 2015.
|
|||||||||||||||||||||||||||||
|
(b) Includes $155 million of outstanding borrowings under the Company’s unsecured revolving credit facility which matures in 2017 with two six-month extension options with the payment of a fee.
|
|||||||||||||||||||||||||||||
While the Company has not experienced any significant credit losses, in the event of a significant rising interest rate environment and/or economic downturn, defaults could increase and result in losses to the Company which could adversely affect its operating results and liquidity.
61
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of the Company and the Report of PricewaterhouseCoopers LLP, together with the notes to the Consolidated Financial Statements of the Company, as set forth in the index in Item 15: Exhibits and Financial Statements, are filed under this Item 8: Financial Statements and Supplementary Data and are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s chief executive officer, president and chief operating officer and chief financial officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s chief executive officer, president and chief operating officer and chief financial officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.
Management’s Report on Internal Control Over Financial Reporting. Internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, is a process designed by, or under the supervision of, the Company’s chief executive officer, president and chief operating officer and chief financial officer, or persons performing similar functions, and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s management, with the participation of the Company’s chief executive officer, president and chief operating officer and chief financial officer, has established and maintained policies and procedures designed to maintain the adequacy of the Company’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 Company;
|
|
|
(2)
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
|
|
|
(3)
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
|
The Company’s management has evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015 based on the criteria established in a report entitled Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. Based on our assessment and those criteria, the Company’s management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2015.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2015 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.
62
Changes In Internal Control Over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Not Applicable.
63
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 will be set forth in the Company’s definitive proxy statement for its annual meeting of shareholders expected to be held on June 1, 2016, and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 will be set forth in the Company’s definitive proxy statement for its annual meeting of shareholders expected to be held on June 1, 2016, and is incorporated herein by reference.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
The information required by Item 12 will be set forth in the Company’s definitive proxy statement for its annual meeting of shareholders expected to be held on June 1, 2016, and is incorporated herein by reference.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
The information required by Item 13 will be set forth in the Company’s definitive proxy statement for its annual meeting of shareholders expected to be held on June 1, 2016, and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by Item 14 will be set forth in the Company’s definitive proxy statement for its annual meeting of shareholders expected to be held on June 1, 2016, and is incorporated herein by reference.
64
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
(a) 1.
|
All Financial Statements
|
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2015 and 2014
Consolidated Statements of Operations for the Years Ended December 31, 2015, 2014 and 2013
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2015, 2014 and 2013
Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014 and 2013
Notes to Consolidated Financial Statements
(a) 2. Financial Statement Schedules
(i) Mack-Cali Realty Corporation:
Schedule III – Real Estate Investments and Accumulated Depreciation as of December 31, 2015
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.
65
Report of Independent Registered Public Accounting Firm
To Board of Directors and Shareholders
of Mack-Cali Realty Corporation:
In our opinion, the consolidated financial statements listed in the index appearing Item 15(a)(1) present fairly, in all material respects, the financial position of Mack-Cali Realty Corporation and its subsidiaries (collectively, the “Company”) at December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2)(i) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included 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. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
As discussed in Note 2 to the consolidated financial statements, the Company adopted accounting standards update (“ASU”) No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”, which changed the criteria for reporting discontinued operations in 2014.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP
New York, New York
February 24, 2016
66
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts)
|
December 31,
|
|||||
|
ASSETS
|
2015
|
2014
|
|||
|
Rental property
|
|||||
|
Land and leasehold interests
|
$
|
735,696
|
$
|
760,855
|
|
|
Buildings and improvements
|
3,648,238
|
3,753,300
|
|||
|
Tenant improvements
|
408,617
|
431,969
|
|||
|
Furniture, fixtures and equipment
|
15,167
|
12,055
|
|||
|
4,807,718
|
4,958,179
|
||||
|
Less – accumulated depreciation and amortization
|
(1,464,482)
|
(1,414,305)
|
|||
|
Net investment in rental property
|
3,343,236
|
3,543,874
|
|||
|
Cash and cash equivalents
|
37,077
|
29,549
|
|||
|
Investments in unconsolidated joint ventures
|
303,457
|
247,468
|
|||
|
Unbilled rents receivable, net
|
120,246
|
123,885
|
|||
|
Deferred charges, goodwill and other assets, net
|
213,377
|
204,650
|
|||
|
Restricted cash
|
35,343
|
34,245
|
|||
|
Accounts receivable, net of allowance for doubtful accounts
|
|||||
|
of $1,407 and $2,584
|
10,754
|
8,576
|
|||
|
Total assets
|
$
|
4,063,490
|
$
|
4,192,247
|
|
|
LIABILITIES AND EQUITY
|
|||||
|
Senior unsecured notes
|
$
|
1,268,844
|
$
|
1,267,744
|
|
|
Revolving credit facility
|
155,000
|
-
|
|||
|
Mortgages, loans payable and other obligations
|
731,076
|
820,910
|
|||
|
Dividends and distributions payable
|
15,582
|
15,528
|
|||
|
Accounts payable, accrued expenses and other liabilities
|
135,057
|
126,971
|
|||
|
Rents received in advance and security deposits
|
49,739
|
52,146
|
|||
|
Accrued interest payable
|
24,484
|
26,937
|
|||
|
Total liabilities
|
2,379,782
|
2,310,236
|
|||
|
Commitments and contingencies
|
|||||
|
Equity:
|
|||||
|
Mack-Cali Realty Corporation stockholders’ equity:
|
|||||
|
Common stock, $0.01 par value, 190,000,000 shares authorized,
|
|||||
|
89,583,950 and 89,076,578 shares outstanding
|
896
|
891
|
|||
|
Additional paid-in capital
|
2,570,392
|
2,560,183
|
|||
|
Dividends in excess of net earnings
|
(1,115,612)
|
(936,293)
|
|||
|
Total Mack-Cali Realty Corporation stockholders’ equity
|
1,455,676
|
1,624,781
|
|||
|
Noncontrolling interests in subsidiaries:
|
|||||
|
Operating Partnership
|
170,891
|
202,173
|
|||
|
Consolidated joint ventures
|
57,141
|
55,057
|
|||
|
Total noncontrolling interests in subsidiaries
|
228,032
|
257,230
|
|||
|
Total equity
|
1,683,708
|
1,882,011
|
|||
|
Total liabilities and equity
|
$
|
4,063,490
|
$
|
4,192,247
|
|
The accompanying notes are an integral part of these consolidated financial statements.
67
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
|
Year Ended December 31,
|
|||||||||
|
REVENUES
|
2015
|
2014
|
2013
|
||||||
|
Base rents
|
$
|
487,041
|
$
|
516,727
|
$
|
540,165
|
|||
|
Escalations and recoveries from tenants
|
62,481
|
78,554
|
72,758
|
||||||
|
Construction services
|
-
|
-
|
15,650
|
||||||
|
Real estate services
|
29,620
|
28,638
|
26,935
|
||||||
|
Parking income
|
11,124
|
9,107
|
6,840
|
||||||
|
Other income
|
4,617
|
3,773
|
4,683
|
||||||
|
Total revenues
|
594,883
|
636,799
|
667,031
|
||||||
|
EXPENSES
|
|||||||||
|
Real estate taxes
|
82,688
|
90,750
|
85,574
|
||||||
|
Utilities
|
55,965
|
72,822
|
63,622
|
||||||
|
Operating services
|
107,951
|
112,621
|
105,278
|
||||||
|
Direct construction costs
|
-
|
-
|
14,945
|
||||||
|
Real estate services expenses
|
25,583
|
26,136
|
22,716
|
||||||
|
General and administrative
|
49,147
|
71,051
|
47,040
|
||||||
|
Acquisition-related costs
|
1,560
|
2,118
|
642
|
||||||
|
Depreciation and amortization
|
170,402
|
172,490
|
182,766
|
||||||
|
Impairments
|
197,919
|
-
|
110,853
|
||||||
|
Total expenses
|
691,215
|
547,988
|
633,436
|
||||||
|
Operating income (loss)
|
(96,332)
|
88,811
|
33,595
|
||||||
|
OTHER (EXPENSE) INCOME
|
|||||||||
|
Interest expense
|
(103,051)
|
(112,878)
|
(123,701)
|
||||||
|
Interest and other investment income
|
794
|
3,615
|
2,903
|
||||||
|
Equity in earnings (loss) of unconsolidated joint ventures
|
(3,172)
|
(2,423)
|
(2,327)
|
||||||
|
Realized gains (losses) on disposition of rental property, net
|
53,261
|
54,848
|
-
|
||||||
|
Gain on sale of investment in unconsolidated joint venture
|
6,448
|
-
|
-
|
||||||
|
Loss from early extinguishment of debt
|
-
|
(582)
|
(156)
|
||||||
|
Total other (expense) income
|
(45,720)
|
(57,420)
|
(123,281)
|
||||||
|
Income (loss) from continuing operations
|
(142,052)
|
31,391
|
(89,686)
|
||||||
|
Discontinued operations:
|
|||||||||
|
Income from discontinued operations
|
-
|
-
|
11,811
|
||||||
|
Loss from early extinguishment of debt
|
-
|
-
|
(703)
|
||||||
|
Realized gains (losses) and unrealized losses on
|
|||||||||
|
disposition of rental property and impairments, net
|
-
|
-
|
59,520
|
||||||
|
Total discontinued operations, net
|
-
|
-
|
70,628
|
||||||
|
Net income (loss)
|
(142,052)
|
31,391
|
(19,058)
|
||||||
|
Noncontrolling interest in consolidated joint ventures
|
1,044
|
778
|
2,199
|
||||||
|
Noncontrolling interest in Operating Partnership
|
15,256
|
(3,602)
|
10,459
|
||||||
|
Noncontrolling interest in discontinued operations
|
-
|
-
|
(8,509)
|
||||||
|
Net income (loss) available to common shareholders
|
$
|
(125,752)
|
$
|
28,567
|
$
|
(14,909)
|
|||
|
Basic earnings per common share:
|
|||||||||
|
Income (loss) from continuing operations
|
$
|
(1.41)
|
$
|
0.32
|
$
|
(0.88)
|
|||
|
Discontinued operations
|
-
|
-
|
0.71
|
||||||
|
Net income (loss) available to common shareholders
|
$
|
(1.41)
|
$
|
0.32
|
$
|
(0.17)
|
|||
|
Diluted earnings per common share:
|
|||||||||
|
Income (loss) from continuing operations
|
$
|
(1.41)
|
$
|
0.32
|
$
|
(0.88)
|
|||
|
Discontinued operations
|
-
|
-
|
0.71
|
||||||
|
Net income (loss) available to common shareholders
|
$
|
(1.41)
|
$
|
0.32
|
$
|
(0.17)
|
|||
|
Basic weighted average shares outstanding
|
89,291
|
88,727
|
87,762
|
||||||
|
Diluted weighted average shares outstanding
|
100,222
|
100,041
|
99,785
|
||||||
The accompanying notes are an integral part of these consolidated financial statements.
68
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (in thousands)
|
Additional
|
Dividends in
|
Noncontrolling
|
|||||||||||||||
|
Common Stock
|
Paid-In
|
Excess of
|
Interests
|
Total
|
|||||||||||||
|
Shares
|
Par Value
|
Capital
|
Net Earnings
|
in Subsidiaries
|
Equity
|
||||||||||||
|
Balance at January 1, 2013
|
87,536
|
$
|
875
|
$
|
2,530,621
|
$
|
(764,522)
|
$
|
301,533
|
$
|
2,068,507
|
||||||
|
Net income (loss)
|
-
|
-
|
-
|
(14,909)
|
(4,149)
|
(19,058)
|
|||||||||||
|
Common stock dividends
|
-
|
-
|
-
|
(118,418)
|
-
|
(118,418)
|
|||||||||||
|
Common unit distributions
|
-
|
-
|
-
|
(16,193)
|
(16,193)
|
||||||||||||
|
Increase in noncontrolling interest
|
|||||||||||||||||
|
in consolidated joint ventures
|
-
|
-
|
-
|
-
|
1,040
|
1,040
|
|||||||||||
|
Redemption of common units
|
|||||||||||||||||
|
for common stock
|
277
|
3
|
5,475
|
-
|
(5,478)
|
-
|
|||||||||||
|
Shares issued under Dividend
|
|||||||||||||||||
|
Reinvestment and Stock Purchase Plan
|
10
|
-
|
243
|
-
|
-
|
243
|
|||||||||||
|
Directors' deferred compensation plan
|
-
|
-
|
529
|
-
|
-
|
529
|
|||||||||||
|
Stock compensation
|
425
|
4
|
1,801
|
-
|
-
|
1,805
|
|||||||||||
|
Rebalancing of ownership percentage
|
|||||||||||||||||
|
between parent and subsidiaries
|
-
|
-
|
657
|
-
|
(657)
|
-
|
|||||||||||
|
Balance at December 31, 2013
|
88,248
|
$
|
882
|
$
|
2,539,326
|
$
|
(897,849)
|
$
|
276,096
|
$
|
1,918,455
|
||||||
|
Net income (loss)
|
-
|
-
|
-
|
28,567
|
2,824
|
31,391
|
|||||||||||
|
Common stock dividends
|
-
|
-
|
-
|
(67,011)
|
-
|
(67,011)
|
|||||||||||
|
Common unit distributions
|
-
|
-
|
-
|
(8,456)
|
(8,456)
|
||||||||||||
|
Increase in noncontrolling interest
|
|||||||||||||||||
|
in consolidated joint ventures
|
-
|
-
|
-
|
-
|
552
|
552
|
|||||||||||
|
Redemption of common units
|
|||||||||||||||||
|
for common stock
|
781
|
8
|
14,354
|
-
|
(14,362)
|
-
|
|||||||||||
|
Shares issued under Dividend
|
|||||||||||||||||
|
Reinvestment and Stock Purchase Plan
|
6
|
-
|
118
|
-
|
-
|
118
|
|||||||||||
|
Directors' deferred compensation plan
|
-
|
-
|
407
|
-
|
-
|
407
|
|||||||||||
|
Stock compensation
|
42
|
1
|
6,554
|
-
|
-
|
6,555
|
|||||||||||
|
Rebalancing of ownership percentage
|
|||||||||||||||||
|
between parent and subsidiaries
|
-
|
-
|
(576)
|
-
|
576
|
-
|
|||||||||||
|
Balance at December 31, 2014
|
89,077
|
$
|
891
|
$
|
2,560,183
|
$
|
(936,293)
|
$
|
257,230
|
$
|
1,882,011
|
||||||
|
Net income (loss)
|
-
|
-
|
-
|
(125,752)
|
(16,300)
|
(142,052)
|
|||||||||||
|
Common stock dividends
|
-
|
-
|
-
|
(53,567)
|
-
|
(53,567)
|
|||||||||||
|
Common unit distributions
|
-
|
-
|
-
|
-
|
(6,505)
|
(6,505)
|
|||||||||||
|
Increase in noncontrolling interest
|
|||||||||||||||||
|
in consolidated joint ventures
|
-
|
-
|
-
|
-
|
3,128
|
3,128
|
|||||||||||
|
Redemption of common units
|
|||||||||||||||||
|
for common stock
|
567
|
6
|
9,941
|
-
|
(9,947)
|
-
|
|||||||||||
|
Shares issued under Dividend
|
|||||||||||||||||
|
Reinvestment and Stock Purchase Plan
|
3
|
-
|
60
|
-
|
-
|
60
|
|||||||||||
|
Directors' deferred compensation plan
|
-
|
-
|
397
|
-
|
-
|
397
|
|||||||||||
|
Stock compensation
|
46
|
-
|
2,277
|
-
|
-
|
2,277
|
|||||||||||
|
Cancellation of restricted shares
|
(109)
|
(1)
|
(2,040)
|
-
|
-
|
(2,041)
|
|||||||||||
|
Rebalancing of ownership percentage
|
|||||||||||||||||
|
between parent and subsidiaries
|
-
|
-
|
(426)
|
-
|
426
|
-
|
|||||||||||
|
Balance at December 31, 2015
|
89,584
|
$
|
896
|
$
|
2,570,392
|
$
|
(1,115,612)
|
$
|
228,032
|
$
|
1,683,708
|
||||||
The accompanying notes are an integral part of these consolidated financial statements.
69
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
|
December 31,
|
|||||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
2015
|
2014
|
2013
|
||||||
|
Net income (loss)
|
$
|
(142,052)
|
$
|
31,391
|
$
|
(19,058)
|
|||
|
Adjustments to reconcile net income to net cash provided by
|
|||||||||
|
Operating activities:
|
|||||||||
|
Depreciation and amortization, including related intangible assets
|
172,108
|
173,848
|
183,303
|
||||||
|
Depreciation and amortization on discontinued operations
|
-
|
-
|
8,218
|
||||||
|
Amortization of deferred stock units
|
397
|
407
|
529
|
||||||
|
Amortization of stock compensation
|
2,219
|
11,097
|
2,387
|
||||||
|
Amortization of deferred financing costs
|
3,790
|
3,274
|
3,172
|
||||||
|
Write-off of unamortized discount on senior unsecured notes
|
-
|
12
|
156
|
||||||
|
Amortization of debt discount and mark-to-market
|
3,385
|
6,507
|
6,781
|
||||||
|
Equity in (earnings) loss of unconsolidated joint ventures
|
3,172
|
2,423
|
2,327
|
||||||
|
Distributions of cumulative earnings from unconsolidated joint ventures
|
5,644
|
11,213
|
8,485
|
||||||
|
Realized (gains) loss on disposition of rental property, net
|
(53,261)
|
(54,848)
|
(59,520)
|
||||||
|
Realized (gains) loss on sale of investment in unconsolidated joint venture
|
(6,448)
|
-
|
-
|
||||||
|
Impairments
|
197,919
|
-
|
110,853
|
||||||
|
Changes in operating assets and liabilities:
|
|||||||||
|
Increase in unbilled rents receivable, net
|
(1,760)
|
(4,083)
|
(10,105)
|
||||||
|
Increase in deferred charges, goodwill and other assets
|
(22,854)
|
(34,402)
|
(31,404)
|
||||||
|
(Increase) decrease in accounts receivable, net
|
(2,178)
|
355
|
248
|
||||||
|
Increase (decrease) in accounts payable, accrued expenses and other liabilities
|
6,960
|
15,858
|
(7,090)
|
||||||
|
Decrease in rents received in advance and security deposits
|
(2,408)
|
(1,583)
|
(2,187)
|
||||||
|
Increase (decrease) in accrued interest payable
|
4,822
|
(2,216)
|
1,598
|
||||||
|
Net cash provided by operating activities
|
$
|
169,455
|
$
|
159,253
|
$
|
198,693
|
|||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|||||||||
|
Rental property acquisitions and related intangibles
|
$
|
(70,455)
|
$
|
(61,938)
|
$
|
(178,294)
|
|||
|
Rental property additions and improvements
|
(94,073)
|
(91,813)
|
(89,869)
|
||||||
|
Development of rental property and other related costs
|
(81,073)
|
(25,140)
|
(13,772)
|
||||||
|
Proceeds from the sales of rental property
|
81,049
|
274,839
|
332,102
|
||||||
|
Proceeds from the sale of investment in unconsolidated joint venture
|
6,448
|
-
|
|||||||
|
Investments in notes receivable
|
-
|
(62,276)
|
(16,425)
|
||||||
|
Repayment of notes receivable
|
8,250
|
62,526
|
333
|
||||||
|
Investment in unconsolidated joint ventures
|
(78,027)
|
(67,325)
|
(86,504)
|
||||||
|
Distributions in excess of cumulative earnings from unconsolidated joint ventures
|
6,445
|
35,901
|
23,907
|
||||||
|
Increase in restricted cash
|
(1,098)
|
(14,451)
|
(455)
|
||||||
|
Net cash (used in) provided by investing activities
|
$
|
(222,534)
|
$
|
50,323
|
$
|
(28,977)
|
|||
|
CASH FLOW FROM FINANCING ACTIVITIES
|
|||||||||
|
Borrowings from revolving credit facility
|
$
|
334,000
|
$
|
277,328
|
$
|
289,000
|
|||
|
Repayment of revolving credit facility
|
(179,000)
|
(277,328)
|
(289,000)
|
||||||
|
Repayment of senior unsecured notes
|
-
|
(350,000)
|
(100,000)
|
||||||
|
Proceeds of senior unsecured notes
|
-
|
-
|
268,928
|
||||||
|
Proceeds from mortgages and loans payable
|
10,752
|
130,135
|
3,170
|
||||||
|
Repayment of mortgages, loans payable and other obligations
|
(43,133)
|
(83,808)
|
(20,715)
|
||||||
|
Payment of contingent consideration
|
(1,167)
|
(5,228)
|
(2,755)
|
||||||
|
Payment of financing costs
|
(2,998)
|
(3,147)
|
(5,429)
|
||||||
|
Contributions from noncontrolling interests
|
2,140
|
145
|
-
|
||||||
|
Payment of dividends and distributions
|
(59,987)
|
(89,830)
|
(149,454)
|
||||||
|
Net cash provided by (used in) financing activities
|
$
|
60,607
|
$
|
(401,733)
|
$
|
(6,255)
|
|||
|
Net increase (decrease) in cash and cash equivalents
|
$
|
7,528
|
$
|
(192,157)
|
$
|
163,461
|
|||
|
Cash and cash equivalents, beginning of period
|
29,549
|
221,706
|
58,245
|
||||||
|
Cash and cash equivalents, end of period
|
$
|
37,077
|
$
|
29,549
|
$
|
221,706
|
|||
The accompanying notes are an integral part of these consolidated financial statements.
70
MACK-CALI REALTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (square footage and apartment unit counts unaudited)
1. ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION
Mack-Cali Realty Corporation, a Maryland corporation, together with its subsidiaries (collectively, the “Company”), is a fully-integrated, self-administered, self-managed real estate investment trust (“REIT”) providing leasing, management, acquisition, development, construction and tenant-related services for its properties and third parties. As of December 31, 2015, the Company owned or had interests in 275 properties, consisting of 147 office and 109 flex properties, totaling approximately 29.9 million square feet, leased to approximately 1,900 commercial tenants, and 19 multi-family rental properties containing 5,644 residential units, plus developable land (collectively, the “Properties”). The Properties are comprised of 147 office buildings totaling approximately 24.6 million square feet (which include 36 buildings aggregating approximately 5.6 million square feet owned by unconsolidated joint ventures in which the Company has investment interests), 94 office/flex buildings totaling approximately 4.8 million square feet, six industrial/warehouse buildings totaling approximately 387,400 square feet, 19 multi-family properties totaling 5,644 apartments (which include 13 properties aggregating 4,343 apartments owned by unconsolidated joint ventures in which the Company has investment interests), five parking/retail properties totaling approximately 121,700 square feet (which include two buildings aggregating 81,700 square feet owned by unconsolidated joint ventures in which the Company has investment interests), one hotel (which is owned by an unconsolidated joint venture in which the Company has an investment interest) and three 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 Company, 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 Company has determined itself to be the primary beneficiary, if any. See Note 2: Significant Accounting Policies – Investments in Unconsolidated Joint Ventures, for the Company’s treatment of unconsolidated joint venture interests. Intercompany accounts and transactions have been eliminated.
Accounting Standards Codification (“ASC”) 810, Consolidation, provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIEs. Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack (i) the ability to make decisions about the entity's activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the variable interest entity’s performance: and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE.
As of December 31, 2015 and 2014, the Company’s investments in consolidated real estate joint ventures in which the Company is deemed to be the primary beneficiary have total real estate assets of $273.4 million and $242.9 million, respectively, mortgages of $89.5 million and $94.3 million, respectively, and other liabilities of $17.5 million and $15.7 million, respectively.
The financial statements have been prepared in conformity with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on management’s historical experience that are believed to be reasonable at the time. However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgment. The Company’s critical accounting policies are those which require assumptions to be made about matters that are highly uncertain. Different estimates could have a material effect on the Company’s financial results. Judgments and uncertainties affecting the application of these policies and estimates may result in materially different amounts being reported under different conditions and circumstances.
Actual results could differ from those estimates. Certain reclassifications have been made to prior period amounts in order to conform with current period presentation.
71
2. SIGNIFICANT ACCOUNTING POLICIES
Rental
|
Property
|
Rental properties are stated at cost less accumulated depreciation and amortization. Costs directly related to the acquisition, development and construction of rental properties are capitalized. Acquisition–related costs are expensed as incurred. Capitalized development and construction costs include pre-construction costs essential to the development of the property, development and construction costs, interest, property taxes, insurance, salaries and other project costs incurred during the period of development. Capitalized development and construction salaries and related costs approximated $4.2 million, $3.1 million and $4.4 million for the years ended December 31, 2015, 2014 and 2013, respectively. Included in total rental property is construction, tenant improvement and development in-progress of $88.7 million and $62.8 million as of December 31, 2015 and 2014, respectively. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Fully-depreciated assets are removed from the accounts.
|
The Company considers a construction project as substantially completed and held available for occupancy upon the substantial completion of tenant improvements, but no later than one year from cessation of major construction activity (as distinguished from activities such as routine maintenance and cleanup). If portions of a rental project are substantially completed and occupied by tenants, or held available for occupancy, and other portions have not yet reached that stage, the substantially completed portions are accounted for as a separate project. The Company allocates costs incurred between the portions under construction and the portions substantially completed and held available for occupancy, primarily based on a percentage of the relative square footage of each portion, and capitalizes only those costs associated with the portion under construction.
Properties are depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:
|
Leasehold interests
|
Remaining lease term
|
|
Buildings and improvements
|
5 to 40 years
|
|
Tenant improvements
|
The shorter of the term of the
|
|
related lease or useful life
|
|
|
Furniture, fixtures and equipment
|
5 to 10 years
|
Upon acquisition of rental property, the Company estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities assumed, generally consisting of the fair value of (i) above and below market leases, (ii) in-place leases and (iii) tenant relationships. The Company allocates the purchase price to the assets acquired and liabilities assumed based on their fair values. The Company records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed exceed the purchase consideration of a transaction. In estimating the fair value of the tangible and intangible assets acquired, the Company considers information obtained about each property as a result of its due diligence and marketing and leasing activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.
Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases. The capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining terms of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases.
Other intangible assets acquired include amounts for in-place lease values and tenant relationship values, which are based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with the respective tenant. Factors to be considered by management in its analysis of in-place lease values include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions, and costs to execute similar leases. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, management considers leasing commissions, legal and other related expenses. Characteristics considered by management in valuing tenant relationships include the nature and extent of the Company’s existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals. The value of in-place leases are amortized to expense over the remaining initial terms of the respective leases. The value of tenant relationship intangibles are amortized to expense over the anticipated life of the relationships.
72
On a periodic basis, management assesses whether there are any indicators that the value of the Company’s rental properties held for use may be impaired. In addition to identifying any specific circumstances which may affect a property or properties, management considers other criteria for determining which properties may require assessment for potential impairment. The criteria considered by management include reviewing low leased percentages, significant near-term lease expirations, recently acquired properties, current and historical operating and/or cash flow losses, near-term mortgage debt maturities or other factors that might impact the Company’s intent and ability to hold the property. A property’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying value of the property over the fair value of the property. The Company’s estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions. These assumptions are generally based on management’s experience in its local real estate markets and the effects of current market conditions. The assumptions are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved, and actual losses or impairments may be realized in the future. See Note 3: Recent Transactions – Impairments on Properties Held and Used.
|
Rental Property
|
|
|
Held for Sale
|
|
When assets are identified by management as held for sale, the Company discontinues depreciating the assets and estimates the sales price, net of selling costs, of such assets. If, in management’s opinion, the estimated net sales price of the assets which have been identified as held for sale is less than the net book value of the assets, a valuation allowance is established.
If circumstances arise that previously were considered unlikely and, as a result, the Company decides not to sell a property previously classified as held for sale, the property is reclassified as held and used. A property that is reclassified is measured and recorded individually at the lower of (a) its carrying value before the property was classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the property been continuously classified as held and used, or (b) the fair value at the date of the subsequent decision not to sell.
Investments in
Unconsolidated
|
Joint Ventures
|
The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting. The Company applies the equity method by initially recording these investments at cost, as Investments in Unconsolidated Joint Ventures, subsequently adjusted for equity in earnings and cash contributions and distributions. The outside basis portion of the Company’s joint ventures is amortized over the anticipated useful lives of the underlying ventures’ tangible and intangible assets acquired and liabilities assumed. Generally, the Company would discontinue applying the equity method when the investment (and any advances) is reduced to zero and would not provide for additional losses unless the Company has guaranteed obligations of the venture or is otherwise committed to providing further financial support for the investee. If the venture subsequently generates income, the Company only recognizes its share of such income to the extent it exceeds its share of previously unrecognized losses.
|
73
On a periodic basis, management assesses whether there are any indicators that the value of the Company’s investments in unconsolidated joint ventures may be impaired. An investment is impaired only if management’s estimate of the value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying value of the investment over the value of the investment. The Company’s estimates of value for each investment (particularly in real estate joint ventures) are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and operating costs. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the values estimated by management in its impairment analyses may not be realized, and actual losses or impairment may be realized in the future. See Note 4: Investments in Unconsolidated Joint Ventures.
|
|
|
|
Cash and Cash
|
|
|
Equivalents
|
All highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents.
|
Deferred
|
Financing Costs
|
Costs incurred in obtaining financing are capitalized and amortized over the term of the related indebtedness. Amortization of such costs is included in interest expense and was $3,790,000, $3,274,000 and $3,172,000 for the years ended December 31, 2015, 2014 and 2013, respectively. If a financing obligation is extinguished early, any unamortized deferred financing costs are written off and included in gains (losses) from early extinguishment of debt. Included in Loss from early extinguishment of debt of $582,000 and $156,000 for the years ended December 31, 2014 and 2013 were unamortized costs which were written off amounting to $12,000 and $156,000, respectively.
|
Deferred
|
Leasing Costs
|
Costs incurred in connection with commercial leases are capitalized and amortized on a straight-line basis over the terms of the related leases and included in depreciation and amortization. Unamortized deferred leasing costs are charged to amortization expense upon early termination of the lease. Certain employees of the Company are compensated for providing leasing services to the Properties. The portion of such compensation related to commercial leases, which is capitalized and amortized, approximated $3,521,000, $3,840,000 and $4,223,000 for the years ended December 31, 2015, 2014 and 2013, respectively.
|
|
Goodwill
|
Goodwill represents the excess of the purchase price over the fair value of net tangible and intangible assets acquired in a business combination. Goodwill is allocated to various reporting units, as applicable. Each of the Company’s segments consists of a reporting unit. Goodwill is not amortized. Management performs an annual impairment test for goodwill during the fourth quarter and between annual tests, management evaluates the recoverability of goodwill whenever events or changes in circumstances indicate that the carrying value of goodwill may not be fully recoverable. In its impairment tests of goodwill, management first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If based on this assessment, management determines that the fair value of the reporting unit is not less than its carrying value, then performing the additional two-step impairment test is unnecessary. If the carrying value of goodwill exceeds its fair value, an impairment charge is recognized. The Company determined that its goodwill was not impaired at December 31, 2015 after management performed its impairment tests.
|
Derivative
|
Instruments
|
The Company measures derivative instruments, including certain derivative instruments embedded in other contracts, at fair value and records them as an asset or liability, depending on the Company’s rights or obligations under the applicable derivative contract. For derivatives designated and qualifying as fair value hedges, the changes in the fair value of both the derivative instrument and the hedged item are recorded in earnings. For derivatives designated as cash flow hedges, the effective portions of the derivative are reported in other comprehensive income (“OCI”) and are subsequently reclassified into earnings when the hedged item affects earnings. Changes in fair value of derivative instruments not designated as hedging and ineffective portions of hedges are recognized in earnings in the affected period.
|
74
Revenue
|
Recognition
|
Base rental revenue is recognized on a straight-line basis over the terms of the respective leases. Unbilled rents receivable represents the cumulative amount by which straight-line rental revenue exceeds rents currently billed in accordance with the lease agreements.
|
Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed-rate renewal options for below-market leases. The capitalized above-market lease values for acquired properties are amortized as a reduction of base rental revenue over the remaining terms of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed-rate renewal options of the respective leases.
Escalations and recoveries from tenants are received from tenants for certain costs as provided in the lease agreements. These costs generally include real estate taxes, utilities, insurance, common area maintenance and other recoverable costs. See Note 14: Tenant Leases.
Construction services revenue includes fees earned and reimbursements received by the Company for providing construction management and general contractor services to clients. Construction services revenue is recognized on the percentage of completion method. Using this method, profits are recorded on the basis of our estimates of the overall profit and percentage of completion of individual contracts. A portion of the estimated profits is accrued based upon estimates of the percentage of completion of the construction contract. This revenue recognition method involves inherent risks relating to profit and cost estimates.
Real estate services revenue includes property management, development, construction and leasing commission fees and other services, and payroll and related costs reimbursed from clients. Fee income derived from the Company’s unconsolidated joint ventures (which are capitalized by such ventures) are recognized to the extent attributable to the unaffiliated ownership interests.
Parking income includes income from parking spaces leased to tenants and others.
Other income includes income from tenants for additional services arranged for by the Company and income from tenants for early lease terminations.
Allowance for
|
Doubtful Accounts
|
Management performs a detailed review of amounts due from tenants to determine if an allowance for doubtful accounts is required based on factors affecting the collectability of the accounts receivable balances. The factors considered by management in determining which individual tenant receivable balances, or aggregate receivable balances, require a collectability allowance include the age of the receivable, the tenant’s payment history, the nature of the charges, any communications regarding the charges and other related information. Management’s estimate of the allowance for doubtful accounts requires management to exercise significant judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income.
|
Income and
|
Other Taxes
|
The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). As a REIT, the Company generally will not be subject to corporate federal income tax (including alternative minimum tax) on net income that it currently distributes to its shareholders, provided that the Company satisfies certain organizational and operational requirements including the requirement to distribute at least 90 percent of its REIT taxable income (determined by excluding any net capital gains) to its shareholders. If and to the extent the Company retains and does not distribute any net capital gains, the Company will be required to pay federal, state and local taxes on such net capital gains at the rate applicable to capital gains of a corporation. The Company has elected to treat certain of its corporate subsidiaries as taxable REIT subsidiaries (each a “TRS”). In general, a TRS of the Company may perform additional services for tenants of the Company and generally may engage in any real estate or non-real estate related business (except for the operation or management of health care facilities or lodging facilities or the providing to any person, under a franchise, license or otherwise, rights to any brand name under which any lodging facility or health care facility is operated). A TRS is subject to corporate federal income tax. The Company has conducted business through its TRS entities for certain property management, development, construction and other related services, as well as to hold a joint venture interest in a hotel and other matters.
|
75
As of December 31, 2015, the Company had a deferred tax asset related to its TRS activity with a balance of approximately $22.4 million which has been fully reserved for through a valuation allowance. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate tax rates. The Company is subject to certain state and local taxes.
Pursuant to the amended provisions related to uncertain tax provisions of ASC 740, Income Taxes, the Company recognized no material adjustments regarding its tax accounting treatment. The Company expects to recognize interest and penalties related to uncertain tax positions, if any, as income tax expense, which is included in general and administrative expense.
In the normal course of business, the Company or one of its subsidiaries is subject to examination by federal, state and local jurisdictions in which it operates, where applicable. As of December 31, 2015, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations are generally from the year 2011 forward.
|
|
|
Earnings
|
|
|
Per Share
|
The Company presents both basic and diluted earnings per share (“EPS”). Basic EPS excludes dilution and is computed by dividing net income available to common shareholders by the weighted average number of shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower EPS from continuing operations amount. Shares whose issuance is contingent upon the satisfaction of certain conditions shall be considered outstanding and included in the computation of diluted EPS as follows (i) if all necessary conditions have been satisfied by the end of the period (the events have occurred), those shares shall be included as of the beginning of the period in which the conditions were satisfied (or as of the date of the grant, if later) or (ii) if all necessary conditions have not been satisfied by the end of the period, the number of contingently issuable shares included in diluted EPS shall be based on the number of shares, if any, that would be issuable if the end of the reporting period were the end of the contingency period (for example, the number of shares that would be issuable based on current period earnings or period-end market price) and if the result would be dilutive. Those contingently issuable shares shall be included in the denominator of diluted EPS as of the beginning of the period (or as of the date of the grant, if later).
|
|
Dividends and
|
|
Distributions
|
Payable
|
The dividends and distributions payable at December 31, 2015 represents dividends payable to common shareholders (89,584,008 shares) and distributions payable to noncontrolling interest common unitholders of the Operating Partnership (10,516,844 common units) for all such holders of record as of January 6, 2016 with respect to the fourth quarter 2015. The fourth quarter 2015 common stock dividends and common unit distributions of $0.15 per common share and unit were approved by the Board of Directors on December 8, 2015 and paid on January 15, 2016.
|
The dividends and distributions payable at December 31, 2014 represents dividends payable to common shareholders (88,866,652 shares) and distributions payable to noncontrolling interest common unitholders of the Operating Partnership (11,083,876 common units) for all such holders of record as of January 6, 2015 with respect to the fourth quarter 2014. The fourth quarter 2014 common stock dividends and common unit distributions of $0.15 per common share and unit were approved by the Board of Directors on December 9, 2014 and paid on January 14, 2015.
The Company has determined that the $0.60 dividend per common share paid during the year ended December 31, 2015 represented approximately 90 percent ordinary income and approximately 10 percent capital gain to its stockholders; the $0.90 dividend per common share paid during the year ended December 31, 2014 represented approximately 77 percent ordinary income and approximately 23 percent return of capital; and the $1.50 dividend per common share paid during the year ended December 31, 2013 represented approximately 53 percent ordinary income, approximately 33 percent return of capital and approximately 14 percent capital gain to its stockholders.
76
Costs Incurred
|
For Stock
|
|
|
Issuances
|
Costs incurred in connection with the Company’s stock issuances are reflected as a reduction of additional paid-in capital.
|
Stock
|
Compensation
|
The Company accounts for stock compensation in accordance with the provisions of ASC 718, Compensation-Stock Compensation. These provisions require that the estimated fair value of restricted stock (“Restricted Stock Awards”), restricted stock units (“RSUs”), performance share units (“PSUs”), total stockholder return based performance shares (“TSR”) and stock options at the grant date be amortized ratably into expense over the appropriate vesting period. The Company recorded stock compensation expense of $2,219,000, $8,139,000 and $2,387,000 for the years ended December 31, 2015, 2014 and 2013, respectively. The amount for 2014 included $5,824,000 related to the departure of certain executive officers.
|
|
Other
|
|
|
Comprehensive
|
|
|
Income
|
Other comprehensive income (loss), if any, includes items that are recorded in equity, such as unrealized holding gains or losses on marketable securities available for sale. There was no difference in other comprehensive income to net income for the years ended December 31, 2015, 2014 and 2013, and no accumulated other comprehensive income as of December 31, 2015 and 2014.
|
|
Fair Value
|
|
|
Hierarchy
|
The standard Fair Value Measurements specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). The following summarizes the fair value hierarchy:
|
|
·
|
Level 1: Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;
|
|
·
|
Level 2: Quoted prices for identical assets and liabilities in markets that are inactive, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly, such as interest rates and yield curves that are observable at commonly quoted intervals and
|
|
·
|
Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
|
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
|
Discontinued
|
|
|
Operations
|
In April 2014, the Financial Accounting Standards Board (“FASB”) issued guidance related to the reporting of discontinued operation and disclosures of disposals of components of an entity. This guidance defines a discontinued operation as a component or group of components disposed or classified as held for sale and represents a strategic shift that has (or will have) a major effect on an entity’s operations and final result; the guidance states that a strategic shift could include a disposal of a major geographical area of operations, a major line of business, a major equity method investment or other major parts of an entity. The guidance also provides for additional disclosure requirements in connection with both discontinued operations and other dispositions not qualifying as discontinued operations. The guidance is effective for all companies for annual and interim periods beginning on or after December 15, 2014. The guidance applies prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. All entities could early adopt the guidance for new disposals (or new classifications as held for sale) that had not been reported in financial statements previously issued or available for issuance. The Company elected to early adopt this standard effective with the interim period beginning January 1, 2014. Prior to January 1, 2014, properties identified as held for sale and/or disposed of were presented in discontinued operations for all periods presented. See Note 7: Discontinued Operations.
|
77
Impact Of
Recently-Issued
Accounting
|
Standards
|
In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. Additionally, this guidance requires improved disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning after December 15, 2017, and early adoption is permitted for periods beginning after December 15, 2016. The Company is currently in the process of evaluating the impact the adoption of ASU 2014-09 will have on the Company’s financial position or results of operations.
|
In June 2014, the FASB issued ASU 2014-12 Compensation—Stock Compensation (Topic 718) - Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”). The amendments in ASU 2014-12 apply to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. That is, the employee would be eligible to vest in the award regardless of whether the employee is rendering service on the date the performance target is achieved. Current GAAP does not contain explicit guidance on how to account for those share-based payments. ASU 2014-12 is intended to resolve the accounting treatment of such awards. The amendments in ASU 2014-12 are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015 with early adoption permitted. The adoption of ASU 2014-12 is not expected to impact the Company’s consolidated financial statements.
In August 2014, the FASB issued ASU 2014-15, which requires management to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern, and to provide certain disclosures when it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. ASU 2014-15 is effective for the annual period ended December 31, 2016 and for annual periods and interim periods thereafter with early adoption permitted. The adoption of ASU 2014-15 is not expected to materially impact the Company’s consolidated financial statements.
In February 2015, the FASB issued ASU 2015-02, Consolidation–Amendments to the Consolidation Analysis (Topic 810) (“ASU 2015-02”). ASU 2015-02 updates guidance related to accounting for consolidation of certain limited partnerships. ASU 2015-02 does not add or remove any of the five characteristics that determine if an entity is a VIE; however, it changes the manner in which a reporting entity assesses its ability to make decisions about the entity's activities. Additionally, ASU 2015-02 removes three of the six criteria that must be met for a fee arrangement to not be a VIE and modifies how an entity assesses interests held through related parties. ASU 2015-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2015, with early adoption permitted. The adoption of ASU 2015-02 is not expected to impact the Company’s consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03, Interest–Imputation of Interest-Simplifying the Presentation of Debt Issuance Costs (Subtopic 835-30) (“ASU 2015-03”). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying value of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this update. Debt issuance costs related to revolving lines of credit are not within the scope of this new guidance. Additionally, in August 2015 the FASB issued guidance expanding the April 2015 update (ASU 2015-15). It states that, given the absence of authoritative guidance within the update, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset for revolving lines of credit and subsequently amortizing the deferred debt issuance costs ratably over the term of the arrangement, regardless of whether there are any outstanding borrowings on the line of credit. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted for financial statements that have not been previously issued. Full retrospective application is required. The adoption of ASU 2015-03 will result in debt issuance costs, currently included in Deferred charges, goodwill and other assets, being presented in the balance sheet as a direct deduction from the carrying value of the related debt liabilities.
78
3. RECENT TRANSACTIONS
Acquisitions
On January 5, 2016, the Company, which held a 50 percent interest in the property-owning entity, Overlook Ridge Apartment Investors LLC, acquired its remaining interest in a 371-unit multi-family operating property located in Malden, Massachusetts for $39.8 million.
2015
On December 23, 2015, the Company acquired a vacant 147,241 square-foot office property located in the Mack-Cali Business Campus in Parsippany, New Jersey, for approximately $10.3 million, which was funded primarily through borrowings under the Company’s unsecured revolving credit facility. This property is currently in redevelopment by the Company.
On November 12, 2015, the Company acquired a 196,128 square-foot, 95.6 percent leased office property adjacent to an existing Mack-Cali property located in Edison, New Jersey, for approximately $53.1 million, which was funded primarily through borrowings under the Company’s unsecured revolving credit facility.
The purchase prices were allocated to the net assets acquired during the year ended December 31, 2015, as follows (in thousands):
|
Parsippany
|
Edison
|
||||
|
Land
|
$
|
5,590
|
$
|
5,542
|
|
|
Buildings and improvements
|
4,710
|
40,762
|
|||
|
Above market leases (1)
|
-
|
2,097
|
|||
|
In-place lease values (1)
|
-
|
4,699
|
|||
|
Net cash paid at acquisition
|
$
|
10,300
|
$
|
53,100
|
(1) In-place lease values will be amortized over four years or less, and above market leases will be amortized over 10 years or less.
2014
On December 2, 2014, the Company acquired developable land in Conshohocken, Pennsylvania, for approximately $15.3 million, which was funded using available cash.
On August 15, 2014, the Company acquired the equity interests of its joint venture partner in Overlook Ridge, L.L.C, Overlook Ridge JV, L.L.C. and Overlook Ridge JV 2C/3B, L.L.C. for $16.6 million, which was funded primarily through borrowing under the Company’s unsecured revolving credit facility. As a result, the Company increased its ownership to 100 percent of the developable land and now consolidates these entities, which were previously accounted for through unconsolidated joint ventures, (collectively, the “Consolidated Land”); and acquired an additional 25 percent, for a total of 50 percent of its subordinated, unconsolidated interests in two operating multi-family properties owned by those entities. See Note 4: Investments in Unconsolidated Joint Ventures. In conjunction with the Company’s acquisition of the Consolidated Land, the Company assumed loans with a total principal balance of $23.0 million, which bore interest in the range of LIBOR plus 2.50 to 3.50 percent. See Note 10: Mortgages, Loans Payable and Other Obligations.
On April 10, 2014, the Company acquired Andover Place, a 220-unit multi-family rental property located in Andover, Massachusetts, for approximately $37.7 million, which was funded primarily through borrowing under the Company’s unsecured revolving credit facility.
79
The purchase price was allocated to the net assets acquired, as follows during the year ended December 31, 2014 (in thousands):
|
Andover
|
|||
|
Place
|
|||
|
Land
|
$
|
8,535
|
|
|
Buildings and improvements
|
27,609
|
||
|
Furniture, fixtures and equipment
|
459
|
||
|
In-place lease values (1)
|
1,118
|
||
|
37,721
|
|||
|
Less: Below market lease values (1)
|
(25)
|
||
|
Net cash paid at acquisition
|
$
|
37,696
|
(1) In-place lease values and below market lease values will be amortized over one year or less.
Excluded from the cash flow statement for the year ended December 31, 2014 was $44.4 million of acquisition and other investment fundings (of which $40.1 million related to the acquisition of 50 percent tenants in common interests in the Curtis Center property. See Unconsolidated Joint Venture Transactions in Note 4: Investments in Unconsolidated Joint Ventures), which were handled through a qualified intermediary using proceeds from prior sales structured for tax purposes as Section 1031 transactions.
Dispositions
2015
The Company disposed of the following office properties during the year ended December 31, 2015 (dollars in thousands):
|
Rentable
|
Net
|
Net
|
||||||||||||
|
Disposition
|
# of
|
Square
|
Sales
|
Book
|
Realized
|
|||||||||
|
Date
|
Property/Address
|
Location
|
Bldgs.
|
Feet
|
Proceeds
|
Value
|
Gain
|
|||||||
|
01/15/15
|
1451 Metropolitan Drive
|
West Deptford, New Jersey
|
1
|
21,600
|
$
|
1,072
|
$
|
929
|
$
|
143
|
||||
|
05/27/15
|
10 Independence Blvd
|
Warren, New Jersey
|
1
|
120,528
|
18,351
|
(a)
|
15,114
|
3,237
|
||||||
|
06/11/15
|
4 Sylvan Way
|
Parsippany, New Jersey
|
1
|
105,135
|
15,961
|
(a)
|
9,522
|
6,439
|
||||||
|
06/26/15
|
14 Sylvan Way
|
Parsippany, New Jersey
|
1
|
203,506
|
79,977
|
55,253
|
24,724
|
|||||||
|
07/21/15
|
210 Clay Ave
|
Lyndhurst, New Jersey
|
1
|
121,203
|
14,766
|
(a)
|
5,202
|
9,564
|
||||||
|
08/24/15
|
5 Becker Farm Rd
|
Roseland, New Jersey
|
1
|
118,343
|
18,129
|
(a)
|
8,975
|
9,154
|
||||||
|
Totals
|
6
|
690,315
|
$
|
148,256
|
$
|
94,995
|
$
|
53,261
|
||||||
|
(a) The Company transferred the deeds for these properties to the lender in satisfaction of its mortgage loan obligations totaling $59.7 million. The Company recorded an impairment charge of $25.2 million during the year ended December 31, 2013 as it estimated that the carrying value of the properties may not be recoverable over their anticipated holding periods.
|
||||||||||||||
2014
The Company sold the following office properties during the year ended December 31, 2014 (dollars in thousands):
|
Rentable
|
Net
|
Net
|
||||||||||||
|
Sale
|
# of
|
Square
|
Sales
|
Book
|
Realized
|
|||||||||
|
Date
|
Property/Address
|
Location
|
Bldgs.
|
Feet
|
Proceeds
|
Value
|
Gain
|
|||||||
|
04/23/14
|
22 Sylvan Way
|
Parsippany, New Jersey
|
1
|
249,409
|
$
|
94,897
|
$
|
60,244
|
$
|
34,653
|
||||
|
06/23/14
|
30 Knightsbridge Road (a)
|
Piscataway, New Jersey
|
4
|
680,350
|
54,641
|
52,361
|
2,280
|
|||||||
|
06/23/14
|
470 Chestnut Ridge Road (a) (b)
|
Woodcliff Lake, New Jersey
|
1
|
52,500
|
7,195
|
7,109
|
86
|
|||||||
|
06/23/14
|
530 Chestnut Ridge Road (a) (b)
|
Woodcliff Lake, New Jersey
|
1
|
57,204
|
6,299
|
6,235
|
64
|
|||||||
|
06/27/14
|
400 Rella Boulevard
|
Suffern, New York
|
1
|
180,000
|
27,539
|
10,938
|
16,601
|
|||||||
|
06/30/14
|
412 Mount Kemble Avenue (a)
|
Morris Township, New Jersey
|
1
|
475,100
|
44,751
|
43,851
|
900
|
|||||||
|
07/29/14
|
17-17 Route 208 North (a) (b)
|
Fair Lawn, New Jersey
|
1
|
143,000
|
11,835
|
11,731
|
104
|
|||||||
|
08/20/14
|
555, 565, 570 Taxter Road (a)
|
Elmsford, New York
|
3
|
416,108
|
41,057
|
41,057
|
-
|
|||||||
|
08/20/14
|
200, 220 White Plains Road (a)
|
Tarrytown, New York
|
2
|
178,000
|
12,619
|
12,619
|
-
|
|||||||
|
08/20/14
|
1266 East Main Street (a) (b)
|
Stamford, Connecticut
|
1
|
179,260
|
18,406
|
18,246
|
160
|
|||||||
|
Totals
|
16
|
2,610,931
|
$
|
319,239
|
$
|
264,391
|
$
|
54,848
|
||||||
|
(a)
|
The Company completed the sale of these properties for approximately $221 million, comprised of: $192.5 million in cash from a combination of affiliates of Keystone Property Group’s (“Keystone Entities”) senior and pari-passu equity and mortgage financing; Company subordinated equity interests in each of the properties sold with capital accounts aggregating $21.2 million; and Company pari-passu equity interests in five of the properties sold aggregating $7.3 million. Net sale proceeds from the sale aggregated $196.8 million which was comprised of the $221 million gross sales price less the subordinated equity interests of $21.2 million and $3 million in closing costs. The purchasers of these properties are unconsolidated joint ventures formed between the Company and the Keystone Entities. The senior and pari-passu equity will receive a 15 percent internal rate of return (“IRR”) after which the subordinated equity will receive a 10 percent IRR and then all distributable cash flow will be split equally between the Keystone Entities and the Company. See Note 4: Investments in Unconsolidated Joint Ventures. In connection with certain of these partial sale transactions, because the buyer received a preferential return on certain of the ventures for which the Company received subordinated equity interests, the Company only recognized profit to the extent that they received net proceeds in excess of their entire carrying value of the properties, effectively reflecting their retained subordinated equity interest at zero.
|
|
(b)
|
The Company recorded an impairment charge of $20.8 million on these properties at December 31, 2013 as it estimated that the carrying value of the properties may not be recoverable over their anticipated holding periods.
|
80
On January 1, 2014, the Company early adopted the new discontinued operations accounting standard and as the properties disposed of during the year ended December 31, 2015 and 2014 did not represent a strategic shift (as the Company is not entirely exiting markets or property types), they have not been reflected as part of discontinued operations.
The following table summarizes income (loss) from the properties disposed of during the years ended December 31, 2015 and 2014, for the years ended December 31, 2015, 2014 and 2013: (dollars in thousands)
|
Years Ended December 31,
|
|||||||||
|
2015
|
2014
|
2013
|
|||||||
|
Total revenues
|
$
|
9,137
|
$
|
53,975
|
$
|
79,379
|
|||
|
Operating and other expenses
|
(5,532)
|
(24,311)
|
(34,835)
|
||||||
|
Depreciation and amortization
|
(11,700)
|
(9,955)
|
(20,927)
|
||||||
|
Interest expense
|
(7,008)
|
(10,369)
|
(9,784)
|
||||||
|
Income (loss) from properties disposed of
|
$
|
(15,103)
|
$
|
9,340
|
$
|
13,833
|
|||
|
Impairments
|
-
|
-
|
(79,378)
|
||||||
|
Realized gains on dispositions
|
53,261
|
54,848
|
-
|
||||||
|
Total income (loss) from properties disposed of
|
$
|
38,158
|
$
|
64,188
|
$
|
(65,545)
|
|||
2015
Impairments on Properties Held and Used
In September 2015, the Company announced a three-year strategic initiative to transform the Company into a more concentrated owner of New Jersey Hudson River waterfront and transit-oriented office properties and a regional owner of luxury multi-family residential properties. In connection with the transformation of the Company’s portfolio, management began developing a disposition plan in September 2015, which will be an ongoing assessment process. Through this plan, the Company, in the coming years, expects to dispose of primarily office properties considered non-core to its ongoing operations. As a result, at September 30, 2015, the Company evaluated the recoverability of the carrying values of these non-core properties, and determined that due to the shortening of the expected periods of ownership, it was necessary to reduce the carrying values of 22 rental properties to their estimated fair values. Accordingly, the Company recorded an impairment charge of $158.6 million at September 30, 2015 reducing the aggregate carrying values of these properties from $554.3 million to their estimated fair values of $395.7 million. At December 31, 2015, as a result of its periodic evaluation of the recoverability of the carrying values resulting from its ongoing assessment of non-core properties, the Company recorded an additional impairment charge of $33.7 million.
Four of the Company’s office properties are collateral for a mortgage loan that matured on August 11, 2014, with a principal balance of $63.3 million as of December 31, 2015. The loan was not repaid at maturity and the Company is in discussions with the lender regarding potential options in satisfaction of the obligation (see Note 10: Mortgages, Loans Payable and Other Obligations). As of September 30, 2015, the Company estimated that the carrying value of three of these properties, aggregating 479,877 square feet and located in Roseland and Parsippany, New Jersey, may not be recoverable over their anticipated holding periods. In order to reduce the carrying values of the properties to their estimated fair values, the Company recorded impairment charges of $5.6 million at September 30, 2015, which resulted from the current decline in leasing activity and market rents of the properties identified. The Company had previously recorded impairment charges on these properties at September 30, 2013 of $12.5 million.
Appointment of executive officers
On June 3, 2015, the Company announced the appointments of Mitchell E. Rudin as chief executive officer and Michael J. DeMarco as president and chief operating officer of the Company, effective immediately. The Company entered into employment agreements dated June 3, 2015 with each of Messrs. Rudin and DeMarco (together, the “Executive Employment Agreements”) that each provide as follows:
81
|
·
|
A term that ends on December 31, 2018 (the “Employment Term”) unless earlier terminated;
|
|
·
|
An annual base salary for each of Messrs. Rudin and DeMarco of $700,000, subject to potential merit increases (but not decreases) each year;
|
|
·
|
A target annual bonus opportunity of one hundred percent (100%) of base salary, or $700,000, for each of Messrs. Rudin and DeMarco, with a threshold bonus of fifty percent (50%) of base salary, or $350,000, and a maximum bonus of two hundred percent (200%) of base salary, or $1,400,000, a pro rata bonus opportunity for 2015 based on the assessment of the Executive Compensation and Option Committee of the Board of Directors (“Committee”) of each executive’s development of a strategic plan for the Company and bonuses for 2016 and subsequent years to be based on objective performance goals to be established annually by the Committee;
|
|
·
|
2015 long-term incentive (“LTI”) awards under the Company’s 2013 Incentive Stock Plan (the “2015 LTI Awards”), consisting of the granting to each of Messrs. Rudin and DeMarco on June 5, 2015 of 18,775.27 restricted stock units subject to time-based vesting over three years, and of 56,325.82 performance share units (“PSUs”) which will vest from 0 to 150 percent of the number of PSUs granted based on the Company’s total shareholder return relative to a peer group of equity office REITs over a three-year performance period; and
|
|
·
|
The grant on June 5, 2015 (the “Grant Date”) to each of Messrs. Rudin and DeMarco of options to purchase 400,000 shares of the Company’s common stock, exercisable for a period of ten years with an exercise price equal to the closing price of the Company’s common stock on the NYSE on the Grant Date (which price was $17.31 per share), with 200,000 of such options vesting in three equal annual installments commencing on the first anniversary of the Grant Date, and 200,000 of such options vesting if the Company’s common stock trades at or above $25.00 per share for 30 consecutive trading days while Mr. Rudin and Mr. DeMarco is employed, as applicable, or on or before June 30, 2019 if Mr. Rudin and Mr. DeMarco is employed for the entire Employment Term (except if the executive’s employment has been terminated by the Company for cause following expiration of the Employment Term).
|
82
4. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
As of December 31, 2015, the Company had an aggregate investment of approximately $303.5 million in its equity method joint ventures. The Company formed these ventures with unaffiliated third parties, or acquired interests in them, to develop or manage primarily office and multi-family rental properties, or to acquire land in anticipation of possible development of office and multi-family rental properties. As of December 31, 2015, the unconsolidated joint ventures owned: 36 office properties aggregating approximately 5.6 million square feet, 13 multi-family properties totaling 4,343 apartments, two retail properties aggregating approximately 81,700 square feet, a 350-room hotel, development projects for up to approximately 1,074 apartments; and interests and/or rights to developable land parcels able to accommodate up to 2,910 apartments and 1.4 million square feet of office space. The Company’s unconsolidated interests range from 7.5 percent to 85 percent subject to specified priority allocations in certain of the joint ventures.
The amounts reflected in the following tables (except for the Company’s share of equity in earnings) are based on the historical financial information of the individual joint ventures. The Company does not record losses of the joint ventures in excess of its investment balances unless the Company is liable for the obligations of the joint venture or is otherwise committed to provide financial support to the joint venture. The outside basis portion of the Company’s investments in joint ventures is amortized over the anticipated useful lives of the underlying ventures’ tangible and intangible assets acquired and liabilities assumed. Unless otherwise noted below, the debt of the Company’s unconsolidated joint ventures generally is non-recourse to the Company, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions, and material misrepresentations.
The Company has agreed to guarantee repayment of a portion of the debt of its unconsolidated joint ventures. As of December 31, 2015, such debt had a total facility amount of $547.6 million of which the Company agreed to guarantee up to $74.7 million. As of December 31, 2015, the outstanding balance of such debt totaled $309.9 million of which $53.1 million was guaranteed by the Company. The Company also posted a $3.6 million letter of credit in support of the South Pier at Harborside joint venture, half of which is indemnified by Hyatt Corporation, the Company’s joint venture partner. The Company performed management, leasing, development and other services for the properties owned by the unconsolidated joint ventures and recognized $5.5 million and $6.2 million for such services in the years ended December 31, 2015 and 2014, respectively. The Company had $0.8 million and $1.0 million in accounts receivable due from its unconsolidated joint ventures as of December 31, 2015 and 2014.
Included in the Company’s investments in unconsolidated joint ventures as of December 31, 2015 are five unconsolidated development joint ventures, which are VIEs for which the Company is not the primary beneficiary. These joint ventures are primarily established to develop real estate property for long-term investment and were deemed VIEs primarily based on the fact that the equity investment at risk was not sufficient to permit the entities to finance their activities without additional financial support. The initial equity contributed to these entities was not sufficient to fully finance the real estate construction as development costs are funded by the partners throughout the construction period. The Company determined that it was not the primary beneficiary of these VIEs based on the fact that the Company has shared control of these entities along with the entity’s partners and therefore does not have controlling financial interests in these VIEs. The Company’s aggregate investment in these VIEs was approximately $173.4 million as of December 31, 2015. The Company’s maximum exposure to loss as a result of its involvement with these VIEs is estimated to be approximately $207.1 million, which includes the Company’s current investment and estimated future funding commitments/guarantees of approximately $33.7 million. The Company has not provided financial support to these VIEs that it was not previously contractually required to provide. In general, future costs of development not financed through third parties will be funded with capital contributions from the Company and its outside partners in accordance with their respective ownership percentages.
83
The following is a summary of the Company's unconsolidated joint ventures as of December 31, 2015 and 2014: (dollars in thousands)
|
Property Debt
|
|||||||||||||||||
|
Number of
|
Company's
|
Carrying Value
|
As of December 31, 2015
|
||||||||||||||
|
Apartment Units
|
Effective
|
December 31,
|
December 31,
|
Maturity
|
Interest
|
||||||||||||
|
Entity / Property Name
|
or Square Feet (sf)
|
Ownership % (a)
|
2015
|
2014
|
Balance
|
Date
|
Rate
|
||||||||||
|
Multi-family
|
|||||||||||||||||
|
Marbella RoseGarden, L.L.C./ Marbella (b)
|
412
|
units
|
24.27
|
%
|
$
|
15,569
|
$
|
15,779
|
$
|
95,000
|
05/01/18
|
4.99
|
%
|
||||
|
RoseGarden Monaco Holdings, L.L.C./ Monaco (b)
|
523
|
units
|
15.00
|
%
|
937
|
2,161
|
165,000
|
02/01/21
|
4.19
|
%
|
|||||||
|
Rosewood Lafayette Holdings, L.L.C./ Highlands at Morristown Station (c)
|
217
|
units
|
25.00
|
%
|
-
|
62
|
-
|
-
|
-
|
||||||||
|
PruRose Port Imperial South 15, LLC /RiversEdge at Port Imperial (b)
|
236
|
units
|
50.00
|
%
|
-
|
-
|
57,500
|
09/01/20
|
4.32
|
%
|
|||||||
|
Rosewood Morristown, L.L.C. / Metropolitan at 40 Park (d) (e)
|
130
|
units
|
12.50
|
%
|
5,723
|
6,029
|
45,982
|
(f)
|
(f)
|
||||||||
|
Overlook Ridge JV 2C/3B, L.L.C./The Chase at Overlook Ridge (b)
|
371
|
units
|
50.00
|
%
|
2,039
|
2,524
|
52,662
|
01/26/16
|
L+2.50
|
%
|
(g)
|
||||||
|
PruRose Riverwalk G, L.L.C./ RiverTrace at Port Imperial (b)
|
316
|
units
|
25.00
|
%
|
-
|
955
|
79,393
|
07/15/21
|
6.00
|
%
|
(h)
|
||||||
|
Elmajo Urban Renewal Associates, LLC / Lincoln Harbor (Bldg A&C) (b)
|
355
|
units
|
7.50
|
%
|
-
|
-
|
128,100
|
03/01/30
|
4.00
|
%
|
(i)
|
||||||
|
Crystal House Apartments Investors LLC / Crystal House (j)
|
798
|
units
|
25.00
|
%
|
28,114
|
27,051
|
165,000
|
04/01/20
|
3.17
|
%
|
|||||||
|
Portside Master Company, L.L.C./ Portside at Pier One - Bldg 7 (b)
|
176
|
units
|
38.25
|
%
|
-
|
1,747
|
42,500
|
12/04/17
|
L+2.50
|
%
|
(k)
|
||||||
|
PruRose Port Imperial South 13, LLC / RiverParc at Port Imperial (b)
|
280
|
units
|
20.00
|
%
|
-
|
1,087
|
70,386
|
06/27/16
|
L+2.15
|
%
|
(l)
|
||||||
|
Roseland/Port Imperial Partners, L.P./ Riverwalk C (b) (m)
|
363
|
units
|
20.00
|
%
|
1,678
|
1,800
|
-
|
-
|
-
|
||||||||
|
RoseGarden Marbella South, L.L.C./ Marbella II
|
311
|
units
|
24.27
|
%
|
16,728
|
11,282
|
68,046
|
03/30/17
|
L+2.25
|
%
|
(n)
|
||||||
|
Estuary Urban Renewal Unit B, LLC / Lincoln Harbor (Bldg B) (b)
|
227
|
units
|
7.50
|
%
|
-
|
-
|
81,900
|
03/01/30
|
4.00
|
%
|
(o)
|
||||||
|
Riverpark at Harrison I, L.L.C./ Riverpark at Harrison (c)
|
141
|
units
|
45.00
|
%
|
2,544
|
4,744
|
30,000
|
08/01/25
|
3.70
|
%
|
(p)
|
||||||
|
Capitol Place Mezz LLC / Station Townhouses
|
378
|
units
|
50.00
|
%
|
46,267
|
49,327
|
100,700
|
07/01/33
|
4.82
|
%
|
(q)
|
||||||
|
Harborside Unit A Urban Renewal, L.L.C. / URL Harborside
|
763
|
units
|
85.00
|
%
|
96,799
|
34,954
|
63,871
|
08/01/29
|
5.197
|
%
|
(r)
|
||||||
|
RoseGarden Monaco, L.L.C./ San Remo Land
|
250
|
potential units
|
41.67
|
%
|
1,339
|
1,283
|
-
|
-
|
-
|
||||||||
|
Grand Jersey Waterfront URA, L.L.C./ Liberty Landing
|
850
|
potential units
|
50.00
|
%
|
337
|
337
|
-
|
-
|
-
|
||||||||
|
Office
|
|||||||||||||||||
|
Red Bank Corporate Plaza, L.L.C./ Red Bank
|
92,878
|
sf
|
50.00
|
%
|
4,140
|
3,963
|
15,124
|
05/17/16
|
L+3.00
|
%
|
(s)
|
||||||
|
12 Vreeland Associates, L.L.C./ 12 Vreeland Road
|
139,750
|
sf
|
50.00
|
%
|
5,890
|
5,620
|
12,543
|
07/01/23
|
2.87
|
%
|
|||||||
|
BNES Associates III / Offices at Crystal Lake
|
106,345
|
sf
|
31.25
|
%
|
2,295
|
1,993
|
6,133
|
11/01/23
|
4.76
|
%
|
|||||||
|
Hillsborough 206 Holdings, L.L.C./ Hillsborough 206
|
160,000
|
sf
|
50.00
|
%
|
1,962
|
1,962
|
-
|
-
|
-
|
||||||||
|
KPG-P 100 IMW JV, LLC / 100 Independence Mall West
|
339,615
|
sf
|
33.33
|
%
|
-
|
-
|
61,500
|
09/09/16
|
L+7.00
|
%
|
(t)
|
||||||
|
Keystone-Penn (c)
|
1,842,820
|
sf
|
(u)
|
-
|
-
|
227,111
|
(v)
|
(v)
|
|||||||||
|
Keystone-TriState
|
1,266,384
|
sf
|
(w)
|
3,958
|
6,140
|
208,476
|
(x)
|
(x)
|
|||||||||
|
KPG-MCG Curtis JV, L.L.C./ Curtis Center (y)
|
885,000
|
sf
|
50.00
|
%
|
59,858
|
59,911
|
(z)
|
(z)
|
(z)
|
||||||||
|
Other
|
|||||||||||||||||
|
Plaza VIII & IX Associates, L.L.C./ Vacant land (parking operations)
|
1,225,000
|
sf
|
50.00
|
%
|
4,055
|
4,022
|
-
|
-
|
-
|
||||||||
|
Roseland/North Retail, L.L.C./ Riverwalk at Port Imperial (b)
|
30,745
|
sf
|
20.00
|
%
|
1,758
|
1,828
|
-
|
-
|
-
|
||||||||
|
South Pier at Harborside / Hyatt Regency Jersey City on the Hudson
|
350
|
rooms
|
50.00
|
%
|
(aa)
|
(aa)
|
63,741
|
(ab)
|
(ab)
|
||||||||
|
Stamford SM LLC / Senior Mezzanine Loan (ac)
|
n/a
|
n/a
|
80.00
|
%
|
-
|
-
|
-
|
-
|
-
|
||||||||
|
Other (ad)
|
1,467
|
907
|
-
|
-
|
-
|
||||||||||||
|
Totals:
|
$
|
303,457
|
$
|
247,468
|
$
|
1,840,668
|
|||||||||||
|
(a)
|
Company's effective ownership % represents the Company's entitlement to residual distributions after payments of priority returns, where applicable.
|
|
(b)
|
The Company's ownership interests in this venture are subordinate to its partner's preferred capital balance and the Company is not expected to meaningfully participate in the venture's cash flows in the near term.
|
|
(c)
|
See discussion in Recent Transactions following in this footnote.
|
|
(d)
|
Through the joint venture, the Company also owns a 12.5 percent interest in a 50,973 square feet retail building ("Shops at 40 Park") and a 25 percent interest in a to-be-built 59-unit, five story multi-family rental development property ("Lofts at 40 Park").
|
|
(e)
|
The Company's ownership interests in this venture are subordinate to its partner's preferred capital balance and the payment of the outstanding balance remaining on a note ($975 as of December 31, 2015), and is not expected to meaningfully participate in the venture's cash flows in the near term.
|
|
(f)
|
Property debt balance consists of: (i) a loan, collateralized by the Metropolitan at 40 Park, with a balance of $38,410, bears interest at 3.25 percent, matures in September 2020; (ii) an amortizable loan, collateralized by the Shops at 40 Park, with a balance of $6,455, bears interest at 3.63 percent, matures in August 2018; and (iii) a loan, collateralized by the Lofts at 40 Park, with a balance of $1,117, bears interest at LIBOR plus 250 basis points and matures in September 2016. The Shops at 40 Park mortgage loan also provides for additional borrowing proceeds of $1 million based on certain preferred thresholds being achieved.
|
|
(g)
|
The construction loan has a maximum borrowing amount of $55,500 and provides, subject to certain conditions, two one-year extension options with a fee of 25 basis points each. The joint venture has a swap agreement that fixes the all-in rate to 3.0875 percent per annum on an initial notional amount of $1,840, increasing to $52,000, for the period from September 3, 2013 to November 2, 2015.
|
|
(h)
|
The permanent loan has a maximum borrowing amount of $80,249.
|
|
(i)
|
The construction loan with a maximum borrowing amount of $91,000 converted to a permanent loan on February 27, 2015.
|
|
(j)
|
The Company also owns a 50 percent interest in a vacant land to accommodate the development of approximately 295 additional units of which 252 are currently approved.
|
|
(k)
|
The construction loan has a maximum borrowing amount of $42,500 and provides, subject to certain conditions, two two-year extension options with a fee of 12.5 basis points for the first two-year extension and 25 basis points for the second two-year extension.
|
|
(l)
|
The construction loan has a maximum borrowing amount of $73,350 and provides, subject to certain conditions, one-year extension option followed by a six-month extension option with a fee of 25 basis points each. The joint venture has a swap agreement that fixes the all-in rate to 2.79 percent per annum on an initial notional amount of $1,620, increasing to $69,500 for the period from July 1, 2013 to January 1, 2016.
|
|
(m)
|
The Company also owns a 20 percent residual interest in undeveloped land parcels: parcels 6, I, and J ("Port Imperial North Land") that can accommodate the development of 836 apartment units.
|
|
(n)
|
The construction loan has a maximum borrowing amount of $77,400 and provides, subject to certain conditions, two one-year extension options with a fee of 25 basis points for each year.
|
|
(o)
|
The construction loan with a maximum borrowing amount of $57,000 converted to a permanent loan on February 27, 2015.
|
|
(p)
|
The construction loan with a maximum borrowing amount of $23,400 converted to a permanent loan on July 14, 2015. See discussion in Recent Transactions following in this footnote.
|
|
(q)
|
The construction/permanent loan has a maximum borrowing amount of $100,700 with amortization starting in August 2017.
|
|
(r)
|
The construction/permanent loan has a maximum borrowing amount of $192,000.
|
|
(s)
|
The joint venture has a swap agreement that fixes the all-in rate to 3.99375 percent per annum on an initial notional amount of $13,650 and then adjusting in accordance with an amortization schedule, which is effective from October 17, 2011 through loan maturity.
|
|
(t)
|
The mortgage loan has two one-year extension options, subject to certain conditions.
|
|
(u)
|
The Company’s equity interests in the joint ventures will be subordinated to Keystone Entities receiving a 15 percent internal rate of return (“IRR”) after which the Company will receive a 10 percent IRR on its subordinate equity and then all profit will be split equally. See discussion in Recent Transactions following in this footnote.
|
|
(v)
|
Principal balance of $127,600 bears interest at 5.114 percent and matures on August 27, 2023; principal balance of $45,500 bears interest at 5.01 percent and matures on September 6, 2025; principal balance of $32,336 bears interest at rates ranging from LIBOR+5.0 percent to LIBOR+5.75 percent and matures on August 27, 2016; principal balance of $11,250 bears interest at LIBOR+5.5 percent and matures on January 9, 2019; principal balance of $10,425 bears interest at LIBOR+6.0 percent matures on August 31, 2016.
|
|
(w)
|
Includes the Company’s pari-passu interests of $4.0 million in five properties and Company’s subordinated equity interests to Keystone Entities receiving a 15 percent internal rate of return (“IRR”) after which the Company will receive a 10 percent IRR on its subordinate equity and then all profit will be split equally.
|
|
(x)
|
Principal balance of $42,107 bears interest at 4.95 percent and matures on July 1, 2017; principal balance of $73,670 bears interest at rates ranging from 5.65 percent to 6.75 percent and matures on September 9, 2017; principal balance of $14,250 bears interest at 4.88 percent and matures on July 6, 2024; principal balance of $63,400 bears interest at 4.93 percent and matures on July 6, 2044; principal balance of $15,050 bears interest at 4.71 percent and matures on August 6, 2044.
|
|
(y)
|
Includes undivided interests in the same manner as investments in noncontrolling partnership, pursuant to ASC 970-323-25-12.
|
|
(z)
|
See Note 10: Mortgages, Loans Payable and Other Obligations for debt secured by interests in these assets.
|
|
(aa)
|
The negative carrying value for this venture of $3,317 and $1,854 as of December 31, 2015 and 2014, respectively, were included in accounts payable, accrued expenses and other liabilities.
|
|
(ab)
|
Balance includes: (i) mortgage loan, collateralized by the hotel property, with a balance of $60,147, bears interest at 6.15 percent and matures in November 2016, and (ii) loan with a balance of $3,594, bears interest at fixed rates ranging from 6.09 percent to 6.62 percent and matures in August 1, 2020. The Company posted a $3.6 million letter of credit in support of this loan, half of which is indemnified by the partner.
|
|
(ac)
|
The joint venture collected net proceeds of $47.2 million at maturity, of which the Company received its share of $37.8 million on August 6, 2014.
|
|
(ad)
|
The Company owns other interests in various unconsolidated joint ventures, including interests in assets previously owned and interest in ventures whose businesses are related to its core operations. These ventures are not expected to significantly impact the Company's operations in the near term.
|
84
The following is a summary of the Company’s equity in earnings (loss) of unconsolidated joint ventures for the years ended December 31, 2015 and 2014: (dollars in thousands)
|
Year Ended December 31,
|
||||||||
|
Entity / Property Name
|
2015
|
2014
|
2013
|
|||||
|
Multi-family
|
||||||||
|
Marbella RoseGarden, L.L.C./ Marbella
|
$
|
231
|
$
|
(19)
|
$
|
(540)
|
||
|
RoseGarden Monaco Holdings, L.L.C./ Monaco
|
(1,224)
|
(1,040)
|
(1,560)
|
|||||
|
Rosewood Lafayette Holdings, L.L.C./ Highlands at Morristown Station
|
(62)
|
(853)
|
(1,131)
|
|||||
|
PruRose Port Imperial South 15, LLC /RiversEdge at Port Imperial
|
-
|
-
|
(606)
|
|||||
|
Rosewood Morristown, L.L.C. / Metropolitan at 40 Park
|
(364)
|
(345)
|
(509)
|
|||||
|
Overlook Ridge JV 2C/3B, L.L.C./The Chase at Overlook Ridge
|
(371)
|
(384)
|
293
|
|||||
|
PruRose Riverwalk G, L.L.C./ RiverTrace at Port Imperial
|
(955)
|
(2,139)
|
(985)
|
|||||
|
Elmajo Urban Renewal Associates, LLC / Lincoln Harbor (Bldg A&C)
|
-
|
(203)
|
(345)
|
|||||
|
Crystal House Apartments Investors LLC / Crystal House
|
(123)
|
(139)
|
(2,639)
|
|||||
|
Portside Master Company, L.L.C./ Portside at Pier One - Bldg 7
|
(1,736)
|
(1,163)
|
(421)
|
|||||
|
PruRose Port Imperial South 13, LLC / RiverParc at Port Imperial
|
(988)
|
(863)
|
(664)
|
|||||
|
Roseland/Port Imperial Partners, L.P./ Riverwalk C
|
(474)
|
(646)
|
(740)
|
|||||
|
RoseGarden Marbella South, L.L.C./ Marbella II
|
-
|
-
|
(57)
|
|||||
|
Estuary Urban Renewal Unit B, LLC / Lincoln Harbor (Bldg B)
|
1
|
(15)
|
(157)
|
|||||
|
Riverpark at Harrison I, L.L.C./ Riverpark at Harrison
|
(363)
|
(150)
|
-
|
|||||
|
Capitol Place Mezz LLC / Station Townhouses
|
(3,687)
|
(75)
|
-
|
|||||
|
Harborside Unit A Urban Renewal, L.L.C. / URL Harborside
|
-
|
(218)
|
-
|
|||||
|
RoseGarden Monaco, L.L.C./ San Remo Land
|
-
|
-
|
-
|
|||||
|
Grand Jersey Waterfront URA, L.L.C./ Liberty Landing
|
(32)
|
(54)
|
(77)
|
|||||
|
Office
|
||||||||
|
Red Bank Corporate Plaza, L.L.C./ Red Bank
|
392
|
380
|
372
|
|||||
|
12 Vreeland Associates, L.L.C./ 12 Vreeland Road
|
270
|
106
|
74
|
|||||
|
BNES Associates III / Offices at Crystal Lake
|
115
|
240
|
(14)
|
|||||
|
Hillsborough 206 Holdings, L.L.C./ Hillsborough 206
|
(5)
|
(10)
|
(35)
|
|||||
|
KPG-P 100 IMW JV, LLC / 100 Independence Mall West
|
(800)
|
(1,887)
|
(913)
|
|||||
|
Keystone-Penn
|
3,812
|
-
|
-
|
|||||
|
Keystone-TriState
|
(2,182)
|
(318)
|
-
|
|||||
|
KPG-MCG Curtis JV, L.L.C./ Curtis Center
|
475
|
624
|
-
|
|||||
|
Other
|
||||||||
|
Plaza VIII & IX Associates, L.L.C./ Vacant land (parking operations)
|
344
|
320
|
99
|
|||||
|
Roseland/North Retail, L.L.C./ Riverwalk at Port Imperial
|
(70)
|
(102)
|
(230)
|
|||||
|
South Pier at Harborside / Hyatt Regency Jersey City on the Hudson
|
3,036
|
2,602
|
2,519
|
|||||
|
Stamford SM LLC / Senior Mezzanine Loan
|
-
|
2,337
|
3,719
|
|||||
|
Other
|
1,588
|
1,591
|
2,220
|
|||||
|
Company's equity in earnings (loss) of unconsolidated joint ventures
|
$
|
(3,172)
|
$
|
(2,423)
|
$
|
(2,327)
|
||
85
The following is a summary of the combined financial position of the unconsolidated joint ventures in which the Company had investment interests as of December 31, 2015 and 2014: (dollars in thousands)
|
December 31,
|
December 31,
|
|||||
|
2015
|
2014
|
|||||
|
Assets:
|
||||||
|
Rental property, net
|
$
|
1,781,621
|
$
|
1,534,812
|
||
|
Other assets
|
307,000
|
398,222
|
||||
|
Total assets
|
$
|
2,088,621
|
$
|
1,933,034
|
||
|
Liabilities and partners'/
|
||||||
|
members' capital:
|
||||||
|
Mortgages and loans payable
|
$
|
1,298,293
|
$
|
1,060,020
|
||
|
Other liabilities
|
215,951
|
211,340
|
||||
|
Partners'/members' capital
|
574,377
|
661,674
|
||||
|
Total liabilities and
|
||||||
|
partners'/members' capital
|
$
|
2,088,621
|
$
|
1,933,034
|
The following is a summary of the combined results from operations of the unconsolidated joint ventures for the period in which the Company had investment interests during the years ended December 31, 2015, 2014 and 2013: (dollars in thousands)
|
Year Ended December 31,
|
||||||||
|
2015
|
2014
|
2013
|
||||||
|
Total revenues
|
$
|
318,980
|
$
|
305,034
|
$
|
255,510
|
||
|
Operating and other expenses
|
(220,982)
|
(233,320)
|
(217,739)
|
|||||
|
Depreciation and amortization
|
(71,711)
|
(42,985)
|
(32,889)
|
|||||
|
Interest expense
|
(52,972)
|
(32,862)
|
(16,709)
|
|||||
|
Net loss
|
$
|
(26,685)
|
$
|
(4,133)
|
$
|
(11,827)
|
||
Recent Transactions
KEYSTONE-PENN
On August 28, 2015, Rosetree KPG III, L.L.C., which owns a 236,417 square-foot two-building office property located in Media, Pennsylvania refinanced its $31.8 million loan and obtained a new $45.5 million mortgage loan. The Company received a distribution of $3.7 million as its share of the loan proceeds recognized as equity in earnings during the year ended December 31, 2015 (as a result of having no carrying value of its investment in the unconsolidated joint venture).
RIVERPARK AT HARRISON I, L.L.C./RIVERPARK AT HARRISON
On July 14, 2015, Riverpark at Harrison I, L.L.C. (“Riverpark”), which owns a 141-unit multi-family rental property located in Harrison, New Jersey, refinanced the $23.4 million construction loan, and obtained a $30 million mortgage loan. The Company received a distribution of $1.7 million from the loan proceeds. Concurrent with the loan refinancing, the Company, which holds a 36 percent interest in Riverpark, and its venture partners that hold ownership interests aggregating 44 percent acquired the 20 percent interest of the remaining partner group for $2.1 million. As a result of the 20 percent redemption, the Company’s ownership interest increased to 45 percent with the remaining venture partners owning 55 percent. The Company has determined that the joint venture is not a VIE since the equity investment at risk is sufficient to permit Riverpark to finance its activities without additional financial support. As control is shared with the partners in accordance with the operating agreement, the Company will continue to have an unconsolidated joint venture interest in Riverpark under the provisions of ASC 810, Consolidation.
ROSEWOOD LAFAYETTE HOLDINGS, L.L.C./HIGHLANDS AT MORRISTOWN STATION
On June 1, 2015, the Company sold its 25 percent equity interest in Rosewood Lafayette Holdings L.L.C., a joint venture which owns the Highlands at Morristown Station, a 217-unit multi-family property located in Morristown, New Jersey, to its joint venture partner and realized a gain on the sale of $6.4 million.
86
5. DEFERRED CHARGES, GOODWILL AND OTHER ASSETS, NET
|
December 31,
|
|||||
|
(dollars in thousands)
|
2015
|
2014
|
|||
|
Deferred leasing costs
|
$
|
239,690
|
$
|
239,138
|
|
|
Deferred financing costs
|
23,723
|
24,042
|
|||
|
263,413
|
263,180
|
||||
|
Accumulated amortization
|
(126,816)
|
(122,358)
|
|||
|
Deferred charges, net
|
136,597
|
140,822
|
|||
|
Notes receivable (1)
|
13,496
|
21,491
|
|||
|
In-place lease values, related intangibles and other assets, net (2)(3)
|
10,931
|
6,565
|
|||
|
Goodwill
|
2,945
|
2,945
|
|||
|
Prepaid expenses and other assets, net (4)
|
49,408
|
32,827
|
|||
|
Total deferred charges, goodwill and other assets, net
|
$
|
213,377
|
$
|
204,650
|
|
|
(1)
|
Includes as of December 31, 2015: a mortgage receivable for $10.4 million which bears interest at LIBOR plus six percent and matures in August 2016; and an interest-free note receivable with a net present value of $3.1 million and matures in April 2023. The Company believes these balances are fully collectible.
|
|
(2)
|
In accordance with ASC 805, Business Combinations, the Company recognizes rental revenue of acquired above and below market lease intangibles over the terms of the respective leases. The impact of amortizating the acquired above and below-market lease intangibles increased revenue by approximately $0.2 million, $0.7 million and $1.5 million for the years ended December 31, 2015, 2014 and 2013, respectively. The following table summarizes, as of December 31, 2015, the scheduled amortization of the Company’s acquired above and below-market lease intangibles for each of the five succeeding years (dollars in thousands).
|
|
Acquired Above-
|
Acquired Below-
|
|||||||
|
Market Lease
|
Market Lease
|
Total
|
||||||
|
Year
|
Intangibles
|
Intangibles
|
Amortization
|
|||||
|
2016
|
$
|
(776)
|
$
|
345
|
$
|
(431)
|
||
|
2017
|
(708)
|
339
|
(369)
|
|||||
|
2018
|
(645)
|
289
|
(356)
|
|||||
|
2019
|
(529)
|
156
|
(373)
|
|||||
|
2020
|
(341)
|
21
|
(320)
|
|
(3)
|
In accordance with ASC 805, Business Combinations, the value of acquired in-place lease intangibles are amortized to expense over the remaining initial terms of the respective leases. The impact of the amortization of acquired in-place lease values is included in depreciation and amortization expense and amounted to approximately $1.4 million, $6.9 million and $10.7 million for the years ended December 31, 2015, 2014 and 2013, respectively. The following table summarizes, as of December 31, 2014, the scheduled amortization of the Company’s acquired in-place lease values for each of the five succeeding years (dollars in thousands).
|
|
Year
|
|||
|
2016
|
$
|
2,399
|
|
|
2017
|
2,093
|
||
|
2018
|
1,175
|
||
|
2019
|
979
|
||
|
2020
|
-
|
(4) Includes as of December 31, 2015, deposits of $15.1 million for acquisitions and developments.
87
|
DERIVATIVE FINANCIAL INSTRUMENTS
|
The Company does not have any derivative instruments designated as cash flow hedges. The following table summarizes the notional and fair value of the Company’s derivative financial instruments, designated as fair value hedges, as of December 31, 2015 and 2014 (dollars in thousands):
|
Fair Value
|
||||||||||||||||
|
Notional
|
Strike
|
Effective
|
Expiration
|
December 31,
|
||||||||||||
|
Value
|
(a)
|
Rate
|
Date
|
Date
|
2015
|
2014
|
||||||||||
|
LIBOR Cap
|
$
|
51,000
|
1.5
|
%
|
September 2014
|
October 2015
|
$
|
-
|
$
|
1
|
||||||
|
LIBOR Cap
|
24,000
|
1.5
|
%
|
September 2014
|
October 2015
|
-
|
1
|
|||||||||
|
LIBOR Cap
|
51,000
|
1.75
|
%
|
October 2015
|
October 2016
|
1
|
64
|
|||||||||
|
LIBOR Cap
|
24,000
|
1.75
|
%
|
October 2015
|
October 2016
|
1
|
29
|
|||||||||
|
$
|
2
|
$
|
95
|
|||||||||||||
|
(a)
|
The notional value is an indication of the extent of our involvement in these instruments at that time, but does not represent exposure to credit, interest rate or market risks.
|
The Company includes these derivative financial instruments, which were recorded in the year ended December 31, 2014, in deferred charges, goodwill and other assets, net. As changes in the fair value of these derivative financial instruments are recorded in earnings, the Company recorded a loss on the change in fair value of $93,000 and $79,000 during the years ended December 31, 2015 and 2014, respectively, which is included in interest and other investment income in the consolidated statements of operations.
|
|
|
6. RESTRICTED CASH
Restricted cash generally includes tenant and resident security deposits for certain of the Company’s properties, and escrow and reserve funds for debt service, real estate taxes, property insurance, capital improvements, tenant improvements, and leasing costs established pursuant to certain mortgage financing arrangements, and is comprised of the following: (dollars in thousands)
|
December 31,
|
|||||
|
2015
|
2014
|
||||
|
Security deposits
|
$
|
7,785
|
$
|
7,795
|
|
|
Escrow and other reserve funds
|
27,558
|
26,450
|
|||
|
Total restricted cash
|
$
|
35,343
|
$
|
34,245
|
|
7. DISCONTINUED OPERATIONS
On January 1, 2014, the Company early adopted the new discontinued operations accounting standard and as the properties disposed of during the year ended December 31, 2015 and 2014 did not represent a strategic shift (as the Company is not entirely exiting markets or property types), they have not been reflected as part of discontinued operations. See Note 3: Recent Transactions – Dispositions.
During the year ended December 31, 2013, the Company disposed of 24 office properties located in New York, New Jersey, Pennsylvania and Connecticut aggregating 3 million square feet and three developable land parcels for total net sales proceeds of approximately $390.6 million. The Company has presented these properties as discontinued operations in its statements of operations for all periods presented.
88
The following table summarizes income from discontinued operations and the related realized gains (losses) and unrealized losses on disposition of rental property and impairments, net, for the year ended December 31, 2013: (dollars in thousands)
|
Total revenues
|
$
|
33,601
|
|
Operating and other expenses
|
(13,454)
|
|
|
Depreciation and amortization
|
(8,218)
|
|
|
Interest expense
|
(118)
|
|
|
Income from discontinued operations
|
11,811
|
|
|
Loss from early extinguishment of debt
|
(703)
|
|
|
Impairments (1)
|
(23,851)
|
|
|
Realized gains on disposition of rental property
|
83,371
|
|
|
Realized gains (losses) and unrealized losses on
|
||
|
disposition of rental property and impairments, net
|
59,520
|
|
|
Total discontinued operations, net
|
$
|
70,628
|
(1) Represents impairment charges recorded on certain properties prior to their sale.
8. SENIOR UNSECURED NOTES
On January 7, 2016, the Company obtained a new $350 million unsecured term loan, which matures in January 2019 with two one-year extension options. The interest rate for the new term loan is currently 140 basis points over LIBOR, subject to adjustment on a sliding scale based on the Company's unsecured debt ratings, or at the Company's option, a defined leverage ratio. The Company entered into interest rate swap arrangements to fix LIBOR for the duration of the term loan. Including costs, the loan provides for a current all-in fixed rate of 3.12 percent. The proceeds from the loan were used primarily to repay outstanding borrowings on its unsecured revolving credit facility and to repay the Company's $200 million, 5.8 percent senior unsecured notes that matured on January 15, 2016.
A summary of the Company’s senior unsecured notes as of December 31, 2015 and 2014 is as follows: (dollars in thousands)
|
December 31,
|
Effective
|
||||||||
|
2015
|
2014
|
Rate (1)
|
|||||||
|
5.800% Senior Unsecured Notes, due January 15, 2016 (2)
|
$
|
200,010
|
$
|
200,086
|
5.806
|
%
|
|||
|
2.500% Senior Unsecured Notes, due December 15, 2017
|
249,446
|
249,150
|
2.803
|
%
|
|||||
|
7.750% Senior Unsecured Notes, due August 15, 2019
|
249,227
|
249,013
|
8.017
|
%
|
|||||
|
4.500% Senior Unsecured Notes, due April 18, 2022
|
299,624
|
299,565
|
4.612
|
%
|
|||||
|
3.150% Senior Unsecured Notes, due May 15, 2023
|
270,537
|
269,930
|
3.517
|
%
|
|||||
|
Total senior unsecured notes
|
$
|
1,268,844
|
$
|
1,267,744
|
|||||
|
(1)
|
Includes the cost of terminated treasury lock agreements (if any), offering and other transaction costs and the discount/premium on the notes, as applicable.
|
|
(2)
|
On January 15, 2016, the Company repaid these notes at their maturity using proceeds from a new unsecured term loan and borrowings under the Company’s unsecured revolving credit facility.
|
The terms of the Company’s senior unsecured notes include certain restrictions and covenants which require compliance with financial ratios relating to the maximum amount of debt leverage, the maximum amount of secured indebtedness, the minimum amount of debt service coverage and the maximum amount of unsecured debt as a percent of unsecured assets. The Company was in compliance with its debt covenants under the indenture relating to its senior unsecured notes as of December 31, 2015.
9. UNSECURED REVOLVING CREDIT FACILITY
On July 16, 2013, the Company amended and restated its unsecured revolving credit facility with a group of 17 lenders. The $600 million facility is expandable to $1 billion and matures in July 2017. It has two six-month extension options each requiring the payment of a 7.5 basis point fee. The interest rate on outstanding borrowings (not electing the Company’s competitive bid feature) and the facility fee on the current borrowing capacity payable quarterly in arrears are based upon the Operating Partnership’s unsecured debt ratings, as follows:
|
Operating Partnership's
|
Interest Rate -
|
|||
|
Unsecured Debt Ratings:
|
Applicable Basis Points
|
Facility Fee
|
||
|
Higher of S&P or Moody's
|
Above LIBOR
|
Basis Points
|
||
|
No ratings or less than BBB-/Baa3
|
170.0
|
35.0
|
||
|
BBB- or Baa3 (current)
|
130.0
|
30.0
|
||
|
BBB or Baa2
|
110.0
|
20.0
|
||
|
BBB+ or Baa1
|
100.0
|
15.0
|
||
|
A- or A3 or higher
|
92.5
|
12.5
|
89
The facility has a competitive bid feature, which allows the Company to solicit bids from lenders under the facility to borrow up to $300 million at interest rates less than those above.
The terms of the unsecured facility include certain restrictions and covenants which limit, among other things the incurrence of additional indebtedness, the incurrence of liens and the disposition of real estate properties (to the extent that: (i) such property dispositions cause the Company to default on any of the financial ratios of the facility described below, or (ii) the property dispositions are completed while the Company 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 (60 percent), the maximum amount of secured indebtedness (40 percent), the minimum amount of fixed charge coverage (1.5 times), the maximum amount of unsecured indebtedness (60 percent), the minimum amount of unencumbered property interest coverage (2.0 times) and certain investment limitations (generally 15 percent of total capitalization). If an event of default has occurred and is continuing, the Company will not make any excess distributions except to enable the Company to continue to qualify as a REIT under the Code. The Company was in compliance with its debt covenants under its revolving credit facility as of December 31, 2015.
As of December 31, 2015, the Company had outstanding borrowings of $155 million under its unsecured revolving credit facility and had no outstanding borrowings under the facility as of December 31, 2014.
Through July 15, 2013, the Company had a $600 million unsecured revolving credit facility, which had an interest rate on outstanding borrowings of LIBOR plus 125 basis points and a facility fee of 25 basis points.
|
10. MORTGAGES, LOANS PAYABLE AND OTHER OBLIGATIONS
|
The Company has mortgages, loans payable and other obligations which primarily consist of various loans collateralized by certain of the Company’s rental properties, land and development projects. As of December 31, 2015, 23 of the Company’s properties, with a total carrying value of approximately $739 million, and four of the Company’s land and development projects, with a total carrying value of approximately $215 million, are encumbered by the Company’s mortgages and loans payable. Payments on mortgages, loans payable and other obligations are generally due in monthly installments of principal and interest, or interest only. Except as noted below, the Company was in compliance with its debt covenants under its mortgages and loans payable as of December 31, 2015.
90
A summary of the Company’s mortgages, loans payable and other obligations as of December 31, 2015 and 2014 is as follows: (dollars in thousands)
|
Effective
|
December 31,
|
||||||||||||
|
Property/Project Name
|
Lender
|
Rate (a)
|
2015
|
2014
|
Maturity
|
||||||||
|
Overlook - Site IIID,IIIC, IIIA &
|
|||||||||||||
|
Overlook - Site IIB (b)
|
Wells Fargo Bank N.A.
|
-
|
-
|
$
|
23,047
|
-
|
|||||||
|
10 Independence, 4 Sylvan, 210 Clay &
|
|||||||||||||
|
5 Becker (c)
|
Wells Fargo CMBS
|
-
|
-
|
58,696
|
-
|
||||||||
|
6 Becker, 85 Livingston,
|
|||||||||||||
|
75 Livingston & 20 Waterview
|
Wells Fargo CMBS
|
10.260
|
%
|
$
|
63,279
|
65,035
|
08/11/14
|
(d)
|
|||||
|
9200 Edmonston Road
|
Principal Commercial Funding L.L.C.
|
9.780
|
%
|
3,793
|
3,951
|
05/01/15
|
(e)
|
||||||
|
Port Imperial South
|
Wells Fargo Bank N.A.
|
LIBOR+1.75
|
%
|
34,962
|
44,119
|
01/17/16
|
(f)
|
||||||
|
4 Becker
|
Wells Fargo CMBS
|
9.550
|
%
|
40,083
|
39,421
|
05/11/16
|
|||||||
|
Curtis Center (g)
|
CCRE & PREFG
|
LIBOR+5.912
|
%
|
(h)
|
64,000
|
64,000
|
10/09/16
|
||||||
|
Various (i)
|
Prudential Insurance
|
6.332
|
%
|
143,513
|
145,557
|
01/15/17
|
|||||||
|
150 Main St.
|
Webster Bank
|
LIBOR+2.35
|
%
|
10,937
|
1,193
|
(j)
|
03/30/17
|
||||||
|
23 Main Street
|
JPMorgan CMBS
|
5.587
|
%
|
28,541
|
29,210
|
09/01/18
|
|||||||
|
Harborside Plaza 5
|
The Northwestern Mutual Life
|
6.842
|
%
|
217,736
|
221,563
|
11/01/18
|
|||||||
|
Insurance Co. & New York Life
|
|||||||||||||
|
Insurance Co.
|
|||||||||||||
|
100 Walnut Avenue
|
Guardian Life Insurance Co.
|
7.311
|
%
|
18,273
|
18,542
|
02/01/19
|
|||||||
|
One River Center (k)
|
Guardian Life Insurance Co.
|
7.311
|
%
|
41,859
|
42,476
|
02/01/19
|
|||||||
|
Park Square
|
Wells Fargo Bank N.A.
|
LIBOR+1.872
|
%
|
(l)
|
27,500
|
27,500
|
04/10/19
|
||||||
|
Port Imperial South 4/5 Retail
|
American General Life & A/G PC
|
4.559
|
%
|
4,000
|
4,000
|
12/01/21
|
|||||||
|
Port Imperial South 4/5 Garage
|
American General Life & A/G PC
|
4.853
|
%
|
32,600
|
32,600
|
12/01/29
|
|||||||
|
Total mortgages, loans payable and other obligations
|
$
|
731,076
|
$
|
820,910
|
|||||||||
|
(a)
|
Reflects effective rate of debt, including deferred financing costs, comprised of the cost of terminated treasury lock agreements (if any), debt initiation costs, mark-to-market adjustment of acquired debt and other transaction costs, as applicable.
|
|
(b)
|
On March 27, 2015, the Company repaid these loans, which had interest rates ranging from LIBOR plus 2.50 to 3.50 percent, at par, using borrowings on the Company's unsecured revolving credit facility.
|
|
(c)
|
During the year ended December 31, 2015, the Company transferred the deeds for these properties to the lender in satisfaction of its obligations on the loans with interest rates ranging from 10.260% to 19.450%. See Note 3: Recent Transactions - Dispositions.
|
|
(d)
|
Mortgage is cross collateralized by the four properties. The loan was not repaid at maturity and the Company is in discussions with the lender regarding potential options in satisfaction of the obligation.
|
|
(e)
|
Excess cash flow, as defined, is being held by the lender for re-leasing costs. The deed for the property was placed in escrow and is available to the lender in the event of default or non-payment at maturity. The mortgage loan was not repaid at maturity on May 1, 2015. The Company is in discussions with the lender regarding a further extension of the loan.
|
|
(f)
|
The loan was repaid in full at maturity, using borrowings from the Company's revolving credit facility.
|
|
(g)
|
The Company owns a 50 percent tenants-in-common interest in the Curtis Center property. The Company’s $64.0 million loan consists of its 50 percent interest in a $102 million senior loan with a current rate of 3.491 percent at December 31, 2015 and its 50 percent interest in a $26 million mezzanine loan (with a maximum borrowing capacity of $48 million) with a current rate of 9.831 percent at December 31, 2015. The senior loan rate is based on a floating rate of one-month LIBOR plus 329 basis points and the mezzanine loan rate is based on a floating rate of one-month LIBOR plus 950 basis points. The Company has entered into LIBOR caps for the periods of the loans. The loans provide for three one-year extension options.
|
|
(h)
|
The effective interest rate includes amortization of deferred financing costs of 1.362 percent.
|
|
(i)
|
Mortgage is cross collateralized by seven properties. The Company has agreed, subject to certain conditions, to guarantee repayment of $61.1 million of the loan.
|
|
(j)
|
This construction loan has a maximum borrowing capacity of $28.8 million.
|
|
(k)
|
Mortgage is collateralized by the three properties comprising One River Center.
|
|
(l)
|
The effective interest rate includes amortization of deferred financing costs of 0.122 percent.
|
91
SCHEDULED PRINCIPAL PAYMENTS
Scheduled principal payments for the Company’s senior unsecured notes (see Note 8), unsecured revolving credit facility (see Note 9) and mortgages, loans payable and other obligations as of December 31, 2015 are as follows: (dollars in thousands)
|
Scheduled
|
Principal
|
|||||||
|
Period
|
Amortization
|
Maturities
|
Total
|
|||||
|
2016
|
$
|
8,125
|
$
|
406,465
|
$
|
414,590
|
||
|
2017
|
7,275
|
557,088
|
564,363
|
|||||
|
2018
|
7,311
|
231,536
|
238,847
|
|||||
|
2019
|
723
|
331,567
|
332,290
|
|||||
|
2020
|
569
|
-
|
569
|
|||||
|
Thereafter
|
5,759
|
605,206
|
610,965
|
|||||
|
Sub-total
|
29,762
|
2,131,862
|
2,161,624
|
|||||
|
Adjustment for unamortized debt
|
||||||||
|
discount/premium, net, as of
|
||||||||
|
December 31, 2015
|
(6,704)
|
-
|
(6,704)
|
|||||
|
Totals/Weighted Average
|
$
|
23,058
|
$
|
2,131,862
|
$
|
2,154,920
|
CASH PAID FOR INTEREST AND INTEREST CAPITALIZED
Cash paid for interest for the years ended December 31, 2015, 2014 and 2013 was $115,123,000, $119,664,000 and $123,213,000, respectively. Interest capitalized by the Company for the years ended December 31, 2015, 2014 and 2013 was $16,217,000, $15,470,000, and $12,885,000, respectively (of which these amounts included $5,325,000, $4,646,000 and $1,326,000 for the years ended December 31, 2015, 2014 and 2013, respectively, for interest capitalized on the Company’s investments in unconsolidated joint ventures which were substantially in development).
SUMMARY OF INDEBTEDNESS
As of December 31, 2015, the Company’s total indebtedness of $2,154,920,000 (weighted average interest rate of 5.22 percent) was comprised of $292,399,000 of revolving credit facility borrowings and other variable rate mortgage debt (weighted average rate of 2.81 percent) and fixed rate debt and other obligations of $1,862,521,000 (weighted average rate of 5.60 percent).
As of December 31, 2014, the Company’s total indebtedness of $2,088,654,000 (weighted average interest rate of 5.64 percent) was comprised of $159,860,000 of variable rate mortgage debt (weighted average rate of 3.83 percent) and fixed rate debt and other obligations of $1,928,794,000 (weighted average rate of 5.79 percent).
|
11. EMPLOYEE BENEFIT 401(k) PLANS AND DEFERRED RETIREMENT COMPENSATION AGREEMENTS
|
Employees of the Company, who meet certain minimum age and service requirements, are eligible to participate in the Mack-Cali Realty Corporation 401(k) Savings/Retirement Plan (the “401(k) Plan”). Eligible employees may elect to defer from one percent up to 60 percent of their annual compensation on a pre-tax basis to the 401(k) Plan, subject to certain limitations imposed by federal law. The amounts contributed by employees are immediately vested and non-forfeitable. The Company may make discretionary matching or profit sharing contributions to the 401(k) Plan on behalf of eligible participants in any plan year. Participants are always 100 percent vested in their pre-tax contributions and will begin vesting in any matching or profit sharing contributions made on their behalf after two years of service with the Company at a rate of 20 percent per year, becoming 100 percent vested after a total of six years of service with the Company. All contributions are allocated as a percentage of compensation of the eligible participants for the Plan year. The assets of the 401(k) Plan are held in trust and a separate account is established for each participant. A participant may receive a distribution of his or her vested account balance in the 401(k) Plan in a single sum or in installment payments upon his or her termination of service with the Company. Total expense recognized by the Company for the 401(k) Plan for the years ended December 31, 2015, 2014 and 2013 was $970,000, zero and $117,000, respectively.
On September 12, 2012, the Board of Directors of the Company approved multi-year deferred retirement compensation agreements for those executive officers in place on such date (the “Deferred Retirement Compensation Agreements”). Pursuant to the Deferred Retirement Compensation Agreements, the Company was to make annual contributions of stock units (“Stock Units”) representing shares of the Company’s common stock on January 1 of each year from 2013 through 2017 into a deferred compensation account maintained on behalf of each participating executive. Vesting of each annual contribution of Stock Units was to occur on December 31 of each year, subject to continued employment. In connection with the separation from service to the Company of certain executive officers effective March 31, 2014, the Company agreed to make cash payments totaling $1.2 million for all vested and unvested Stock Units and future cash contributions pursuant to the Deferred Retirement Compensation Agreements. In connection with the separation from service to the Company of its former president and chief executive officer effective June 30, 2015, the Company agreed to make cash payments of $2.3 million on the separation date for all vested and unvested Stock Units and future cash contributions pursuant to his Deferred Retirement Compensation Agreement. Total expense recognized by the Company under the Deferred Retirement Compensation Agreements for the years ended December 31, 2015, 2014 and 2013 was zero, $2,957,000 and $595,000, respectively.
92
12. DISCLOSURE OF FAIR VALUE OF ASSETS AND LIABILITIES
The following disclosure of estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize on disposition of the assets and liabilities at December 31, 2015 and 2014. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
Cash equivalents, receivables, notes receivables, accounts payable, and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of December 31, 2015 and 2014.
The fair value of the Company’s long-term debt, consisting of senior unsecured notes, an unsecured revolving credit facility and mortgages, loans payable and other obligations aggregated approximately $2,160,034,000 and $2,133,214,000 as compared to the book value of approximately $2,154,920,000 and $2,088,654,000 as of December 31, 2015 and 2014, respectively. The fair value of the Company’s long-term debt was categorized as a level 3 basis (as provided by ASC 820, Fair Value Measurements and Disclosures). The fair value was estimated using a discounted cash flow analysis valuation based on the borrowing rates currently available to the Company for loans with similar terms and maturities. The fair value of the mortgage debt and the unsecured notes was determined by discounting the future contractual interest and principal payments by a market rate. Although the Company has determined that the majority of the inputs used to value its derivative financial instruments fall within level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivative financial instruments utilize level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. The Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivative financial instruments. As a result, the Company has determined that its derivative financial instruments valuations in their entirety are classified in level 2 of the fair value hierarchy.
The fair value measurements used in the evaluation of the Company’s rental properties are considered to be Level 3 valuations within the fair value hierarchy, as there are significant unobservable inputs. Examples of inputs that were utilized in the fair value calculations include estimated holding periods, discount rates, market capitalization rates, expected lease rental rates, and third party broker information. The valuation techniques and significant unobservable inputs used for the Company’s Level 3 fair value measurements at December 31, 2015 were as follows:
|
Fair Value at
|
Primary
|
||||||||||
|
December 31,
|
Valuation
|
Unobservable
|
Location
|
Range of
|
|||||||
|
Description
|
2015
|
Techniques
|
Inputs
|
Type
|
Rates
|
||||||
|
Properties held and used on which the Company recognized impairment losses
|
$
|
404,863,000
|
Discounted cash flows
|
Discount rate
|
Suburban
|
8% - 15%
|
|||||
|
Central Business District
|
6% - 9.5%
|
||||||||||
|
Exit Capitalization rate
|
Suburban
|
7.5% - 9%
|
|||||||||
|
Central Business District
|
5% - 5.75%
|
Disclosure about fair value of assets and liabilities is based on pertinent information available to management as of December 31, 2015 and 2014. 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, 2015 and current estimates of fair value may differ significantly from the amounts presented herein.
13. COMMITMENTS AND CONTINGENCIES
TAX ABATEMENT AGREEMENTS
Pursuant to agreements with certain municipalities, the Company is required to make payments in lieu of property taxes (“PILOT”) on certain of its properties and has tax abatement agreements on other properties, as follows:
The Harborside Plaza 4-A agreement with the City of Jersey City, as amended, which commenced in 2002, is for a term of 20 years. The annual PILOT is equal to two percent of Total Project Costs, as defined. Total Project Costs are $49.5 million. The PILOT totaled $990,000 for each of the years ended December 31, 2015, 2014 and 2013.
93
The Harborside Plaza 5 agreement, also with the City of Jersey City, as amended, which commenced in 2002, is for a term of 20 years. The annual PILOT is equal to two percent of Total Project Costs, as defined. Total Project Costs are $170.9 million. The PILOT totaled $3.4 million for each of the years ended December 31, 2015, 2014 and 2013.
The agreement with the City of Weehawken for its Port Imperial 4/5 garage development project has a term of five years beginning when the project is substantially complete, which occurred in the third quarter 2013. The agreement provides that real estate taxes be paid initially on the land value of the project only and allows for a phase in of real estate taxes on the value of the improvements over a five year period.
The agreement with the City of Rahway for its Park Square multi-family rental property provided that real estate taxes would be partially abated, on a declining scale, for four years through 2015.
At the conclusion of the above-referenced agreements, it is expected that the properties will be assessed by the municipality and be subject to real estate taxes at the then prevailing rates.
LITIGATION
The Company is a defendant in litigation arising in the normal course of its business activities. Management does not believe that the ultimate resolution of these matters will have a materially adverse effect upon the Company’s financial condition taken as whole.
GROUND LEASE AGREEMENTS
Future minimum rental payments under the terms of all non-cancelable ground leases under which the Company is the lessee, as of December 31, 2015, are as follows: (dollars in thousands)
|
Year
|
Amount
|
|
|
2016
|
$
|
387
|
|
2017
|
267
|
|
|
2018
|
232
|
|
|
2019
|
235
|
|
|
2020
|
235
|
|
|
2021 through 2084
|
15,348
|
|
|
Total
|
$
|
16,704
|
Ground lease expense incurred by the Company during each of the years ended December 31, 2015, 2014 and 2013 amounted to $406,000.
ROSELAND CONTINGENT CONSIDERATION
The purchase price for the Roseland transaction in 2012 included the fair value of contingent consideration pursuant to an earn-out (“Earn Out”) agreement of approximately $10 million. Since the acquisition, the Company recognized charges and benefits related to changes in fair value in the Earn Out liability and, as a result of the achievement of certain of the defined criteria, paid certain amounts such that there was no remaining amount in the Earn Out as of December 31, 2015. Related to changes in the fair value of the Earn Out liability, the Company recognized a net charge of $219,000 during the year ended December 31, 2015, and recognized benefits of $1.5 million and $2.3 million during the years ended December 31, 2014 and 2013, respectively. The Earn Out liability was remeasured at fair value until the contingency was resolved, with any changes in fair value representing a charge or benefit directly to earnings (with no adjustment to purchase accounting). The measures of the Earn Out were based on significant inputs that are not observable in the market, which ASC 820 refers to as level 3 inputs. In addition to an appropriate discount rate, the key assumption affecting the valuation for the Roseland assets component was the probability of occurrence of the payment events under the relevant provisions (management assumed between 92 and 99 percent for completion/start criteria and 50 percent for the tax credit/grant criteria in its initial valuation). The valuation of the TRS component included assumptions for the risk-free rate and various other factors (i.e., stock price, dividend levels and volatility) for the Company and the relevant peer group, as defined in the Earn Out agreement.
DEPARTURE OF EXECUTIVE OFFICERS
The Company’s total estimated costs for the departure of the Company’s former president and chief executive officer and of the departure of certain of the Company’s executive officers of approximately $23.8 million during the year ended December 31, 2014 was included in general and administrative expense (approximately $11.7 million and $11.6 million was included in accounts payable, accrued expenses and other liabilities as of December 31, 2015 and 2014, respectively). On January 4, 2016, the Company satisfied $11.4 million of the accrued expense balance from December 31, 2015.
94
CONSTRUCTION PROJECTS
The Company owns a 76.25 percent interest in a consolidated joint venture which is constructing a 108-unit multi-family development rental property located in Eastchester, New York (the “Eastchester Project”). The project is expected to be ready for occupancy by the second quarter of 2016. The Eastchester Project is estimated to cost a total of $50 million (of which development costs of $29.6 million have been incurred through December 31, 2015). The venture has a $28.8 million construction loan (with $10.9 million outstanding as of December 31, 2015). The Company expects to fund costs of approximately $20.9 million for the development of the project (of which, as of December 31, 2015, the Company has incurred $14.7 million of the development costs and estimates it will need to fund an additional $6.2 million for the completion of the project).
On April 1, 2015, the Company acquired vacant land to accommodate a two-phase development of the CitySquare Project for a purchase price of $3.1 million with an additional $1.25 million to be paid (which is accrued as of December 31, 2015), subject to certain conditions, in accordance with the terms of the purchase and sale agreement. The purchase price for the acquisition was funded primarily through borrowing under the Company’s unsecured revolving credit facility. The first phase with 237 units started construction in the third quarter 2015 with anticipated initial deliveries in the second quarter 2017. The second phase, with 128 units, is projected to begin construction in 2017. On December 10, 2015, the Company obtained a construction loan with a maximum borrowing amount of $41.5 million (with no outstanding balance as of December 31, 2015). Total development costs are estimated to be approximately $92.5 million (of which $9.1 million was incurred by the Company through December 31, 2015 and estimates it will need to fund an additional $41.9 million for the completion of the project).
On October 6, 2015, the Company entered into a joint venture partnership with XS Port Imperial Hotel, LLC (“XS”) to form XS Hotel Urban Renewal Associates LLC (“XS Hotel URA”) for the development and ownership of a 364-key dual branded hotel property located in Weehawken, New Jersey (“Port Imperial Hotel”). Concurrently, the Company and XS entered into a separate joint venture partnership to form XS Hotel Associates, L.L.C. (“XS Hotel”) for the management and operations of the completed hotel development. The Company holds a 90 percent interest and XS holds the remaining 10 percent interest in the consolidated joint ventures, XS Hotel URA and XS Hotel, with the Company having full and complete authority, power, and discretion to manage and control the ventures’ business, affairs, and property. The construction of the Port Imperial Hotel is estimated to cost a total of $105.9 million, which will be funded by a $94 million construction loan with the balance to be funded with members’ capital. Upon closing, Mack-Cali’s initial contribution was $27.3 million, which included a capital credit of $23.7 million for its contributed Hotel Condominium Land unit, and XS Hotel’s initial contribution was $3 million. As of December 31, 2015, the Company incurred development costs of $1.5 million and estimates it will need to fund an additional $3.3 million for the completion of the project.
The Company owns developable land to accommodate a multi-phase development project of approximately 1,034-unit multi-family rental property located in Malden, Massachusetts. The initial phase commenced construction of 292 units in the third quarter of 2015 (the “Chase II Project”). The Chase II Project is estimated to cost a total of $74.9 million (of which the Company has incurred $22.1 million through December 31, 2015) and is expected to be ready for occupancy by second quarter 2017. On December 16, 2015, the Company obtained a construction loan with a maximum borrowing amount of $48 million (with no outstanding balance as of December 21, 2015). The Company estimates it will need to fund additional costs of $4.8 million for the completion of the Chase II Project.
OTHER
The Company may not dispose of or distribute certain of its properties, currently comprised of seven properties with an aggregate net carrying value of approximately $57.1 million, which were originally contributed by certain unrelated common unitholders, without the express written consent of such 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 specific common unitholders for the tax consequences of the recognition of such built-in-gains (collectively, the “Property Lock-Ups”). The aforementioned restrictions do not apply in the event that the Company sells all of its properties or in connection with a sale transaction which the Company’s Board of Directors determines is reasonably necessary to satisfy a material monetary default on any unsecured debt, judgment or liability of the Company or to cure any material monetary default on any mortgage secured by a property. The Property Lock-Ups expire in 2016. Upon the expiration of the Property Lock-Ups, the Company is generally required to use commercially reasonable efforts to prevent any sale, transfer or other disposition of the subject properties from resulting in the recognition of built-in gain to the specific common unitholders, which include members of the Mack Group (which includes William L. Mack, Chairman of the Company’s Board of Directors; David S. Mack, director; and Earle I. Mack, a former director), the Robert Martin Group (which includes Robert F. Weinberg, a former director and current member of its Advisory Board), and the Cali Group (which includes John R. Cali, a former director and current member of its Advisory Board). 110 of the Company’s properties, with an aggregate net book value of approximately $1.3 billion, have lapsed restrictions and are subject to these conditions.
95
14. TENANT LEASES
The Properties are leased to tenants under operating leases with various expiration dates through 2035. Substantially all of the commercial leases provide for annual base rents plus recoveries and escalation charges based upon the tenant’s proportionate share of and/or increases in real estate taxes and certain operating costs, as defined, and the pass-through of charges for electrical usage.
Future minimum rentals to be received under non-cancelable commercial operating leases at December 31, 2015 are as follows (dollars in thousands):
|
Year
|
Amount
|
|
|
2016
|
$
|
463,029
|
|
2017
|
423,654
|
|
|
2018
|
342,756
|
|
|
2019
|
280,123
|
|
|
2020
|
239,079
|
|
|
2021 and thereafter
|
902,403
|
|
|
Total
|
$
|
2,651,044
|
Multi-family rental property residential leases are excluded from the above table as they generally expire within one year.
15. MACK-CALI REALTY CORPORATION STOCKHOLDERS’ EQUITY
To maintain its qualification as a REIT, not more than 50 percent in value of the outstanding shares of the Company may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of any taxable year of the Company, other than its initial taxable year (defined to include certain entities), applying certain constructive ownership rules. To help ensure that the Company will not fail this test, the Company’s Charter provides, among other things, certain restrictions on the transfer of common stock to prevent further concentration of stock ownership. Moreover, to evidence compliance with these requirements, the Company must maintain records that disclose the actual ownership of its outstanding common stock and demands written statements each year from the holders of record of designated percentages of its common stock requesting the disclosure of the beneficial owners of such common stock.
SHARE REPURCHASE PROGRAM
In September 2012, the Board of Directors renewed and authorized an increase to the Company’s repurchase program (“Repurchase Program”). The Company has authorization to repurchase up to $150 million of its outstanding common stock under the renewed Repurchase Program, which it may repurchase from time to time in open market transactions at prevailing prices or through privately negotiated transactions. The Company has purchased and retired 394,625 shares of its outstanding common stock for an aggregate cost of approximately $11 million (all of which occurred in the year ended December 31, 2012), with a remaining authorization under the Repurchase Program of $139 million.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Company has a Dividend Reinvestment and Stock Purchase Plan (the “DRIP”) which commenced in March 1999 under which approximately 5.5 million shares of the Company’s common stock have been reserved for future issuance. The DRIP provides for automatic reinvestment of all or a portion of a participant’s dividends from the Company’s shares of common stock. The DRIP also permits participants to make optional cash investments up to $5,000 a month without restriction and, if the Company waives this limit, for additional amounts subject to certain restrictions and other conditions set forth in the DRIP prospectus filed as part of the Company’s effective registration statement on Form S-3 filed with the SEC for the approximately 5.5 million shares of the Company’s common stock reserved for issuance under the DRIP.
STOCK OPTION PLANS
In May 2013, the Company established the 2013 Incentive Stock Plan (the “2013 Plan”) under which a total of 4,600,000 shares have been reserved for issuance. In May 2004, the Company established the 2004 Incentive Stock Plan (the “2004 Plan”) under which a total of 2,500,000 shares had been reserved for issuance. The 2004 Plan was terminated upon establishment of the 2013 Plan. No options were granted under the 2004 Plan. In September 2000, the Company established the 2000 Employee Stock Option Plan (“2000 Employee Plan”) and the Amended and Restated 2000 Director Stock Option Plan (“2000 Director Plan” and together with the 2000 Employee Plan, the “2000 Plans”). In May 2002, shareholders of the Company approved amendments to both of the 2000 Plans to increase the total shares reserved for issuance under both of the 2000 Plans from 2,700,000 to 4,350,000 shares of the Company’s common stock (from 2,500,000 to 4,000,000 shares under the 2000 Employee Plan and from 200,000 to 350,000 shares under the 2000 Director Plan). As the 2000 Plans expired in 2010, stock options may no longer be issued under those plans. Stock options granted under the 2000 Employee Plan became exercisable over a five-year period. All stock options granted under the 2000 Director Plan became exercisable in one year. All options were granted at the fair market value at the dates of grant and have terms of 10 years. As of December 31, 2015 and 2014, the stock options outstanding had a weighted average remaining contractual life of approximately 9.4 years and 4.9 years, respectively.
96
On June 5, 2015, in connection with the Executive Employment Agreements, the Company granted options to purchase a total of 800,000 shares of the Company’s common stock, exercisable for a period of ten years with an exercise price equal to the closing price of the Company’s common stock on the grant date of $17.31 per share, with 400,000 of such options vesting in three equal annual installments commencing on the first anniversary of the grant date (“Time Vesting Options”), and 400,000 of such options vesting if the Company’s common stock trades at or above $25.00 per share for 30 consecutive trading days while the executive is employed (“Price Vesting Options”), or on or before June 30, 2019, subject to certain conditions.
Information regarding the Company’s stock option plans is summarized below:
|
Weighted
|
Aggregate
|
||||||
|
Average
|
Intrinsic
|
||||||
|
Shares
|
Exercise
|
Value
|
|||||
|
Under Options
|
Price
|
$(000’s)
|
|||||
|
Outstanding at January 1, 2013
|
183,870
|
$
|
29.51
|
-
|
|||
|
Lapsed or Cancelled
|
(168,870)
|
28.53
|
|||||
|
Outstanding at December 31, 2013 ($35.59 – $45.47)
|
15,000
|
$
|
40.54
|
-
|
|||
|
Granted
|
5,000
|
21.25
|
|||||
|
Lapsed or Cancelled
|
(10,000)
|
38.07
|
|||||
|
Outstanding at December 31, 2014 ($21.25 - $45.47)
|
10,000
|
$
|
33.36
|
-
|
|||
|
Granted
|
800,000
|
17.31
|
|||||
|
Lapsed or Cancelled
|
(5,000)
|
45.47
|
|||||
|
Outstanding at December 31, 2015 ($17.31 – $21.25)
|
805,000
|
$
|
17.33
|
$
|
4,843
|
||
|
Options exercisable at December 31, 2015
|
-
|
||||||
|
Available for grant at December 31, 2015
|
3,416,581
|
97
The weighted average fair value of options granted during the year ended December 31, 2015 and 2014 was $3.06 and $1.71 per option, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes model for Time Vesting Options granted during the year ended December 31, 2015 and for options granted during the year ended December 31, 2014 and the Monte Carlo method for Price Vesting Options granted during the year ended December 31, 2015. The following weighted average assumptions are included in the Company’s fair value calculations of stock options granted during the year ended December 31, 2015 and 2014:
|
2015
|
2014
|
|||||
|
Time Vesting
|
Price Vesting
|
Stock
|
||||
|
Options
|
Options
|
Options
|
||||
|
Expected life (in years)
|
6.0
|
5.8
|
6.0
|
|||
|
Risk-free interest rate
|
2.04
|
%
|
1.96
|
%
|
1.50
|
%
|
|
Volatility
|
29.0
|
%
|
29.0
|
%
|
20.26
|
%
|
|
Dividend yield
|
3.5
|
%
|
3.5
|
%
|
5.65
|
%
|
There were no stock options exercised under all stock option plans for the years ended December 31, 2015, 2014 and 2013. The Company has a policy of issuing new shares to satisfy stock option exercises.
The Company recognized stock options expense of $432,000, $4,000 and zero for the years ended December 31, 2015, 2014 and 2013, respectively.
RESTRICTED STOCK AWARDS
The Company has issued stock awards (“Restricted Stock Awards”) to officers, certain other employees, and non-employee members of the Board of Directors of the Company, which allow the holders to each receive a certain amount of shares of the Company’s common stock generally over a one to seven-year vesting period, of which 98,669 unvested shares were legally outstanding at December 31, 2015. Of the Restricted Stock Awards issued to executive officers and certain other employees, 210,000 were contingent upon the Company meeting certain performance goals to be set by the Committee each year (“Performance Shares”), with the remaining based on time and service.
On September 12, 2012, the Company granted Restricted Stock Awards totaling 319,667 shares for those executive officers in place on such date. The Restricted Stock Awards were to vest commencing January 1, 2014 and with the number of Restricted Stock Awards scheduled to be vested and earned on each vesting date on an annual basis over a five to seven year vesting schedule, with each annual vesting of each tranche of Restricted Stock Awards being subject to the attainment of annual performance targets to be set by the Committee for each year. In connection with the departure of two executive officers effective March 31, 2014, the Company agreed to grant and accelerate vesting of 109,667 shares of Restricted Stock Awards on April 1, 2014. In connection with the departure of the Company’s former president and chief executive officer effective June 30, 2015, the Company agreed to vest 84,000 Performance Shares and to grant and accelerate the vesting of 126,000 Performance Shares on the Separation Date.
On June 5, 2015, in connection with the Executive Employment Agreements, the Company granted a total of 37,550.54 Restricted Stock Awards, which were valued in accordance with ASC 718 – Stock Compensation, at their fair value. These awards are scheduled to vest equally over a three-year period on each annual anniversary date of the grant date.
All currently outstanding and unvested Restricted Stock Awards provided to the officers, certain other employees, and members of the Board of Directors of the Company were issued under the 2013 Plan.
98
Information regarding the Restricted Stock Awards grant activity is summarized below:
|
Weighted-Average
|
||||
|
Grant – Date
|
||||
|
Shares
|
Fair Value
|
|||
|
Outstanding at January 1, 2013
|
134,328
|
$
|
31.65
|
|
|
Granted (a) (b)
|
168,841
|
23.99
|
||
|
Vested
|
(149,463)
|
29.63
|
||
|
Forfeited
|
(146)
|
26.36
|
||
|
Outstanding at December 31, 2013
|
153,560
|
$
|
25.20
|
|
|
Granted (c) (d) (e)
|
376,719
|
20.04
|
||
|
Vested
|
(183,214)
|
22.37
|
||
|
Forfeited
|
(119)
|
26.36
|
||
|
Outstanding at December 31, 2014
|
346,946
|
$
|
21.09
|
|
|
Granted (f)
|
41,337
|
17.51
|
||
|
Vested
|
(250,132)
|
21.44
|
||
|
Forfeited
|
(1,931)
|
20.31
|
||
|
Outstanding at December 31, 2015
|
136,220
|
$
|
19.36
|
|
(a)
|
Included in the 168,841 Restricted Stock Awards granted in 2013 were 106,933 awards granted to the Company’s then four executive officers, Mitchell E. Hersh, Barry Lefkowitz, Roger W. Thomas and Anthony Krug.
|
|
(b)
|
Includes 63,933 Performance Shares which were legally granted in 2013 for which the 2013 performance goals were not met, which may be earned if subsequent years’ performance goals are met.
|
|
(c)
|
Included in the 376,719 Restricted Stock Awards granted in 2014 were 8,211 awards granted to the Company’s two executive officers, Anthony Krug and Gary Wagner.
|
|
(d)
|
Includes 42,000 Performance Shares which were legally granted in 2013 for which the 2014 performance goals were set by the Committee on March 31, 2014. Also includes 87,734 shares which were additionally considered granted for accounting purposes to two executive officers in connection with their departure effective March 31, 2014, which vested on April 1, 2014.
|
|
(e)
|
Includes 126,000 Performance Shares which were legally granted in 2013 for which future performance goals had not yet been set by the Committee. These awards were not considered granted for accounting purposes until these goals are set. These were considered granted in 2014 for accounting purposes in connection with the announcement of the departure of Mitchell E. Hersh in the fourth quarter 2014.
|
|
(f)
|
Included in the 41,337 Restricted Stock Awards granted in 2015 were 37,551 awards granted to the Company’s two executive officers, Mitchell E. Rudin and Michael J. DeMarco.
|
|
|
|
As of December 31, 2015, the Company had $2.0 million of total unrecognized compensation cost related to unvested Restricted Stock Awards granted under the Company’s stock compensation plans. That cost is expected to be recognized over a weighted average period of 1.8 years.
PERFORMANCE SHARE UNITS/TSR-BASED AWARDS
On September 12, 2012, the Board of Directors of the Company approved the recommendations and ratified the determinations of the Committee with respect to new multi-year TSR based awards (the “TSR-Based Awards”) totaling 5,160 performance shares (the “TSR Performance Shares”) for those executive officers in place on such date, each TSR Performance Share evidencing the right to receive $1,000 in the Company’s common stock upon vesting. In accordance with the amended and restated TSR-Based Awards agreements entered into between the Company and those executive officers in June 2013, the TSR Performance Shares were to vest commencing December 31, 2014, with the number of TSR Performance Shares scheduled to be granted annually over the next four years. The Company granted 1,032 TSR Performance Shares in the year ended December 31, 2013, which were valued in accordance with ASC 718, Compensation - Stock Compensation, at their fair value, utilizing a Monte-Carlo simulation to estimate the probability of the vesting conditions being satisfied. In connection with the departure of two executive officers effective March 31, 2014, the Company agreed to vest 357 TSR Performance Shares and to grant and accelerate the vesting of 528 TSR Performance Shares, for which the Company issued 45,062 shares of common stock on April 2, 2014. In connection with the departure of the Company’s former president and chief executive officer effective June 30, 2015, the Company agreed to vest 675 TSR Performance Shares on the Separation Date, for which it issued 41,811 shares of common stock.
On June 5, 2015, in connection with the Executive Employment Agreements, the Company granted a total of 112,651.64 performance share units (“PSUs”) which will vest from 0 to 150 percent of the number of PSUs granted based on the Company’s total shareholder return relative to a peer group of equity office REITs over a three-year performance period starting from the grant date, each PSU evidencing the right to receive a share of the Company’s common stock upon vesting. The PSUs are also entitled to the payment of dividend equivalents in respect of vested PSUs in the form of additional PSUs. The PSUs were valued in accordance with ASC 718, Compensation - Stock Compensation, at their fair value on the grant date, utilizing a Monte-Carlo simulation to estimate the probability of the vesting conditions being satisfied.
The Company has reserved shares of common stock under the 2004 Plan and 2013 Plan for issuance upon vesting of the TSR Performance Shares and PSUs in accordance with the terms and conditions of the TSR-Based Awards and PSUs.
99
DEFERRED STOCK COMPENSATION PLAN FOR DIRECTORS
The Amended and Restated Deferred Compensation Plan for Directors, which commenced January 1, 1999, allows non-employee directors of the Company to elect to defer up to 100 percent of their annual retainer fee into deferred stock units. The deferred stock units are convertible into an equal number of shares of common stock upon the directors’ termination of service from the Board of Directors or a change in control of the Company, as defined in the plan. Deferred stock units are credited to each director quarterly using the closing price of the Company’s common stock on the applicable dividend record date for the respective quarter. Each participating director’s account is also credited for an equivalent amount of deferred stock units based on the dividend rate for each quarter.
During the years ended December 31, 2015, 2014 and 2013, 19,702, 20,261 and 22,392 deferred stock units were earned, respectively. As of December 31, 2015 and 2014, there were 178,039 and 157,730 deferred stock units outstanding, respectively.
EARNINGS PER SHARE
Basic EPS excludes dilution and is computed by dividing net income available to common shareholders by the weighted average number of shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.
The following information presents the Company’s results for the years ended December 31, 2015, 2014 and 2013 in accordance with ASC 260, Earnings Per Share: (dollars in thousands, except per share amounts)
|
Year Ended December 31,
|
|||||||
|
Computation of Basic EPS
|
2015
|
2014
|
2013
|
||||
|
Income (loss) from continuing operations
|
$
|
(142,052)
|
$
|
31,391
|
$
|
(89,686)
|
|
|
Add: Noncontrolling interest in consolidated joint ventures
|
1,044
|
778
|
2,199
|
||||
|
Add: Noncontrolling interest in Operating Partnership
|
15,256
|
(3,602)
|
10,459
|
||||
|
Income (loss) from continuing operations available to common shareholders
|
(125,752)
|
28,567
|
(77,028)
|
||||
|
Income from discontinued operations available to common shareholders
|
-
|
-
|
62,119
|
||||
|
Net income (loss) available to common shareholders
|
$
|
(125,752)
|
$
|
28,567
|
$
|
(14,909)
|
|
|
Weighted average common shares
|
89,291
|
88,727
|
87,762
|
||||
|
Basic EPS:
|
|||||||
|
Income (loss) from continuing operations available to common shareholders
|
$
|
(1.41)
|
$
|
0.32
|
$
|
(0.88)
|
|
|
Income from discontinued operations available to common shareholders
|
-
|
-
|
0.71
|
||||
|
Net income (loss) available to common shareholders
|
$
|
(1.41)
|
$
|
0.32
|
$
|
(0.17)
|
|
|
Year Ended December 31,
|
|||||||
|
Computation of Diluted EPS
|
2015
|
2014
|
2013
|
||||
|
Income (loss) from continuing operations available to common shareholders
|
$
|
(125,752)
|
$
|
28,567
|
$
|
(77,028)
|
|
|
Add (deduct): Noncontrolling interest in Operating Partnership
|
(15,256)
|
3,602
|
(10,459)
|
||||
|
Income (loss) from continuing operations for diluted earnings per share
|
(141,008)
|
32,169
|
(87,487)
|
||||
|
Income from discontinued operations for diluted earnings per share
|
-
|
-
|
70,628
|
||||
|
Net income (loss) for diluted earnings per share
|
$
|
(141,008)
|
$
|
32,169
|
$
|
(16,859)
|
|
|
Weighted average common shares
|
100,222
|
100,041
|
99,785
|
||||
|
Diluted EPS:
|
|||||||
|
Income (loss) from continuing operations available to common shareholders
|
$
|
(1.41)
|
$
|
0.32
|
$
|
(0.88)
|
|
|
Income from discontinued operations available to common shareholders
|
-
|
-
|
0.71
|
||||
|
Net income (loss) available to common shareholders
|
$
|
(1.41)
|
$
|
0.32
|
$
|
(0.17)
|
|
100
The following schedule reconciles the shares used in the basic EPS calculation to the shares used in the diluted EPS calculation:
(in thousands)
|
Year Ended December 31,
|
|||
|
2015
|
2014
|
2013
|
|
|
Basic EPS shares
|
89,291
|
88,727
|
87,762
|
|
Add: Operating Partnership – common units
|
10,931
|
11,272
|
12,023
|
|
Restricted Stock Awards
|
-
|
42
|
-
|
|
Diluted EPS Shares
|
100,222
|
100,041
|
99,785
|
Contingently issuable shares under the PSU awards and Price Vesting Options were excluded from the denominator in 2015 because the criteria had not been met for the period. Contingently issuable shares under the TSR Performance Shares were excluded from the denominator in 2013 because the criteria had not been met for the period. Not included in the computations of diluted EPS were 405,000, 10,000 and 15,000 stock options as such securities were anti-dilutive during the years ended December 31, 2015, 2014 and 2013, respectively. Unvested restricted stock outstanding as of December 31, 2015, 2014 and 2013 were 98,669, 136,946 and 409,294 shares, respectively.
Dividends declared per common share for the years ended December 31, 2015, 2014 and 2013 was $0.60, $0.75 and $1.35 per share, respectively.
16. NONCONTROLLING INTERESTS IN SUBSIDIARIES
Noncontrolling interests in subsidiaries in the accompanying consolidated financial statements relate to (i) common units in the Operating Partnership, held by parties other than the Company, and (ii) interests in consolidated joint ventures for the portion of such ventures not owned by the Company.
OPERATING PARTNERSHIP
Common Units
Certain individuals and entities own common units in the Operating Partnership. A common unit and a share of Common Stock of the Company have substantially the same economic characteristics in as much as they effectively share equally in the net income or loss of the Operating Partnership. Common unitholders have the right to redeem their common units, subject to certain restrictions. The redemption is required to be satisfied in shares of Common Stock, cash, or a combination thereof, calculated as follows: one share of the Company’s Common Stock, or cash equal to the fair market value of a share of the Company’s Common Stock at the time of redemption, for each common unit. The Company, in its sole discretion, determines the form of redemption of common units (i.e., whether a common unitholder receives Common Stock, cash, or any combination thereof). If the Company elects to satisfy the redemption with shares of Common Stock as opposed to cash, it is obligated to issue shares of its Common Stock to the redeeming unitholder. Regardless of the rights described above, the common unitholders may not put their units for cash to the Company or the Operating Partnership under any circumstances. When a unitholder redeems a common unit, noncontrolling interest in the Operating Partnership is reduced and Mack-Cali Realty Corporation Stockholders’ equity is increased.
Unit Transactions
The following table sets forth the changes in noncontrolling interests in subsidiaries which relate to the common units in the Operating Partnership for the years ended December 31, 2015, 2014 and 2013:
|
Common
|
|
|
Units
|
|
|
Balance at January 1, 2013
|
12,141,836
|
|
Redemption of common units for shares of common stock
|
(277,061)
|
|
Balance at December 31, 2013
|
11,864,775
|
|
Redemption of common units for shares of common stock
|
(780,899)
|
|
Balance at December 31, 2014
|
11,083,876
|
|
Redemption of common units for shares of common stock
|
(567,032)
|
|
Balance at December 31, 2015
|
10,516,844
|
Pursuant to ASC 810, Consolidation, on the accounting and reporting for noncontrolling interests and changes in ownership interests of a subsidiary, changes in a parent’s ownership interest (and transactions with noncontrolling interest unitholders in the subsidiary) while the parent retains its controlling interest in its subsidiary should be accounted for as equity transactions. The carrying value of the noncontrolling interest shall be adjusted to reflect the change in its ownership interest in the subsidiary, with the offset to equity attributable to the parent. Accordingly, as a result of equity transactions which caused changes in ownership percentages between Mack-Cali Realty Corporation stockholders’ equity and noncontrolling interests in the Operating Partnership that occurred during the year ended December 31, 2015, the Company has increased noncontrolling interests in the Operating Partnership and decreased additional paid-in capital in Mack-Cali Realty Corporation stockholders’ equity by approximately $0.4 million as of December 31, 2015.
101
Noncontrolling Interest Ownership
As of December 31, 2015 and 2014, the noncontrolling interest common unitholders owned 10.5 percent and 11.1 percent of the Operating Partnership, respectively.
CONSOLIDATED JOINT VENTURES
The Company consolidates certain joint ventures in which it has ownership interests. Various entities and/or individuals hold noncontrolling interests in these ventures.
PARTICIPATION RIGHTS
The Company’s interests in certain real estate projects (three properties and a future development) each provide for the initial distributions of net cash flow solely to the Company, and thereafter, other parties have participation rights in 50 percent of the excess net cash flow remaining after the distribution to the Company of the aggregate amount equal to the sum of: (a) the Company’s capital contributions, plus (b) an IRR of 10 percent per annum.
17. SEGMENT REPORTING
The Company operates in three business segments: (i) commercial and other real estate, (ii) multi-family real estate, and (iii) multi-family services. The Company provides leasing, property management, acquisition, development, construction and tenant-related services for its commercial and other real estate and multi-family real estate portfolio. The Company’s multi-family services business also provides similar services for third parties. The Company no longer considers construction services as a reportable segment as it phased out this line of business in 2014. The Company had no revenues from foreign countries recorded for the years ended December 31, 2015, 2014 and 2013. The Company had no long lived assets in foreign locations as of December 31, 2015 and 2014. The accounting policies of the segments are the same as those described in Note 2: Significant Accounting Policies, excluding depreciation and amortization.
The Company evaluates performance based upon net operating income from the combined properties in each of its real estate segments (commercial and other, and multi-family) and from its multi-family services segment.
102
Selected results of operations for the years ended December 31, 2015, 2014 and 2013, and selected asset information as of December 31, 2015 and 2014 regarding the Company’s operating segments are as follows. Amounts for prior periods have been restated to conform to the current period segment reporting presentation: (dollars in thousands)
|
Real Estate
|
|||||||||||||||
|
Commercial
|
Multi-family
|
Corporate
|
Total
|
||||||||||||
|
& Other
|
Multi-family
|
Services
|
& Other (d)
|
Company
|
|||||||||||
|
Total revenues:
|
|||||||||||||||
|
2015
|
$
|
538,323
|
$
|
27,787
|
$
|
33,112
|
(e)
|
$
|
(4,339)
|
$
|
594,883
|
||||
|
2014
|
585,491
|
24,971
|
30,533
|
(f)
|
(4,196)
|
636,799
|
|||||||||
|
2013
|
621,352
|
12,792
|
25,710
|
(g)
|
7,177
|
667,031
|
|||||||||
|
Total operating and
|
|||||||||||||||
|
interest expenses (a):
|
|||||||||||||||
|
2015
|
$
|
264,967
|
$
|
17,642
|
$
|
37,090
|
(h)
|
$
|
105,452
|
$
|
425,151
|
||||
|
2014
|
295,416
|
12,235
|
38,377
|
(i)
|
138,733
|
484,761
|
|||||||||
|
2013
|
285,755
|
6,482
|
32,415
|
(j)
|
135,963
|
460,615
|
|||||||||
|
Equity in earnings (loss) of
|
|||||||||||||||
|
unconsolidated joint ventures:
|
|||||||||||||||
|
2015
|
$
|
5,104
|
$
|
(9,879)
|
$
|
1,603
|
$
|
-
|
$
|
(3,172)
|
|||||
|
2014
|
4,236
|
(8,790)
|
2,131
|
-
|
(2,423)
|
||||||||||
|
2013
|
6,280
|
(10,615)
|
2,008
|
-
|
(2,327)
|
||||||||||
|
Net operating income (loss) (b):
|
|||||||||||||||
|
2015
|
$
|
278,460
|
$
|
266
|
$
|
(2,375)
|
$
|
(109,791)
|
$
|
166,560
|
|||||
|
2014
|
294,311
|
3,946
|
(5,713)
|
(142,929)
|
149,615
|
||||||||||
|
2013
|
341,877
|
(4,305)
|
(4,697)
|
(128,786)
|
204,089
|
||||||||||
|
Total assets:
|
|||||||||||||||
|
2015
|
$
|
3,167,408
|
$
|
838,874
|
$
|
9,831
|
$
|
47,377
|
$
|
4,063,490
|
|||||
|
2014
|
3,636,126
|
492,362
|
11,158
|
52,601
|
4,192,247
|
||||||||||
|
Total long-lived assets (c):
|
|||||||||||||||
|
2015
|
$
|
2,886,583
|
$
|
577,705
|
$
|
3,670
|
$
|
(1,531)
|
$
|
3,466,427
|
|||||
|
2014
|
3,344,840
|
318,524
|
3,858
|
3,482
|
3,670,704
|
||||||||||
|
Total investments in
|
|||||||||||||||
|
unconsolidated joint ventures:
|
|||||||||||||||
|
2015
|
$
|
76,140
|
$
|
225,850
|
$
|
1,467
|
$
|
-
|
$
|
303,457
|
|||||
|
2014
|
81,649
|
164,912
|
907
|
-
|
247,468
|
||||||||||
|
(a)
|
Total operating and interest expenses represent the sum of: real estate taxes; utilities; operating services; direct construction costs; real estate services expenses; general and administrative and interest expense (net of interest income). All interest expense, net of interest and other investment income, (including for property-level mortgages) is excluded from segment amounts and classified in Corporate & Other for all periods.
|
|
(b)
|
Net operating income represents total revenues less total operating and interest expenses (as defined in Note “a”), plus equity in earnings (loss) of unconsolidated joint ventures, for the period.
|
|
(c)
|
Long-lived assets are comprised of net investment in rental property, unbilled rents receivable and goodwill. The Company recorded an impairment charge of $197.9 million on assets included in the commercial and other real estate business segment for the year ended December 31, 2015. See Note 3: Recent Transactions – Impairments on Properties Held and Used
|
|
(d)
|
Corporate & Other represents all corporate-level items (including interest and other investment income, interest expense, non-property general and administrative expense, construction services revenue and direct construction costs) as well as intercompany eliminations necessary to reconcile to consolidated Company totals.
|
|
(e)
|
Includes $6.6 million of fees and salary reimbursements earned for this period from the multi-family real estate segment, which are eliminated in consolidation.
|
|
(f)
|
Includes $2.3 million of fees and salary reimbursements earned for this period from the multi-family real estate segment, which are eliminated in consolidation.
|
|
(g)
|
Includes $2.2 million of fees and salary reimbursements earned for this period from the multi-family real estate segment, which are eliminated in consolidation.
|
|
(h)
|
Includes $3.9 million of management fees and salary reimbursement expenses for this period for the multi-family real estate segment, which are eliminated in consolidation.
|
|
(i)
|
Includes $2.9 million of management fees and salary reimbursement expenses for this period for the multi-family real estate segment, which are eliminated in consolidation.
|
|
(j)
|
Includes $1.3 million of management fees and salary reimbursement expenses for this period for the multi-family real estate segment, which are eliminated in consolidation.
|
|
|
103
The following schedule reconciles net operating income to net income available to common shareholders: (dollars in thousands)
|
Year Ended December 31,
|
||||||||
|
2015
|
2014
|
2013
|
||||||
|
Net operating income
|
$
|
166,560
|
$
|
149,615
|
$
|
204,089
|
||
|
Add (deduct):
|
||||||||
|
Depreciation and amortization
|
(170,402)
|
(172,490)
|
(182,766)
|
|||||
|
Realized gains on disposition of
|
||||||||
|
rental property, net
|
53,261
|
54,848
|
-
|
|||||
|
Gain on sale of investment in unconsolidated joint venture
|
6,448
|
-
|
-
|
|||||
|
Loss from early extinguishment of debt
|
-
|
(582)
|
(156)
|
|||||
|
Impairments
|
(197,919)
|
-
|
(110,853)
|
|||||
|
Income (loss) from continuing operations
|
(142,052)
|
31,391
|
(89,686)
|
|||||
|
Discontinued operations
|
||||||||
|
Income from discontinued operations
|
-
|
-
|
11,811
|
|||||
|
Loss from early extinguishment of debt
|
-
|
-
|
(703)
|
|||||
|
Realized gains (losses) and unrealized losses on
|
||||||||
|
disposition of rental property and impairments, net
|
-
|
-
|
59,520
|
|||||
|
Total discontinued operations, net
|
-
|
-
|
70,628
|
|||||
|
Net income (loss)
|
(142,052)
|
31,391
|
(19,058)
|
|||||
|
Noncontrolling interest in consolidated joint ventures
|
1,044
|
778
|
2,199
|
|||||
|
Noncontrolling interest in Operating Partnership
|
15,256
|
(3,602)
|
10,459
|
|||||
|
Noncontrolling interest in discontinued operations
|
-
|
-
|
(8,509)
|
|||||
|
Net income (loss) available to common shareholders
|
$
|
(125,752)
|
$
|
28,567
|
$
|
(14,909)
|
||
18. RELATED PARTY TRANSACTIONS
William L. Mack, Chairman of the Board of Directors of the Company, David S. Mack, a director of the Company, and Earle I. Mack, a former director of the Company, are the executive officers, directors and stockholders of a corporation that leases approximately 7,034 square feet at one of the Company’s office properties, which is scheduled to expire in May 2018, subject to two, three-year renewal options. The Company has recognized $204,000, $231,000 and $226,000 in revenue under this lease for the years ended December 31, 2015, 2014 and 2013, respectively, and had no accounts receivable from the corporation as of December 31, 2015 and 2014.
Certain executive officers of the Company’s Roseland subsidiary and/or their family members (“RG”) directly or indirectly hold small noncontrolling interests in a certain consolidated joint venture. Additionally, the Company earned $2,542,000, $2,401,000 and $2,272,000 from entities in which RG has ownership interests for the years ended December 31, 2015, 2014 and 2013, respectively.
104
19. CONDENSED QUARTERLY FINANCIAL INFORMATION (unaudited)
The following summarizes the condensed quarterly financial information for the Company: (dollars in thousands)
|
Quarter Ended 2015
|
December 31
|
September 30
|
June 30
|
March 31
|
|||||||
|
Total revenues
|
$
|
146,443
|
$
|
146,158
|
$
|
148,567
|
$
|
153,715
|
|||
|
Operating and other expenses
|
60,846
|
56,850
|
60,653
|
68,255
|
|||||||
|
Real estate service salaries
|
6,063
|
6,673
|
6,208
|
6,639
|
|||||||
|
General and administrative
|
12,589
|
13,670
|
11,877
|
11,011
|
|||||||
|
Acquisition-related costs
|
1,449
|
-
|
111
|
-
|
|||||||
|
Depreciation and amortization
|
43,136
|
44,099
|
42,365
|
40,802
|
|||||||
|
Impairments (1)
|
33,743
|
164,176
|
-
|
-
|
|||||||
|
Total expenses
|
157,826
|
285,468
|
121,214
|
126,707
|
|||||||
|
Operating Income (loss)
|
(11,383)
|
(139,310)
|
27,353
|
27,008
|
|||||||
|
Interest expense
|
(24,374)
|
(24,689)
|
(26,773)
|
(27,215)
|
|||||||
|
Interest and other investment income
|
231
|
5
|
291
|
267
|
|||||||
|
Equity in earnings (loss) of unconsolidated
|
|||||||||||
|
joint ventures
|
(449)
|
3,135
|
(2,329)
|
(3,529)
|
|||||||
|
Realized gains (losses) on disposition of rental properties
|
-
|
18,718
|
34,399
|
144
|
|||||||
|
Gain on sale of investment in unconsolidated joint venture
|
-
|
-
|
6,448
|
-
|
|||||||
|
Total other (expense) income
|
(24,592)
|
(2,831)
|
12,036
|
(30,333)
|
|||||||
|
Net income (loss)
|
(35,975)
|
(142,141)
|
39,389
|
(3,325)
|
|||||||
|
Noncontrolling interest in consolidated joint ventures
|
462
|
(281)
|
373
|
490
|
|||||||
|
Noncontrolling interest in Operating Partnership
|
3,795
|
15,530
|
(4,383)
|
314
|
|||||||
|
Net income (loss) available to common shareholders
|
$
|
(31,718)
|
$
|
(126,892)
|
$
|
35,379
|
$
|
(2,521)
|
|||
|
Basic earnings per common share:
|
|||||||||||
|
Net income (loss) available to common shareholders
|
$
|
(0.35)
|
$
|
(1.42)
|
$
|
0.40
|
$
|
(0.03)
|
|||
|
Diluted earnings per common share:
|
|||||||||||
|
Net income (loss) available to common shareholders
|
$
|
(0.35)
|
$
|
(1.42)
|
$
|
0.40
|
$
|
(0.03)
|
|||
|
Dividends declared per common share
|
$
|
0.15
|
$
|
0.15
|
$
|
0.15
|
$
|
0.15
|
|
(1)
|
Amounts for the year ended December 31, 2015 relate to impairment charges as further described in Note 3: Recent Transactions – Impairments on Properties Held and Used.
|
105
|
Quarter Ended 2014
|
December 31
|
September 30
|
June 30
|
March 31
|
|||||||
|
Total revenues
|
$
|
151,414
|
$
|
155,489
|
$
|
160,300
|
$
|
169,596
|
|||
|
Operating and other expenses
|
64,177
|
64,374
|
65,788
|
81,854
|
|||||||
|
Real estate service salaries
|
5,923
|
6,933
|
6,571
|
6,709
|
|||||||
|
General and administrative
|
23,775
|
12,665
|
11,730
|
22,881
|
|||||||
|
Acquisition-related costs
|
175
|
-
|
1,943
|
-
|
|||||||
|
Depreciation and amortization
|
40,811
|
41,983
|
44,711
|
44,985
|
|||||||
|
Total expenses
|
134,861
|
125,955
|
130,743
|
156,429
|
|||||||
|
Operating Income
|
16,553
|
29,534
|
29,557
|
13,167
|
|||||||
|
Interest expense
|
(27,420)
|
(27,353)
|
(28,159)
|
(29,946)
|
|||||||
|
Interest and other investment income
|
1,399
|
908
|
922
|
386
|
|||||||
|
Equity in earnings (loss) of unconsolidated
|
|||||||||||
|
joint ventures
|
(363)
|
(1,268)
|
443
|
(1,235)
|
|||||||
|
Realized gains (losses) on disposition of rental properties
|
-
|
264
|
54,584
|
-
|
|||||||
|
Loss from early extinguishment of debt
|
(582)
|
-
|
-
|
-
|
|||||||
|
Total other (expense) income
|
(26,966)
|
(27,449)
|
27,790
|
(30,795)
|
|||||||
|
Net income (loss)
|
(10,413)
|
2,085
|
57,347
|
(17,628)
|
|||||||
|
Noncontrolling interest in consolidated joint ventures
|
21
|
145
|
290
|
322
|
|||||||
|
Noncontrolling interest in Operating Partnership
|
1,152
|
(248)
|
(6,514)
|
2,008
|
|||||||
|
Net income (loss) available to common shareholders
|
$
|
(9,240)
|
$
|
1,982
|
$
|
51,123
|
$
|
(15,298)
|
|||
|
Basic earnings per common share:
|
|||||||||||
|
Net income (loss) available to common shareholders
|
$
|
(0.10)
|
$
|
0.02
|
$
|
0.58
|
$
|
(0.17)
|
|||
|
Diluted earnings per common share:
|
|||||||||||
|
Net income (loss) available to common shareholders
|
$
|
(0.10)
|
$
|
0.02
|
$
|
0.58
|
$
|
(0.17)
|
|||
|
|
|||||||||||
|
Dividends declared per common share
|
$
|
0.15
|
$
|
0.15
|
$
|
0.15
|
$
|
0.30
|
106
|
MACK-CALI REALTY CORPORATION
|
|||||||||||
|
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
|
|||||||||||
|
December 31, 2015
|
|||||||||||
|
(dollars in thousands)
|
|||||||||||
|
SCHEDULE III
|
|||||||||||
|
Gross Amount at Which
|
|||||||||||
|
Costs
|
Carried at Close of
|
||||||||||
|
Initial Costs
|
Capitalized
|
Period (a)
|
|||||||||
|
Property
|
Year
|
Related
|
Building and
|
Subsequent
|
Building and
|
Accumulated
|
|||||
|
Property Location
|
Type
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation (b)
|
|
NEW JERSEY
|
|||||||||||
|
Bergen County
|
|||||||||||
|
Fort Lee
|
|||||||||||
|
One Bridge Plaza
|
Office
|
1981
|
1996
|
-
|
2,439
|
24,462
|
7,444
|
2,439
|
31,906
|
34,345
|
14,813
|
|
2115 Linwood Avenue
|
Office
|
1981
|
1998
|
-
|
474
|
4,419
|
7,017
|
474
|
11,436
|
11,910
|
4,083
|
|
Montvale
|
|||||||||||
|
135 Chestnut Ridge Road
|
Office
|
1981
|
1997
|
-
|
2,587
|
10,350
|
(4,659)
|
1,437
|
6,841
|
8,278
|
3,026
|
|
Paramus
|
|||||||||||
|
15 East Midland Avenue
|
Office
|
1988
|
1997
|
12,438
|
10,375
|
41,497
|
2,490
|
10,374
|
43,988
|
54,362
|
19,632
|
|
140 East Ridgewood Avenue
|
Office
|
1981
|
1997
|
11,720
|
7,932
|
31,463
|
7,578
|
7,932
|
39,041
|
46,973
|
17,789
|
|
461 From Road
|
Office
|
1988
|
1997
|
-
|
13,194
|
52,778
|
10,587
|
13,194
|
63,365
|
76,559
|
24,838
|
|
650 From Road
|
Office
|
1978
|
1997
|
22,484
|
10,487
|
41,949
|
8,189
|
10,487
|
50,138
|
60,625
|
22,344
|
|
61 South Paramus Road (c)
|
Office
|
1985
|
1997
|
22,005
|
9,005
|
36,018
|
9,162
|
9,005
|
45,180
|
54,185
|
20,390
|
|
Rochelle Park
|
|||||||||||
|
120 West Passaic Street
|
Office
|
1972
|
1997
|
-
|
1,354
|
5,415
|
431
|
1,357
|
5,843
|
7,200
|
2,582
|
|
365 West Passaic Street
|
Office
|
1976
|
1997
|
11,720
|
4,148
|
16,592
|
5,497
|
4,148
|
22,089
|
26,237
|
9,804
|
|
395 West Passaic Street
|
Office
|
1979
|
2006
|
-
|
2,550
|
17,131
|
1,020
|
2,550
|
18,151
|
20,701
|
4,324
|
|
Upper Saddle River
|
|||||||||||
|
1 Lake Street
|
Office
|
1994
|
1997
|
40,184
|
13,952
|
55,812
|
(37,797)
|
6,268
|
25,699
|
31,967
|
15,132
|
|
10 Mountainview Road
|
Office
|
1986
|
1998
|
-
|
4,240
|
20,485
|
4,743
|
4,240
|
25,228
|
29,468
|
11,358
|
|
Woodcliff Lake
|
|||||||||||
|
400 Chestnut Ridge Road
|
Office
|
1982
|
1997
|
-
|
4,201
|
16,802
|
(6,770)
|
2,312
|
11,921
|
14,233
|
6,579
|
|
50 Tice Boulevard
|
Office
|
1984
|
1994
|
22,962
|
4,500
|
-
|
27,862
|
4,500
|
27,862
|
32,362
|
19,320
|
|
300 Tice Boulevard
|
Office
|
1991
|
1996
|
-
|
5,424
|
29,688
|
6,385
|
5,424
|
36,073
|
41,497
|
16,438
|
|
Burlington County
|
|||||||||||
|
Burlington
|
|||||||||||
|
3 Terri Lane
|
Office/Flex
|
1991
|
1998
|
-
|
652
|
3,433
|
1,549
|
658
|
4,976
|
5,634
|
2,285
|
|
5 Terri Lane
|
Office/Flex
|
1992
|
1998
|
-
|
564
|
3,792
|
2,272
|
569
|
6,059
|
6,628
|
2,856
|
|
Moorestown
|
|||||||||||
|
2 Commerce Drive
|
Office/Flex
|
1986
|
1999
|
-
|
723
|
2,893
|
544
|
723
|
3,437
|
4,160
|
1,461
|
|
101 Commerce Drive
|
Office/Flex
|
1988
|
1998
|
-
|
422
|
3,528
|
436
|
426
|
3,960
|
4,386
|
1,893
|
|
102 Commerce Drive
|
Office/Flex
|
1987
|
1999
|
-
|
389
|
1,554
|
482
|
389
|
2,036
|
2,425
|
732
|
|
201 Commerce Drive
|
Office/Flex
|
1986
|
1998
|
-
|
254
|
1,694
|
349
|
258
|
2,039
|
2,297
|
922
|
|
202 Commerce Drive
|
Office/Flex
|
1988
|
1999
|
-
|
490
|
1,963
|
384
|
490
|
2,347
|
2,837
|
919
|
|
1 Executive Drive
|
Office/Flex
|
1989
|
1998
|
-
|
226
|
1,453
|
772
|
228
|
2,223
|
2,451
|
979
|
|
2 Executive Drive
|
Office/Flex
|
1988
|
2000
|
-
|
801
|
3,206
|
980
|
801
|
4,186
|
4,987
|
1,530
|
|
101 Executive Drive
|
Office/Flex
|
1990
|
1998
|
-
|
241
|
2,262
|
701
|
244
|
2,960
|
3,204
|
1,328
|
|
102 Executive Drive
|
Office/Flex
|
1990
|
1998
|
-
|
353
|
3,607
|
420
|
357
|
4,023
|
4,380
|
1,812
|
|
225 Executive Drive
|
Office/Flex
|
1990
|
1998
|
-
|
323
|
2,477
|
457
|
326
|
2,931
|
3,257
|
1,280
|
|
97 Foster Road
|
Office/Flex
|
1982
|
1998
|
-
|
208
|
1,382
|
389
|
211
|
1,768
|
1,979
|
885
|
|
1507 Lancer Drive
|
Office/Flex
|
1995
|
1998
|
-
|
119
|
1,106
|
209
|
120
|
1,314
|
1,434
|
612
|
|
1245 North Church Street
|
Office/Flex
|
1998
|
2001
|
-
|
691
|
2,810
|
110
|
691
|
2,920
|
3,611
|
1,078
|
|
1247 North Church Street
|
Office/Flex
|
1998
|
2001
|
-
|
805
|
3,269
|
175
|
805
|
3,444
|
4,249
|
1,287
|
107
|
MACK-CALI REALTY CORPORATION
|
|||||||||||
|
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
|
|||||||||||
|
December 31, 2015
|
|||||||||||
|
(dollars in thousands)
|
|||||||||||
|
SCHEDULE III
|
|||||||||||
|
Gross Amount at Which
|
|||||||||||
|
Costs
|
Carried at Close of
|
||||||||||
|
Initial Costs
|
Capitalized
|
Period (a)
|
|||||||||
|
Year
|
Related
|
Building and
|
Subsequent
|
Building and
|
Accumulated
|
||||||
|
Property Location
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation (b)
|
|
|
1256 North Church Street
|
Office/Flex
|
1984
|
1998
|
-
|
354
|
3,098
|
658
|
357
|
3,753
|
4,110
|
1,678
|
|
840 North Lenola Road
|
Office/Flex
|
1995
|
1998
|
-
|
329
|
2,366
|
499
|
333
|
2,861
|
3,194
|
1,286
|
|
844 North Lenola Road
|
Office/Flex
|
1995
|
1998
|
-
|
239
|
1,714
|
298
|
241
|
2,010
|
2,251
|
957
|
|
915 North Lenola Road
|
Office/Flex
|
1998
|
2000
|
-
|
508
|
2,034
|
215
|
508
|
2,249
|
2,757
|
985
|
|
2 Twosome Drive
|
Office/Flex
|
2000
|
2001
|
-
|
701
|
2,807
|
225
|
701
|
3,032
|
3,733
|
1,077
|
|
30 Twosome Drive
|
Office/Flex
|
1997
|
1998
|
-
|
234
|
1,954
|
510
|
236
|
2,462
|
2,698
|
1,251
|
|
31 Twosome Drive
|
Office/Flex
|
1998
|
2001
|
-
|
815
|
3,276
|
258
|
815
|
3,534
|
4,349
|
1,303
|
|
40 Twosome Drive
|
Office/Flex
|
1996
|
1998
|
-
|
297
|
2,393
|
160
|
301
|
2,549
|
2,850
|
1,180
|
|
41 Twosome Drive
|
Office/Flex
|
1998
|
2001
|
-
|
605
|
2,459
|
214
|
605
|
2,673
|
3,278
|
1,016
|
|
50 Twosome Drive
|
Office/Flex
|
1997
|
1998
|
-
|
301
|
2,330
|
98
|
304
|
2,425
|
2,729
|
1,133
|
|
Essex County
|
|||||||||||
|
Millburn
|
|
||||||||||
|
150 J.F. Kennedy Parkway
|
Office
|
1980
|
1997
|
-
|
12,606
|
50,425
|
8,203
|
12,606
|
58,628
|
71,234
|
25,768
|
|
Roseland
|
|||||||||||
|
4 Becker Farm Road
|
Office
|
1983
|
2009
|
40,083
|
5,600
|
38,285
|
(9,089)
|
4,271
|
30,525
|
34,796
|
6,756
|
|
6 Becker Farm Road
|
Office
|
1983
|
2009
|
13,829
|
2,600
|
15,548
|
(7,006)
|
1,556
|
9,586
|
11,142
|
2,055
|
|
101 Eisenhower Parkway
|
Office
|
1980
|
1994
|
-
|
228
|
-
|
21,850
|
228
|
21,850
|
22,078
|
14,063
|
|
103 Eisenhower Parkway
|
Office
|
1985
|
1994
|
-
|
-
|
-
|
16,898
|
2,300
|
14,598
|
16,898
|
9,448
|
|
105 Eisenhower Parkway
|
Office
|
2001
|
2001
|
-
|
4,430
|
42,898
|
5,670
|
3,835
|
49,163
|
52,998
|
22,616
|
|
75 Livingston Avenue
|
Office
|
1985
|
2009
|
10,599
|
1,900
|
6,312
|
(1,630)
|
1,281
|
5,301
|
6,582
|
1,206
|
|
85 Livingston Avenue
|
Office
|
1985
|
2009
|
14,862
|
2,500
|
14,238
|
(8,238)
|
1,234
|
7,266
|
8,500
|
1,622
|
|
Hudson County
|
|
||||||||||
|
Jersey City
|
|||||||||||
|
Harborside Plaza 1
|
Office
|
1983
|
1996
|
-
|
3,923
|
51,013
|
27,985
|
3,923
|
78,998
|
82,921
|
39,183
|
|
Harborside Plaza 2
|
Office
|
1990
|
1996
|
-
|
17,655
|
101,546
|
25,245
|
12,844
|
131,602
|
144,446
|
58,486
|
|
Harborside Plaza 3
|
Office
|
1990
|
1996
|
-
|
17,655
|
101,878
|
24,911
|
12,843
|
131,601
|
144,444
|
58,486
|
|
Harborside Plaza 4A
|
Office
|
2000
|
2000
|
-
|
1,244
|
56,144
|
14,601
|
1,244
|
70,745
|
71,989
|
30,770
|
|
Harborside Plaza 5
|
Office
|
2002
|
2002
|
217,736
|
6,218
|
170,682
|
56,368
|
5,705
|
227,563
|
233,268
|
86,807
|
|
101 Hudson Street
|
Office
|
1992
|
2005
|
-
|
45,530
|
271,376
|
4,723
|
45,530
|
276,099
|
321,629
|
76,102
|
|
Weehawken
|
|||||||||||
|
500 Avenue at Port Imperial
|
Other
|
2013
|
2013
|
36,600
|
13,099
|
56,669
|
(21,005)
|
13,099
|
35,664
|
48,763
|
2,174
|
|
Mercer County
|
|||||||||||
|
Hamilton Township
|
|
||||||||||
|
3 AAA Drive
|
Office
|
1981
|
2007
|
-
|
242
|
3,218
|
1,391
|
242
|
4,609
|
4,851
|
1,321
|
|
100 Horizon Center Boulevard
|
Office/Flex
|
1989
|
1995
|
-
|
205
|
1,676
|
730
|
325
|
2,286
|
2,611
|
1,029
|
|
200 Horizon Drive
|
Office/Flex
|
1991
|
1995
|
-
|
205
|
3,027
|
715
|
357
|
3,590
|
3,947
|
1,845
|
|
300 Horizon Drive
|
Office/Flex
|
1989
|
1995
|
-
|
379
|
4,355
|
1,428
|
531
|
5,631
|
6,162
|
2,641
|
|
500 Horizon Drive
|
Office/Flex
|
1990
|
1995
|
-
|
379
|
3,395
|
901
|
496
|
4,179
|
4,675
|
2,152
|
|
600 Horizon Drive
|
Office/Flex
|
2002
|
2002
|
-
|
-
|
7,549
|
709
|
685
|
7,573
|
8,258
|
2,478
|
108
|
MACK-CALI REALTY CORPORATION
|
|||||||||||
|
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
|
|||||||||||
|
December 31, 2015
|
|||||||||||
|
(dollars in thousands)
|
|||||||||||
|
SCHEDULE III
|
|||||||||||
|
Gross Amount at Which
|
|||||||||||
|
Costs
|
Carried at Close of
|
||||||||||
|
Initial Costs
|
Capitalized
|
Period (a)
|
|||||||||
|
Year
|
Related
|
Building and
|
Subsequent
|
Building and
|
Accumulated
|
||||||
|
Property Location
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation (b)
|
|
|
700 Horizon Drive
|
Office
|
2007
|
2007
|
-
|
490
|
43
|
16,663
|
865
|
16,331
|
17,196
|
4,028
|
|
2 South Gold Drive
|
Office
|
1974
|
2007
|
-
|
476
|
3,487
|
846
|
476
|
4,333
|
4,809
|
967
|
|
Princeton
|
|||||||||||
|
103 Carnegie Center
|
Office
|
1984
|
1996
|
-
|
2,566
|
7,868
|
3,304
|
2,566
|
11,172
|
13,738
|
5,460
|
|
2 Independence Way
|
Office
|
1985
|
2009
|
-
|
1,300
|
7,246
|
(4,079)
|
702
|
3,765
|
4,467
|
166
|
|
3 Independence Way
|
Office
|
1983
|
1997
|
-
|
1,997
|
11,391
|
4,374
|
1,997
|
15,765
|
17,762
|
7,732
|
|
100 Overlook Center
|
Office
|
1988
|
1997
|
-
|
2,378
|
21,754
|
3,666
|
2,378
|
25,420
|
27,798
|
11,149
|
|
5 Vaughn Drive
|
Office
|
1987
|
1995
|
-
|
657
|
9,800
|
2,962
|
657
|
12,762
|
13,419
|
6,823
|
|
Middlesex County
|
|||||||||||
|
East Brunswick
|
|||||||||||
|
377 Summerhill Road
|
Office
|
1977
|
1997
|
-
|
649
|
2,594
|
324
|
649
|
2,918
|
3,567
|
1,349
|
|
Edison
|
|||||||||||
|
333 Thornall Street
|
Office
|
1984
|
2015
|
-
|
5,542
|
40,762
|
-
|
5,542
|
40,762
|
46,304
|
247
|
|
343 Thornall Street
|
Office
|
1991
|
2006
|
-
|
6,027
|
39,101
|
3,349
|
6,027
|
42,450
|
48,477
|
12,243
|
|
New Brunswick
|
|||||||||||
|
Richmond Court
|
Multi-Family
|
1997
|
2013
|
-
|
2,992
|
13,534
|
1,601
|
2,992
|
15,135
|
18,127
|
689
|
|
Riverwatch Commons
|
Multi-Family
|
1995
|
2013
|
-
|
4,169
|
18,974
|
729
|
4,169
|
19,703
|
23,872
|
965
|
|
Plainsboro
|
|||||||||||
|
500 College Road East (c)
|
Office
|
1984
|
1998
|
-
|
614
|
20,626
|
4,839
|
614
|
25,465
|
26,079
|
11,312
|
|
Woodbridge
|
|||||||||||
|
581 Main Street
|
Office
|
1991
|
1997
|
-
|
3,237
|
12,949
|
26,135
|
8,115
|
34,206
|
42,321
|
16,730
|
|
Monmouth County
|
|||||||||||
|
Freehold
|
|
||||||||||
|
2 Paragon Way
|
Office
|
1989
|
2005
|
-
|
999
|
4,619
|
(864)
|
720
|
4,034
|
4,754
|
1,263
|
|
3 Paragon Way
|
Office
|
1991
|
2005
|
-
|
1,423
|
6,041
|
(979)
|
1,020
|
5,465
|
6,485
|
1,809
|
|
4 Paragon Way
|
Office
|
2002
|
2005
|
-
|
1,961
|
8,827
|
(3,107)
|
1,404
|
6,277
|
7,681
|
1,585
|
|
100 Willow Brook Road
|
Office
|
1988
|
2005
|
-
|
1,264
|
5,573
|
(1,543)
|
869
|
4,425
|
5,294
|
1,442
|
|
Holmdel
|
|||||||||||
|
23 Main Street
|
Office
|
1977
|
2005
|
28,541
|
4,336
|
19,544
|
9,133
|
4,336
|
28,677
|
33,013
|
12,775
|
|
Middletown
|
|||||||||||
|
One River Center, Building 1
|
Office
|
1983
|
2004
|
10,721
|
3,070
|
17,414
|
4,065
|
2,451
|
22,098
|
24,549
|
7,840
|
|
One River Center, Building 2
|
Office
|
1983
|
2004
|
12,026
|
2,468
|
15,043
|
3,894
|
2,452
|
18,953
|
21,405
|
5,441
|
|
One River Center, Building 3
|
Office
|
1984
|
2004
|
19,112
|
4,051
|
24,790
|
6,171
|
4,627
|
30,385
|
35,012
|
9,435
|
|
Neptune
|
|||||||||||
|
3600 Route 66
|
Office
|
1989
|
1995
|
-
|
1,098
|
18,146
|
11,397
|
1,098
|
29,543
|
30,641
|
11,448
|
|
Wall Township
|
|||||||||||
|
1305 Campus Parkway
|
Office
|
1988
|
1995
|
-
|
335
|
2,560
|
707
|
291
|
3,311
|
3,602
|
1,618
|
|
1325 Campus Parkway
|
Office/Flex
|
1988
|
1995
|
-
|
270
|
2,928
|
725
|
270
|
3,653
|
3,923
|
1,914
|
|
1340 Campus Parkway
|
Office/Flex
|
1992
|
1995
|
-
|
489
|
4,621
|
1,836
|
489
|
6,457
|
6,946
|
3,434
|
|
1345 Campus Parkway
|
Office/Flex
|
1995
|
1997
|
-
|
1,023
|
5,703
|
1,772
|
1,024
|
7,474
|
8,498
|
3,841
|
|
1350 Campus Parkway
|
Office
|
1990
|
1995
|
-
|
454
|
7,134
|
1,049
|
454
|
8,183
|
8,637
|
4,016
|
|
1433 Highway 34
|
Office/Flex
|
1985
|
1995
|
-
|
889
|
4,321
|
1,655
|
889
|
5,976
|
6,865
|
2,972
|
109
|
MACK-CALI REALTY CORPORATION
|
|||||||||||
|
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
|
|||||||||||
|
December 31, 2015
|
|||||||||||
|
(dollars in thousands)
|
|||||||||||
|
SCHEDULE III
|
|||||||||||
|
Gross Amount at Which
|
|||||||||||
|
Costs
|
Carried at Close of
|
||||||||||
|
Initial Costs
|
Capitalized
|
Period (a)
|
|||||||||
|
Year
|
Related
|
Building and
|
Subsequent
|
Building and
|
Accumulated
|
||||||
|
Property Location
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation (b)
|
|
|
1320 Wyckoff Avenue
|
Office/Flex
|
1986
|
1995
|
-
|
255
|
1,285
|
291
|
216
|
1,615
|
1,831
|
908
|
|
1324 Wyckoff Avenue
|
Office/Flex
|
1987
|
1995
|
-
|
230
|
1,439
|
317
|
190
|
1,796
|
1,986
|
853
|
|
Morris County
|
|||||||||||
|
Florham Park
|
|
||||||||||
|
325 Columbia Parkway
|
Office
|
1987
|
1994
|
-
|
1,564
|
-
|
17,770
|
1,564
|
17,770
|
19,334
|
11,013
|
|
Morris Plains
|
|||||||||||
|
250 Johnson Road
|
Office
|
1977
|
1997
|
-
|
2,004
|
8,016
|
(3,806)
|
930
|
5,284
|
6,214
|
4,265
|
|
201 Littleton Road
|
Office
|
1979
|
1997
|
-
|
2,407
|
9,627
|
3,351
|
2,407
|
12,978
|
15,385
|
5,661
|
|
Parsippany
|
|||||||||||
|
4 Campus Drive
|
Office
|
1983
|
2001
|
-
|
5,213
|
20,984
|
3,953
|
5,213
|
24,937
|
30,150
|
8,914
|
|
6 Campus Drive
|
Office
|
1983
|
2001
|
-
|
4,411
|
17,796
|
3,368
|
4,411
|
21,164
|
25,575
|
8,231
|
|
7 Campus Drive
|
Office
|
1982
|
1998
|
-
|
1,932
|
27,788
|
6,298
|
1,932
|
34,086
|
36,018
|
15,795
|
|
8 Campus Drive
|
Office
|
1987
|
1998
|
-
|
1,865
|
35,456
|
4,823
|
1,865
|
40,279
|
42,144
|
17,257
|
|
9 Campus Drive
|
Office
|
1983
|
2001
|
-
|
3,277
|
11,796
|
16,882
|
5,842
|
26,113
|
31,955
|
10,295
|
|
4 Century Drive
|
Office
|
1981
|
2004
|
-
|
1,787
|
9,575
|
(3,432)
|
1,086
|
6,844
|
7,930
|
2,188
|
|
5 Century Drive
|
Office
|
1981
|
2004
|
-
|
1,762
|
9,341
|
(3,796)
|
953
|
6,354
|
7,307
|
2,109
|
|
6 Century Drive
|
Office
|
1981
|
2004
|
-
|
1,289
|
6,848
|
(631)
|
990
|
6,516
|
7,506
|
1,966
|
|
2 Dryden Way
|
Office
|
1990
|
1998
|
-
|
778
|
420
|
110
|
778
|
530
|
1,308
|
264
|
|
4 Gatehall Drive
|
Office
|
1988
|
2000
|
-
|
8,452
|
33,929
|
4,055
|
8,452
|
37,984
|
46,436
|
15,223
|
|
2 Hilton Court
|
Office
|
1991
|
1998
|
-
|
1,971
|
32,007
|
4,434
|
1,971
|
36,441
|
38,412
|
16,638
|
|
1633 Littleton Road
|
Office
|
1978
|
2002
|
-
|
2,283
|
9,550
|
507
|
2,355
|
9,985
|
12,340
|
6,117
|
|
600 Parsippany Road
|
Office
|
1978
|
1994
|
-
|
1,257
|
5,594
|
3,102
|
1,257
|
8,696
|
9,953
|
4,631
|
|
1 Sylvan Way
|
Office
|
1989
|
1998
|
-
|
1,689
|
24,699
|
2,914
|
1,021
|
28,281
|
29,302
|
13,702
|
|
3 Sylvan Way
|
Office
|
1988
|
2015
|
-
|
5,590
|
4,710
|
-
|
5,590
|
4,710
|
10,300
|
-
|
|
5 Sylvan Way
|
Office
|
1989
|
1998
|
-
|
1,160
|
25,214
|
2,866
|
1,161
|
28,079
|
29,240
|
12,067
|
|
7 Sylvan Way
|
Office
|
1987
|
1998
|
-
|
2,084
|
26,083
|
1,185
|
2,084
|
27,268
|
29,352
|
11,760
|
|
20 Waterview Boulevard
|
Office
|
1988
|
2009
|
23,989
|
4,500
|
27,246
|
(4,222)
|
3,816
|
23,708
|
27,524
|
4,895
|
|
35 Waterview Boulevard
|
Office
|
1990
|
2006
|
-
|
5,133
|
28,059
|
1,161
|
5,133
|
29,220
|
34,353
|
8,100
|
|
5 Wood Hollow Road
|
Office
|
1979
|
2004
|
-
|
5,302
|
26,488
|
15,538
|
5,302
|
42,026
|
47,328
|
15,275
|
|
Passaic County
|
|||||||||||
|
Totowa
|
|||||||||||
|
1 Center Court
|
Office/Flex
|
1999
|
1999
|
-
|
270
|
1,824
|
490
|
270
|
2,314
|
2,584
|
990
|
|
2 Center Court
|
Office/Flex
|
1998
|
1998
|
-
|
191
|
-
|
2,476
|
191
|
2,476
|
2,667
|
1,089
|
|
11 Commerce Way
|
Office/Flex
|
1989
|
1995
|
-
|
586
|
2,986
|
1,000
|
586
|
3,986
|
4,572
|
2,086
|
|
20 Commerce Way
|
Office/Flex
|
1992
|
1995
|
-
|
516
|
3,108
|
111
|
516
|
3,219
|
3,735
|
1,600
|
|
29 Commerce Way
|
Office/Flex
|
1990
|
1995
|
-
|
586
|
3,092
|
961
|
586
|
4,053
|
4,639
|
1,809
|
|
40 Commerce Way
|
Office/Flex
|
1987
|
1995
|
-
|
516
|
3,260
|
1,509
|
516
|
4,769
|
5,285
|
2,293
|
|
45 Commerce Way
|
Office/Flex
|
1992
|
1995
|
-
|
536
|
3,379
|
497
|
536
|
3,876
|
4,412
|
1,940
|
|
60 Commerce Way
|
Office/Flex
|
1988
|
1995
|
-
|
526
|
3,257
|
507
|
526
|
3,764
|
4,290
|
2,048
|
|
80 Commerce Way
|
Office/Flex
|
1996
|
1996
|
-
|
227
|
-
|
1,348
|
227
|
1,348
|
1,575
|
638
|
|
100 Commerce Way
|
Office/Flex
|
1996
|
1996
|
-
|
226
|
-
|
1,348
|
226
|
1,348
|
1,574
|
637
|
|
120 Commerce Way
|
Office/Flex
|
1994
|
1995
|
-
|
228
|
-
|
1,284
|
229
|
1,283
|
1,512
|
657
|
|
140 Commerce Way
|
Office/Flex
|
1994
|
1995
|
-
|
229
|
-
|
1,282
|
228
|
1,283
|
1,511
|
657
|
|
999 Riverview Drive
|
Office
|
1988
|
1995
|
-
|
476
|
6,024
|
2,766
|
1,102
|
8,164
|
9,266
|
4,367
|
110
|
MACK-CALI REALTY CORPORATION
|
|||||||||||
|
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
|
|||||||||||
|
December 31, 2015
|
|||||||||||
|
(dollars in thousands)
|
|||||||||||
|
SCHEDULE III
|
|||||||||||
|
Gross Amount at Which
|
|||||||||||
|
Costs
|
Carried at Close of
|
||||||||||
|
Initial Costs
|
Capitalized
|
Period (a)
|
|||||||||
|
Year
|
Related
|
Building and
|
Subsequent
|
Building and
|
Accumulated
|
||||||
|
Property Location
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation (b)
|
|
|
Somerset County
|
|||||||||||
|
Basking Ridge
|
|||||||||||
|
222 Mt. Airy Road
|
Office
|
1986
|
1996
|
-
|
775
|
3,636
|
1,848
|
697
|
5,562
|
6,259
|
2,747
|
|
233 Mt. Airy Road
|
Office
|
1987
|
1996
|
-
|
1,034
|
5,033
|
1,254
|
915
|
6,406
|
7,321
|
2,677
|
|
Bridgewater
|
|||||||||||
|
440 Route 22 East
|
Office
|
1990
|
2010
|
-
|
3,986
|
13,658
|
4,940
|
3,986
|
18,598
|
22,584
|
4,638
|
|
721 Route 202/206
|
Office
|
1989
|
1997
|
-
|
6,730
|
26,919
|
(952)
|
5,067
|
27,630
|
32,697
|
14,895
|
|
Union County
|
|||||||||||
|
Clark
|
|
||||||||||
|
100 Walnut Avenue
|
Office
|
1985
|
1994
|
18,273
|
-
|
-
|
17,801
|
1,822
|
15,979
|
17,801
|
10,958
|
|
Cranford
|
|||||||||||
|
6 Commerce Drive
|
Office
|
1973
|
1994
|
-
|
250
|
-
|
1,728
|
250
|
1,728
|
1,978
|
704
|
|
11 Commerce Drive
|
Office
|
1981
|
1994
|
-
|
470
|
-
|
5,490
|
470
|
5,490
|
5,960
|
4,644
|
|
12 Commerce Drive
|
Office
|
1967
|
1997
|
-
|
887
|
3,549
|
1,543
|
887
|
5,092
|
5,979
|
2,566
|
|
14 Commerce Drive
|
Office
|
1971
|
2003
|
-
|
1,283
|
6,344
|
1,613
|
1,283
|
7,957
|
9,240
|
2,477
|
|
20 Commerce Drive
|
Office
|
1990
|
1994
|
-
|
2,346
|
-
|
21,663
|
2,346
|
21,663
|
24,009
|
11,901
|
|
25 Commerce Drive
|
Office
|
1971
|
2002
|
-
|
1,520
|
6,186
|
864
|
1,520
|
7,050
|
8,570
|
3,239
|
|
65 Jackson Drive
|
Office
|
1984
|
1994
|
-
|
541
|
-
|
6,377
|
542
|
6,376
|
6,918
|
4,381
|
|
New Providence
|
|||||||||||
|
890 Mountain Road
|
Office
|
1977
|
1997
|
-
|
2,796
|
11,185
|
(4,798)
|
1,719
|
7,464
|
9,183
|
3,212
|
|
Rahway
|
|||||||||||
|
Park Square
|
Multi-Family
|
2011
|
2013
|
27,500
|
4,000
|
40,670
|
256
|
4,000
|
40,926
|
44,926
|
2,148
|
|
NEW YORK
|
|||||||||||
|
New York County
|
|
||||||||||
|
New York
|
|||||||||||
|
125 Broad Street
|
Office
|
1970
|
2007
|
-
|
50,191
|
207,002
|
(48,039)
|
33,829
|
175,325
|
209,154
|
37,852
|
|
Westchester County
|
|||||||||||
|
Elmsford
|
|
||||||||||
|
11 Clearbrook Road
|
Office/Flex
|
1974
|
1997
|
-
|
149
|
2,159
|
602
|
149
|
2,761
|
2,910
|
1,278
|
|
75 Clearbrook Road
|
Office/Flex
|
1990
|
1997
|
-
|
2,314
|
4,716
|
57
|
2,314
|
4,773
|
7,087
|
2,259
|
|
100 Clearbrook Road
|
Office
|
1975
|
1997
|
-
|
220
|
5,366
|
1,617
|
220
|
6,983
|
7,203
|
3,352
|
|
125 Clearbrook Road
|
Office/Flex
|
2002
|
2002
|
-
|
1,055
|
3,676
|
(445)
|
1,055
|
3,231
|
4,286
|
1,145
|
|
150 Clearbrook Road
|
Office/Flex
|
1975
|
1997
|
-
|
497
|
7,030
|
2,221
|
497
|
9,251
|
9,748
|
4,104
|
|
175 Clearbrook Road
|
Office/Flex
|
1973
|
1997
|
-
|
655
|
7,473
|
762
|
655
|
8,235
|
8,890
|
3,863
|
|
200 Clearbrook Road
|
Office/Flex
|
1974
|
1997
|
-
|
579
|
6,620
|
1,888
|
579
|
8,508
|
9,087
|
3,852
|
|
250 Clearbrook Road
|
Office/Flex
|
1973
|
1997
|
-
|
867
|
8,647
|
2,395
|
867
|
11,042
|
11,909
|
4,697
|
|
50 Executive Boulevard
|
Office/Flex
|
1969
|
1997
|
-
|
237
|
2,617
|
441
|
237
|
3,058
|
3,295
|
1,404
|
|
77 Executive Boulevard
|
Office/Flex
|
1977
|
1997
|
-
|
34
|
1,104
|
212
|
34
|
1,316
|
1,350
|
677
|
|
85 Executive Boulevard
|
Office/Flex
|
1968
|
1997
|
-
|
155
|
2,507
|
516
|
155
|
3,023
|
3,178
|
1,284
|
|
101 Executive Boulevard
|
Office
|
1971
|
1997
|
-
|
267
|
5,838
|
(3,528)
|
101
|
2,476
|
2,577
|
2,468
|
|
300 Executive Boulevard
|
Office/Flex
|
1970
|
1997
|
-
|
460
|
3,609
|
306
|
460
|
3,915
|
4,375
|
1,802
|
111
|
MACK-CALI REALTY CORPORATION
|
|||||||||||
|
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
|
|||||||||||
|
December 31, 2015
|
|||||||||||
|
(dollars in thousands)
|
|||||||||||
|
SCHEDULE III
|
|||||||||||
|
Gross Amount at Which
|
|||||||||||
|
Costs
|
Carried at Close of
|
||||||||||
|
Initial Costs
|
Capitalized
|
Period (a)
|
|||||||||
|
Year
|
Related
|
Building and
|
Subsequent
|
Building and
|
Accumulated
|
||||||
|
Property Location
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation (b)
|
|
|
350 Executive Boulevard
|
Office/Flex
|
1970
|
1997
|
-
|
100
|
1,793
|
175
|
100
|
1,968
|
2,068
|
942
|
|
399 Executive Boulevard
|
Office/Flex
|
1962
|
1997
|
-
|
531
|
7,191
|
163
|
531
|
7,354
|
7,885
|
3,502
|
|
400 Executive Boulevard
|
Office/Flex
|
1970
|
1997
|
-
|
2,202
|
1,846
|
938
|
2,202
|
2,784
|
4,986
|
1,407
|
|
500 Executive Boulevard
|
Office/Flex
|
1970
|
1997
|
-
|
258
|
4,183
|
434
|
258
|
4,617
|
4,875
|
2,268
|
|
525 Executive Boulevard
|
Office/Flex
|
1972
|
1997
|
-
|
345
|
5,499
|
837
|
345
|
6,336
|
6,681
|
3,082
|
|
700 Executive Boulevard
|
Land Lease
|
N/A
|
1997
|
-
|
970
|
-
|
-
|
970
|
-
|
970
|
-
|
|
1 Warehouse Lane (c)
|
Industrial/Warehouse
|
1957
|
1997
|
-
|
3
|
268
|
233
|
3
|
501
|
504
|
238
|
|
2 Warehouse Lane (c)
|
Industrial/Warehouse
|
1957
|
1997
|
-
|
4
|
672
|
232
|
4
|
904
|
908
|
378
|
|
3 Warehouse Lane (c)
|
Industrial/Warehouse
|
1957
|
1997
|
-
|
21
|
1,948
|
363
|
21
|
2,311
|
2,332
|
1,181
|
|
4 Warehouse Lane (c)
|
Industrial/Warehouse
|
1957
|
1997
|
-
|
84
|
13,393
|
3,405
|
85
|
16,797
|
16,882
|
7,261
|
|
5 Warehouse Lane (c)
|
Industrial/Warehouse
|
1957
|
1997
|
-
|
19
|
4,804
|
943
|
19
|
5,747
|
5,766
|
2,745
|
|
6 Warehouse Lane (c)
|
Industrial/Warehouse
|
1982
|
1997
|
-
|
10
|
4,419
|
2,381
|
10
|
6,800
|
6,810
|
2,764
|
|
1 Westchester Plaza
|
Office/Flex
|
1967
|
1997
|
-
|
199
|
2,023
|
469
|
199
|
2,492
|
2,691
|
1,318
|
|
2 Westchester Plaza
|
Office/Flex
|
1968
|
1997
|
-
|
234
|
2,726
|
686
|
234
|
3,412
|
3,646
|
1,510
|
|
3 Westchester Plaza
|
Office/Flex
|
1969
|
1997
|
-
|
655
|
7,936
|
1,343
|
655
|
9,279
|
9,934
|
4,453
|
|
4 Westchester Plaza
|
Office/Flex
|
1969
|
1997
|
-
|
320
|
3,729
|
1,244
|
320
|
4,973
|
5,293
|
2,455
|
|
5 Westchester Plaza
|
Office/Flex
|
1969
|
1997
|
-
|
118
|
1,949
|
425
|
118
|
2,374
|
2,492
|
1,219
|
|
6 Westchester Plaza
|
Office/Flex
|
1968
|
1997
|
-
|
164
|
1,998
|
166
|
164
|
2,164
|
2,328
|
1,012
|
|
7 Westchester Plaza
|
Office/Flex
|
1972
|
1997
|
-
|
286
|
4,321
|
681
|
286
|
5,002
|
5,288
|
2,187
|
|
8 Westchester Plaza
|
Office/Flex
|
1971
|
1997
|
-
|
447
|
5,262
|
1,917
|
447
|
7,179
|
7,626
|
3,157
|
|
Hawthorne
|
|||||||||||
|
200 Saw Mill River Road
|
Office/Flex
|
1965
|
1997
|
-
|
353
|
3,353
|
533
|
353
|
3,886
|
4,239
|
1,831
|
|
1 Skyline Drive
|
Office
|
1980
|
1997
|
-
|
66
|
1,711
|
210
|
66
|
1,921
|
1,987
|
943
|
|
2 Skyline Drive
|
Office
|
1987
|
1997
|
-
|
109
|
3,128
|
1,474
|
109
|
4,602
|
4,711
|
2,270
|
|
4 Skyline Drive
|
Office/Flex
|
1987
|
1997
|
-
|
363
|
7,513
|
2,873
|
363
|
10,386
|
10,749
|
5,320
|
|
5 Skyline Drive
|
Office/Flex
|
1980
|
2001
|
-
|
2,219
|
8,916
|
1,747
|
2,219
|
10,663
|
12,882
|
4,706
|
|
6 Skyline Drive
|
Office/Flex
|
1980
|
2001
|
-
|
740
|
2,971
|
1,498
|
740
|
4,469
|
5,209
|
2,380
|
|
7 Skyline Drive
|
Office
|
1987
|
1998
|
-
|
330
|
13,013
|
2,564
|
330
|
15,577
|
15,907
|
6,690
|
|
8 Skyline Drive
|
Office/Flex
|
1985
|
1997
|
-
|
212
|
4,410
|
769
|
212
|
5,179
|
5,391
|
2,557
|
|
10 Skyline Drive
|
Office/Flex
|
1985
|
1997
|
-
|
134
|
2,799
|
732
|
134
|
3,531
|
3,665
|
1,903
|
|
11 Skyline Drive (c)
|
Office/Flex
|
1989
|
1997
|
-
|
-
|
4,788
|
761
|
-
|
5,549
|
5,549
|
2,409
|
|
12 Skyline Drive (c)
|
Office/Flex
|
1999
|
1999
|
-
|
1,562
|
3,254
|
200
|
1,320
|
3,696
|
5,016
|
1,497
|
|
15 Skyline Drive (c)
|
Office/Flex
|
1989
|
1997
|
-
|
-
|
7,449
|
1,060
|
-
|
8,509
|
8,509
|
3,620
|
|
17 Skyline Drive (c)
|
Office
|
1989
|
1997
|
-
|
-
|
7,269
|
1,484
|
-
|
8,753
|
8,753
|
3,998
|
|
Tarrytown
|
|||||||||||
|
230 White Plains Road
|
Retail
|
1984
|
1997
|
-
|
124
|
1,845
|
107
|
124
|
1,952
|
2,076
|
919
|
|
White Plains
|
|||||||||||
|
1 Barker Avenue
|
Office
|
1975
|
1997
|
-
|
208
|
9,629
|
2,590
|
207
|
12,220
|
12,427
|
5,489
|
|
3 Barker Avenue
|
Office
|
1983
|
1997
|
-
|
122
|
7,864
|
1,848
|
122
|
9,712
|
9,834
|
4,473
|
|
50 Main Street
|
Office
|
1985
|
1997
|
-
|
564
|
48,105
|
14,554
|
564
|
62,659
|
63,223
|
29,323
|
|
11 Martine Avenue
|
Office
|
1987
|
1997
|
-
|
127
|
26,833
|
8,561
|
127
|
35,394
|
35,521
|
16,002
|
|
1 Water Street
|
Office
|
1979
|
1997
|
-
|
211
|
5,382
|
1,341
|
211
|
6,723
|
6,934
|
3,043
|
|
Yonkers
|
|||||||||||
|
100 Corporate Boulevard
|
Office/Flex
|
1987
|
1997
|
-
|
602
|
9,910
|
1,397
|
602
|
11,307
|
11,909
|
5,342
|
|
200 Corporate Boulevard South
|
Office/Flex
|
1990
|
1997
|
-
|
502
|
7,575
|
1,472
|
502
|
9,047
|
9,549
|
4,473
|
|
1 Enterprise Boulevard
|
Land Lease
|
N/A
|
1997
|
-
|
1,379
|
-
|
1
|
1,380
|
-
|
1,380
|
-
|
|
1 Executive Boulevard
|
Office
|
1982
|
1997
|
-
|
1,104
|
11,904
|
2,998
|
1,105
|
14,901
|
16,006
|
6,732
|
112
|
MACK-CALI REALTY CORPORATION
|
|||||||||||
|
REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
|
|||||||||||
|
December 31, 2015
|
|||||||||||
|
(dollars in thousands)
|
|||||||||||
|
SCHEDULE III
|
|||||||||||
|
Gross Amount at Which
|
|||||||||||
|
Costs
|
Carried at Close of
|
||||||||||
|
Initial Costs
|
Capitalized
|
Period (a)
|
|||||||||
|
Year
|
Related
|
Building and
|
Subsequent
|
Building and
|
Accumulated
|
||||||
|
Property Location
|
Built
|
Acquired
|
Encumbrances
|
Land
|
Improvements
|
to Acquisition
|
Land
|
Improvements
|
Total
|
Depreciation (b)
|
|
|
2 Executive Boulevard
|
Retail
|
1986
|
1997
|
-
|
89
|
2,439
|
107
|
89
|
2,546
|
2,635
|
1,182
|
|
3 Executive Boulevard
|
Office
|
1987
|
1997
|
-
|
385
|
6,256
|
1,772
|
385
|
8,028
|
8,413
|
3,625
|
|
4 Executive Plaza
|
Office/Flex
|
1986
|
1997
|
-
|
584
|
6,134
|
1,142
|
584
|
7,276
|
7,860
|
3,294
|
|
6 Executive Plaza
|
Office/Flex
|
1987
|
1997
|
-
|
546
|
7,246
|
2,206
|
546
|
9,452
|
9,998
|
4,218
|
|
1 Odell Plaza
|
Office/Flex
|
1980
|
1997
|
-
|
1,206
|
6,815
|
2,221
|
1,206
|
9,036
|
10,242
|
4,058
|
|
3 Odell Plaza
|
Office
|
1984
|
2003
|
-
|
1,322
|
4,777
|
2,332
|
1,322
|
7,109
|
8,431
|
3,259
|
|
5 Odell Plaza
|
Office/Flex
|
1983
|
1997
|
-
|
331
|
2,988
|
535
|
331
|
3,523
|
3,854
|
1,760
|
|
7 Odell Plaza
|
Office/Flex
|
1984
|
1997
|
-
|
419
|
4,418
|
1,249
|
419
|
5,667
|
6,086
|
2,482
|
|
CONNECTICUT
|
|||||||||||
|
Fairfield County
|
|||||||||||
|
Stamford
|
|||||||||||
|
419 West Avenue
|
Office/Flex
|
1986
|
1997
|
-
|
4,538
|
9,246
|
1,298
|
4,538
|
10,544
|
15,082
|
5,417
|
|
500 West Avenue
|
Office/Flex
|
1988
|
1997
|
-
|
415
|
1,679
|
654
|
415
|
2,333
|
2,748
|
899
|
|
550 West Avenue
|
Office/Flex
|
1990
|
1997
|
-
|
1,975
|
3,856
|
185
|
1,975
|
4,041
|
6,016
|
1,956
|
|
600 West Avenue
|
Office/Flex
|
1999
|
1999
|
-
|
2,305
|
2,863
|
754
|
2,305
|
3,617
|
5,922
|
1,426
|
|
650 West Avenue
|
Office/Flex
|
1998
|
1998
|
-
|
1,328
|
-
|
3,524
|
1,328
|
3,524
|
4,852
|
1,601
|
|
DISTRICT OF COLUMBIA
|
|||||||||||
|
Washington,
|
|||||||||||
|
1201 Connecticut Avenue, NW
|
Office
|
1940
|
1999
|
-
|
14,228
|
18,571
|
6,895
|
14,228
|
25,466
|
39,694
|
11,390
|
|
1400 L Street, NW
|
Office
|
1987
|
1998
|
-
|
13,054
|
27,423
|
7,910
|
13,054
|
35,333
|
48,387
|
18,841
|
|
MARYLAND
|
|||||||||||
|
Prince George’s County
|
|||||||||||
|
Greenbelt
|
|||||||||||
|
Capital Office Park Parcel A
|
Land
|
N/A
|
2009
|
-
|
840
|
-
|
7
|
847
|
-
|
847
|
-
|
|
9200 Edmonston Road
|
Office
|
1973/03
|
2006
|
3,793
|
1,547
|
4,131
|
(2,484)
|
610
|
2,584
|
3,194
|
1,376
|
|
6301 Ivy Lane
|
Office
|
1979/95
|
2006
|
-
|
5,168
|
14,706
|
(9,924)
|
2,431
|
7,519
|
9,950
|
1,988
|
|
6303 Ivy Lane
|
Office
|
1980/03
|
2006
|
-
|
5,115
|
13,860
|
(10,097)
|
2,436
|
6,442
|
8,878
|
1,584
|
|
6305 Ivy Lane
|
Office
|
1982/95
|
2006
|
-
|
5,615
|
14,420
|
(10,137)
|
2,599
|
7,299
|
9,898
|
1,972
|
|
6404 Ivy Lane
|
Office
|
1987
|
2006
|
-
|
7,578
|
20,785
|
(14,343)
|
3,437
|
10,583
|
14,020
|
3,376
|
|
6406 Ivy Lane
|
Office
|
1991
|
2006
|
-
|
7,514
|
21,152
|
(14,034)
|
3,158
|
11,474
|
14,632
|
2,570
|
|
6411 Ivy Lane
|
Office
|
1984/05
|
2006
|
-
|
6,867
|
17,470
|
(12,445)
|
3,216
|
8,676
|
11,892
|
2,452
|
|
Lanham
|
|||||||||||
|
4200 Parliament Place
|
Office
|
1989
|
1998
|
-
|
2,114
|
13,546
|
(6,173)
|
774
|
8,713
|
9,487
|
4,258
|
|
MASSACHUSETTS
|
|||||||||||
|
Suffolk County
|
|||||||||||
|
Revere
|
|||||||||||
|
Alterra at Overlook Ridge IA
|
Multi-Family
|
2004
|
2013
|
-
|
9,042
|
50,671
|
879
|
9,042
|
51,550
|
60,592
|
3,859
|
|
Alterra at Overlook Ridge II
|
Multi-Family
|
2008
|
2013
|
-
|
12,055
|
71,409
|
250
|
12,055
|
71,659
|
83,714
|
5,236
|
|
Andover Place
|
Multi-Family
|
1988
|
2014
|
-
|
8,535
|
27,609
|
2,263
|
8,534
|
29,873
|
38,407
|
1,623
|
|
Projects Under Development
|
|||||||||||
|
and Developable Land
|
45,899
|
204,041
|
237,906
|
-
|
204,041
|
237,906
|
441,947
|
323
|
|||
|
Furniture, Fixtures
|
|||||||||||
|
and Equipment
|
-
|
-
|
-
|
15,167
|
-
|
15,167
|
15,167
|
5,418
|
|||
|
TOTALS
|
667,076
|
796,691
|
3,531,729
|
479,298
|
735,696
|
4,072,022
|
4,807,718
|
1,464,482
|
|||
(a) The aggregate cost for federal income tax purposes at December 31, 2015 was approximately $3.3 billion.
(b) Depreciation of buildings and improvements are calculated over lives ranging from the life of the lease to 40 years.
(c) This property is located on land leased by the Company.
113
MACK-CALI REALTY CORPORATION
NOTE TO SCHEDULE III
Changes in rental properties and accumulated depreciation for the periods ended December 31, 2015, 2014 and 2013 are as follows: (dollars in thousands)
|
2015
|
2014
|
2013
|
||||||
|
Rental Properties
|
||||||||
|
Balance at beginning of year
|
$
|
4,958,179
|
$
|
5,129,933
|
$
|
5,379,436
|
||
|
Additions
|
219,227
|
193,005
|
317,994
|
|||||
|
Rental property held for sale
|
-
|
-
|
(107,205)
|
|||||
|
Properties sold
|
(82,015)
|
(331,181)
|
(256,335)
|
|||||
|
Impairment charge
|
(255,849)
|
-
|
(149,030)
|
|||||
|
Retirements/disposals
|
(31,824)
|
(33,578)
|
(54,927)
|
|||||
|
Balance at end of year
|
$
|
4,807,718
|
$
|
4,958,179
|
$
|
5,129,933
|
||
|
Accumulated Depreciation
|
||||||||
|
Balance at beginning of year
|
$
|
1,414,305
|
$
|
1,400,988
|
$
|
1,478,214
|
||
|
Depreciation expense
|
147,447
|
143,278
|
155,846
|
|||||
|
Rental property held for sale
|
-
|
-
|
(35,594)
|
|||||
|
Properties sold
|
(7,517)
|
(96,383)
|
(104,196)
|
|||||
|
Impairment charge
|
(57,929)
|
-
|
(38,353)
|
|||||
|
Retirements/disposals
|
(31,824)
|
(33,578)
|
(54,929)
|
|||||
|
Balance at end of year
|
$
|
1,464,482
|
$
|
1,414,305
|
$
|
1,400,988
|
114
MACK-CALI REALTY CORPORATION
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
Mack-Cali Realty Corporation
|
||||
|
(Registrant)
|
||||
|
Date: February 24, 2016
|
By:
|
/s/ Anthony Krug
|
||
|
Anthony Krug
|
||||
|
Chief Financial Officer
|
||||
|
(principal financial officer
|
||||
|
and principal accounting officer)
|
||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
|
Name
|
Title
|
Date
|
|
|
/s/ William L. Mack
|
Chairman of the Board
|
February 24, 2016
|
|
|
William L. Mack
|
|||
|
/s/ Mitchell E. Rudin
|
Chief Executive Officer
|
February 24, 2016
|
|
|
Mitchell E. Rudin
|
(principal executive officer)
|
||
|
/s/ Michael J. DeMarco
|
President and Chief Operating Officer
|
February 24, 2016
|
|
|
Michael J. DeMarco
|
|||
|
/s/ Anthony Krug
|
Chief Financial Officer
|
February 24, 2016
|
|
|
Anthony Krug
|
(principal financial officer
|
||
|
and principal accounting officer)
|
|||
|
/s/ Alan S. Bernikow
|
Director
|
February 24, 2016
|
|
|
Alan S. Bernikow
|
|||
|
/s/ Kenneth M. Duberstein
|
Director
|
February 24, 2016
|
|
|
Kenneth M. Duberstein
|
|||
|
/s/ Nathan Gantcher
|
Director
|
February 24, 2016
|
|
|
Nathan Gantcher
|
|||
|
/s/ Jonathan Litt
|
Director
|
February 24, 2016
|
|
|
Jonathan Litt
|
|||
115
|
/s/ David S. Mack
|
Director
|
February 24, 2016
|
|
|
David S. Mack
|
|||
|
/s/ Alan G. Philibosian
|
Director
|
February 24, 2016
|
|
|
Alan G. Philibosian
|
|||
|
/s/ Irvin D. Reid
|
Director
|
February 24, 2016
|
|
|
Irvin D. Reid
|
|||
|
/s/ Vincent Tese
|
Director
|
February 24, 2016
|
|
|
Vincent Tese
|
|||
|
/s/ Roy J. Zuckerberg
|
Director
|
February 24, 2016
|
|
|
Roy J. Zuckerberg
|
116
MACK-CALI REALTY CORPORATION
EXHIBIT INDEX
|
Exhibit
|
||
|
Number
|
Exhibit Title
|
|
|
3.1
|
Articles of Restatement of Mack-Cali Realty Corporation dated September 18, 2009 (filed as Exhibit 3.2 to the Company’s Form 8-K dated September 17, 2009 and incorporated herein by reference).
|
|
|
3.2
|
Articles of Amendment to the Articles of Restatement of Mack-Cali Realty Corporation as filed with the State Department of Assessments and Taxation of Maryland on May 14, 2014 (filed as Exhibit 3.1 to the Company’s Form 8-K dated May 12, 2014 and incorporated herein by reference).
|
|
|
3.3
|
Amended and Restated Bylaws of Mack-Cali Realty Corporation dated June 10, 1999 (filed as Exhibit 3.2 to the Company’s Form 8-K dated June 10, 1999 and incorporated herein by reference).
|
|
|
3.4
|
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 Company’s Form 10-Q dated March 31, 2003 and incorporated herein by reference).
|
|
|
3.5
|
Amendment No. 2 to the Mack-Cali Realty Corporation Amended and Restated Bylaws dated May 24, 2006 (filed as Exhibit 3.1 to the Company’s Form 8-K dated May 24, 2006 and incorporated herein by reference).
|
|
|
3.6
|
Amendment No. 3 to the Mack-Cali Realty Corporation Amended and Restated Bylaws dated May 14, 2014 (filed as Exhibit 3.2 to the Company’s Form 8-K dated 12, 2014 and incorporated herein by reference).
|
|
|
3.7
|
Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. dated December 11, 1997 (filed as Exhibit 10.110 to the Company’s Form 8-K dated December 11, 1997 and incorporated herein by reference).
|
|
|
3.8
|
Amendment No. 1 to the Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. dated August 21, 1998 (filed as Exhibit 3.1 to the Company’s and the Operating Partnership’s Registration Statement on Form S-3, Registration No. 333-57103, and incorporated herein by reference).
|
|
|
3.9
|
Second Amendment to the Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. dated July 6, 1999 (filed as Exhibit 10.1 to the Company’s Form 8-K dated July 6, 1999 and incorporated herein by reference).
|
|
|
3.10
|
Third Amendment to the Second Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty, L.P. dated September 30, 2003 (filed as Exhibit 3.7 to the Company’s Form 10-Q dated September 30, 2003 and incorporated herein by reference).
|
|
|
4.1
|
Indenture dated as of March 16, 1999, by and among Mack-Cali Realty, L.P., as issuer, Mack-Cali Realty Corporation, as guarantor, and Wilmington Trust Company, as trustee (filed as Exhibit 4.1 to the Operating Partnership’s Form 8-K dated March 16, 1999 and incorporated herein by reference).
|
|
|
4.2
|
Supplemental Indenture No. 1 dated as of March 16, 1999, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated March 16, 1999 and incorporated herein by reference).
|
|
|
4.3
|
Supplemental Indenture No. 2 dated as of August 2, 1999, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.4 to the Operating Partnership’s Form 10-Q dated June 30, 1999 and incorporated herein by reference).
|
|
|
4.4
|
Supplemental Indenture No. 3 dated as of December 21, 2000, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated December 21, 2000 and incorporated herein by reference).
|
|
|
4.5
|
Supplemental Indenture No. 4 dated as of January 29, 2001, by and among Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated January 29, 2001 and incorporated herein by reference).
|
|
|
4.6
|
Supplemental Indenture No. 5 dated as of December 20, 2002, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Operating Partnership’s Form 8-K dated December 20, 2002 and incorporated herein by reference).
|
117
|
Exhibit
|
||
|
Number
|
Exhibit Title
|
|
|
4.7
|
Supplemental Indenture No. 6 dated as of March 14, 2003, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company’s Form 8-K dated March 14, 2003 and incorporated herein by reference).
|
|
|
4.8
|
Supplemental Indenture No. 7 dated as of June 12, 2003, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company’s Form 8-K dated June 12, 2003 and incorporated herein by reference).
|
|
|
4.9
|
Supplemental Indenture No. 8 dated as of February 9, 2004, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company’s Form 8-K dated February 9, 2004 and incorporated herein by reference).
|
|
|
4.10
|
Supplemental Indenture No. 9 dated as of March 22, 2004, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company’s Form 8-K dated March 22, 2004 and incorporated herein by reference).
|
|
|
4.11
|
Supplemental Indenture No. 10 dated as of January 25, 2005, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company’s Form 8-K dated January 25, 2005 and incorporated herein by reference).
|
|
|
4.12
|
Supplemental Indenture No. 11 dated as of April 15, 2005, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company’s Form 8-K dated April 15, 2005 and incorporated herein by reference).
|
|
|
4.13
|
Supplemental Indenture No. 12 dated as of November 30, 2005, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company’s Form 8-K dated November 30, 2005 and incorporated herein by reference).
|
|
|
4.14
|
Supplemental Indenture No. 13 dated as of January 24, 2006, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company’s Form 8-K dated January 18, 2006 and incorporated herein by reference).
|
|
|
4.15
|
Supplemental Indenture No. 14 dated as of August 14, 2009, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company’s Form 8-K dated August 14, 2009 and incorporated herein by reference).
|
|
|
4.16
|
Supplemental Indenture No. 15 dated as of April 19, 2012, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company’s Form 8-K dated April 19, 2012 and incorporated herein by reference).
|
|
|
4.17
|
Supplemental Indenture No. 16 dated as of November 20, 2012, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee. (filed as Exhibit 4.2 to the Company’s Form 8-K dated November 20, 2012 and incorporated herein by reference).
|
|
|
4.18
|
Supplemental Indenture No. 17 dates as of May 8, 2013, by and between Mack-Cali Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit 4.2 to the Company’s Form 8-K dated May 8, 2013 and incorporated herein by reference).
|
|
|
10.1
|
Amended and Restated Employment Agreement dated as of July 1, 1999 between Mitchell E. Hersh and Mack-Cali Realty Corporation (filed as Exhibit 10.2 to the Company’s Form 10-Q dated June 30, 1999 and incorporated herein by reference).
|
|
|
10.2
|
Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.4 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).
|
|
118
|
Exhibit
|
||
|
Number
|
Exhibit Title
|
|
|
10.3
|
Second Amended and Restated Employment Agreement dated as of July 1, 1999 between Barry Lefkowitz and Mack-Cali Realty Corporation (filed as Exhibit 10.6 to the Company’s Form 10-Q dated June 30, 1999 and incorporated herein by reference).
|
|
|
10.4
|
Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).
|
|
|
10.5
|
Second Amended and Restated Employment Agreement dated as of July 1, 1999 between Roger W. Thomas and Mack-Cali Realty Corporation (filed as Exhibit 10.7 to the Company’s Form 10-Q dated June 30, 1999 and incorporated herein by reference).
|
|
|
10.6
|
Letter Agreement dated December 9, 2008 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.8 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).
|
|
|
10.7
|
Contribution and Exchange Agreement among The MK Contributors, The MK Entities, The Patriot Contributors, The Patriot Entities, Patriot American Management and Leasing Corp., Cali Realty, L.P. and Cali Realty Corporation, dated September 18, 1997 (filed as Exhibit 10.98 to the Company’s Form 8-K dated September 19, 1997 and incorporated herein by reference).
|
|
|
10.8
|
First Amendment to Contribution and Exchange Agreement, dated as of December 11, 1997, by and among the Company and the Mack Group (filed as Exhibit 10.99 to the Company’s Form 8-K dated December 11, 1997 and incorporated herein by reference).
|
|
|
10.9
|
Employee Stock Option Plan of Mack-Cali Realty Corporation (filed as Exhibit 10.1 to the Company’s Post-Effective Amendment No. 1 to Form S-8, Registration No. 333-44443, and incorporated herein by reference).
|
|
|
10.10
|
Director Stock Option Plan of Mack-Cali Realty Corporation (filed as Exhibit 10.2 to the Company’s Post-Effective Amendment No. 1 to Form S-8, Registration No. 333-44443, and incorporated herein by reference).
|
|
|
10.11
|
2000 Employee Stock Option Plan (filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-8, Registration No. 333-52478, and incorporated herein by reference), as amended by the First Amendment to the 2000 Employee Stock Option Plan (filed as Exhibit 10.17 to the Company’s Form 10-Q dated June 30, 2002 and incorporated herein by reference).
|
|
|
10.12
|
Amended and Restated 2000 Director Stock Option Plan (filed as Exhibit 10.2 to the Company’s Post-Effective Amendment No. 1 to Registration Statement on Form S-8, Registration No. 333-100244, and incorporated herein by reference).
|
|
|
10.13
|
Mack-Cali Realty Corporation 2004 Incentive Stock Plan (filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-8, Registration No. 333-116437, and incorporated herein by reference).
|
|
|
10.14
|
Amended and Restated Mack-Cali Realty Corporation Deferred Compensation Plan for Directors (filed as Exhibit 10.3 to the Company's Form 8-K dated December 9, 2008 and incorporated herein by reference).
|
|
|
10.15
|
Mack-Cali Realty Corporation 2013 Incentive Stock Plan (filed as Exhibit 10.1 to the Company's Registration Statement on Form S-8 Registration No. 333-188729, and incorporated herein by reference).
|
|
|
10.16
|
Indemnification Agreement by and between Mack-Cali Realty Corporation and William L. Mack dated October 22, 2002 (filed as Exhibit 10.101 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.17
|
Indemnification Agreement by and between Mack-Cali Realty Corporation and Mitchell E. Hersh dated October 22, 2002 (filed as Exhibit 10.102 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.18
|
Indemnification Agreement by and between Mack-Cali Realty Corporation and Alan S. Bernikow dated May 20, 2004 (filed as Exhibit 10.104 to the Company’s Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.19
|
Indemnification Agreement by and between Mack-Cali Realty Corporation and Kenneth M. Duberstein dated September 13, 2005 (filed as Exhibit 10.106 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.20
|
Indemnification Agreement by and between Mack-Cali Realty Corporation and Nathan Gantcher dated October 22, 2002 (filed as Exhibit 10.107 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
119
|
Exhibit
|
||
|
Number
|
Exhibit Title
|
|
|
10.21
|
Indemnification Agreement by and between Mack-Cali Realty Corporation and David S. Mack dated December 11, 1997 (filed as Exhibit 10.108 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.22
|
Indemnification Agreement by and between Mack-Cali Realty Corporation and Alan G. Philibosian dated October 22, 2002 (filed as Exhibit 10.109 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.23
|
Indemnification Agreement by and between Mack-Cali Realty Corporation and Irvin D. Reid dated October 22, 2002 (filed as Exhibit 10.110 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.24
|
Indemnification Agreement by and between Mack-Cali Realty Corporation and Vincent Tese dated October 22, 2002 (filed as Exhibit 10.111 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.25
|
Indemnification Agreement by and between Mack-Cali Realty Corporation and Roy J. Zuckerberg dated October 22, 2002 (filed as Exhibit 10.113 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.26
|
Indemnification Agreement by and between Mack-Cali Realty Corporation and Barry Lefkowitz dated October 22, 2002 (filed as Exhibit 10.114 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.27
|
Indemnification Agreement by and between Mack-Cali Realty Corporation and Roger W. Thomas dated October 22, 2002 (filed as Exhibit 10.116 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.28
|
Indemnification Agreement by and between Mack-Cali Realty Corporation and Anthony Krug dated October 22, 2002 (filed as Exhibit 10.32 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 and incorporated herein by reference).
|
|
|
10.29
|
Indemnification Agreement by and between Mack-Cali Realty Corporation and Jonathan Litt dated March 3, 2014 (filed as Exhibit 10.33 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 and incorporated herein by reference).
|
|
|
10.30
|
Indemnification Agreement by and between Mack-Cali Realty Corporation and Gary T. Wagner dated November 11, 2011 (filed as Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and incorporated herein by reference).
|
|
|
10.31
|
Indemnification Agreement dated October 22, 2002 by and between Mack-Cali Realty Corporation and John Crandall (filed as Exhibit 10.29 to the Company's Form 10-Q dated September 30, 2002 and incorporated herein by reference).
|
|
|
10.32
|
Second Amendment to Contribution and Exchange Agreement, dated as of June 27, 2000, between RMC Development Company, LLC f/k/a Robert Martin Company, LLC, Robert Martin Eastview North Company, L.P., the Company and the Operating Partnership (filed as Exhibit 10.44 to the Company's Form 10-K dated December 31, 2002 and incorporated herein by reference).
|
|
|
10.33
|
Contribution and Exchange Agreement by and between Mack-Cali Realty, L.P. and Tenth Springhill Lake Associates L.L.L.P., Eleventh Springhill Lake Associates L.L.L.P., Twelfth Springhill Lake Associates L.L.L.P., Fourteenth Springhill Lake Associates L.L.L.P., each a Maryland limited liability limited partnership, Greenbelt Associates, a Maryland general partnership, and Sixteenth Springhill Lake Associates L.L.L.P., a Maryland limited liability limited partnership, and certain other natural persons, dated as of November 21, 2005 (filed as Exhibit 10.69 to the Company's Form 10-K dated December 31, 2005 and incorporated herein by reference).
|
|
|
10.34
|
Term Loan Agreement among Mack-Cali Realty, L.P. and JPMorgan Chase Bank, N.A. as Administrative Agent, J.P. Morgan Securities Inc. as Arranger, and other lender which may become parties to this Agreement dated November 29, 2006 (filed as Exhibit 10.120 to the Company's Form 10-K dated December 31, 2006 and incorporated herein by reference).
|
|
|
10.35
|
Agreement of Purchase and Sale among SLG Broad Street A LLC and SLG Broad Street C LLC, as Sellers, and M-C Broad 125 A L.L.C. and M-C Broad 125 C L.L.C., as Purchasers, dated as of March 15, 2007 (filed as Exhibit 10.121 to the Company's Form 10-Q dated March 31, 2007 and incorporated herein by reference).
|
120
|
Exhibit
|
||
|
Number
|
Exhibit Title
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|
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10.36
|
Mortgage and Security Agreement and Financing Statement dated October 28, 2008 between M-C Plaza V L.L.C., Cal-Harbor V Urban Renewal Associates, L.P., Cal-Harbor V Leasing Associates L.L.C., as Mortgagors and The Northwestern Mutual Life Insurance Company and New York Life Insurance Company as Mortgagees (filed as Exhibit 10.131 to the Company's Form 10-Q dated September 30, 2008 and incorporated herein by reference).
|
|
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10.37
|
Promissory Note of M-C Plaza V L.L.C., Cal-Harbor V Urban Renewal Associates, L.P., Cal-Harbor V Leasing Associates L.L.C., as Borrowers, in favor of The Northwestern Mutual Life Insurance Company, as Lender, in the principal amount of $120,000,000, dated October 28, 2008. (filed as Exhibit 10.132 to the Company's Form 10-Q dated September 30, 2008 and incorporated herein by reference).
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|
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10.38
|
Promissory Note of M-C Plaza V L.L.C., Cal-Harbor V Urban Renewal Associates, L.P., Cal-Harbor V Leasing Associates L.L.C., as Borrowers, in favor of New York Life Insurance Company, as Lender, in the principal amount of $120,000,000, dated October 28, 2008 (filed as Exhibit 10.133 to the Company's Form 10-Q dated September 30, 2008 and incorporated herein by reference).
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|
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10.39
|
Guarantee of Recourse Obligations of Mack-Cali Realty, L.P. in favor of The Northwestern Mutual Life Insurance Company and New York Life Insurance Company dated October 28, 2008 (filed as Exhibit 10.134 to the Company's Form 10-Q dated September 30, 2008 and incorporated herein by reference).
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|
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10.40
|
Amended and Restated Loan Agreement by and among One Grande SPE LLC, 1280 Wall SPE LLC, 10 Sylvan SPE LLC, 5 Independence SPE LLC, 1 Independence SPE LLC, and 3 Becker SPE LLC, collectively, as Borrowers and Gramercy Warehouse Funding I LLC, as Lender, dated April 29, 2009 (filed as Exhibit 10.144 to the Company's Form 10-Q dated March 31, 2009 and incorporated herein by reference).
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|
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10.41
|
Amended and Restated Promissory Note of One Grande SPE LLC, 1280 Wall SPE LLC, 10 Sylvan SPE LLC, 5 Independence SPE LLC, 1 Independence SPE LLC, and 3 Becker SPE LLC, as Borrowers, in favor of Gramercy Warehouse Funding I, LLC, as Lender, dated April 29, 2009 (filed as Exhibit 10.145 to the Company's Form 10-Q dated March 31, 2009 and incorporated herein by reference).
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10.42
|
Limited Liability Company Membership Interest Purchase and Sale Agreement dated April 29, 2009 by and among Gale SLG NJ LLC, Mack-Cali Ventures L.L.C., SLG Gale 55 Corporation LLC and 55 Corporate Partners L.L.C. (filed as Exhibit 10.146 to the Company's Form 10-Q dated March 31, 2009 and incorporated herein by reference).
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10.43
|
Amended and Restated Master Loan Agreement dated as of January 15, 2010 among Mack-Cali Realty, L.P., and Affiliates of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P., as Borrowers, Mack-Cali Realty Corporation and Mack-Cali Realty L.P., as Guarantors and The Prudential Insurance Company of America and VPCM, LLC, as Lenders (filed as Exhibit 10.1 to the Company's Form 8-K dated January 15, 2010 and incorporated herein by reference).
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|
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10.44
|
Partial Recourse Guaranty of Mack-Cali Realty, L.P. dated as of January 15, 2010 to The Prudential Insurance Company of America and VPCM, LLC (filed as Exhibit 10.2 to the Company's Form 8-K dated January 15, 2010 and incorporated herein by reference).
|
|
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10.45
|
Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali Realty, L.P., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Centre I in Bergen County, New Jersey (filed as Exhibit 10.165 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
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10.46
|
Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali Realty, L.P., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Centre II in Bergen County, New Jersey (filed as Exhibit 10.166 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.47
|
Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali Realty, L.P., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Centre III in Bergen County, New Jersey (filed as Exhibit 10.167 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
121
|
Exhibit
|
||
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Number
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Exhibit Title
|
|
|
10.48
|
Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali Realty, L.P., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Centre IV in Bergen County, New Jersey filed as Exhibit 10.168 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.49
|
Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali F Properties, L.P., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Centre VII in Bergen County, New Jersey (filed as Exhibit 10.169 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.50
|
Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali Chestnut Ridge, L.L.C., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Corp. Center in Bergen County, New Jersey (filed as Exhibit 10.170 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.51
|
Amended, Restated and Consolidated Mortgage and Security Agreement and Financing Statement dated as of January 15, 2010 by Mack-Cali Realty, L.P., as Borrower, to The Prudential Insurance Company of America and VPCM, LLC, as Mortgagees with respect to Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.171 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.52
|
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Centre I in Bergen County, New Jersey (filed as Exhibit 10.172 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.53
|
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to Mack-Cali Centre I in Bergen County, New Jersey (filed as Exhibit 10.173 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.54
|
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Centre II in Bergen County, New Jersey (filed as Exhibit 10.174 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
|
|
|
|
10.55
|
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to Mack-Cali Centre II in Bergen County, New Jersey (filed as Exhibit 10.175 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.56
|
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Centre III in Bergen County, New Jersey (filed as Exhibit 10.176 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.57
|
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to Mack-Cali Centre III in Bergen County, New Jersey (filed as Exhibit 10.177 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.58
|
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Centre IV in Bergen County, New Jersey (filed as Exhibit 10.178 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.59
|
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to Mack-Cali Centre IV in Bergen County, New Jersey (filed as Exhibit 10.179 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.60
|
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali F Properties, L.P. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Centre VII in Bergen County, New Jersey (filed as Exhibit 10.180 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.61
|
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali F Properties, L.P. in favor of VPCM, LLC with respect to Mack-Cali Centre VII in Bergen County, New Jersey (filed as Exhibit 10.181 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
122
|
Exhibit
|
||
|
Number
|
Exhibit Title
|
|
|
10.62
|
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Chestnut Ridge, L.L.C. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Corp. Center in Bergen County, New Jersey (filed as Exhibit 10.182 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.63
|
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Chestnut Ridge, L.L.C. in favor of VPCM, LLC with respect to Mack-Cali Corp. Center in Bergen County, New Jersey (filed as Exhibit 10.183 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.64
|
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of The Prudential Insurance Company of America with respect to Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.184 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.65
|
Amended, Restated and Consolidated Promissory Note dated January 15, 2010 of Mack-Cali Realty, L.P. in favor of VPCM, LLC with respect to Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.185 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.66
|
Recourse Liabilities Guaranty dated January 15, 2010 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to certain liabilities of Mack-Cali Realty, L.P. with respect to Mack-Cali Centre I in Bergen County, New Jersey (filed as Exhibit 10.186 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.67
|
Recourse Liabilities Guaranty dated January 15, 2010 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to certain liabilities of Mack-Cali Realty, L.P. with respect to Mack-Cali Centre II in Bergen County, New Jersey (filed as Exhibit 10.187 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.68
|
Recourse Liabilities Guaranty dated January 15, 2010 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to certain liabilities of Mack-Cali Realty, L.P. with respect to Mack-Cali Centre III in Bergen County, New Jersey (filed as Exhibit 10.188 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.69
|
Recourse Liabilities Guaranty dated January 15, 2010 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to certain liabilities of Mack-Cali Realty, L.P. with respect to Mack-Cali Centre IV in Bergen County, New Jersey (filed as Exhibit 10.189 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.70
|
Recourse Liabilities Guaranty dated January 15, 2010 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to certain liabilities of Mack-Cali F Properties, L.P. with respect to Mack-Cali Centre VII in Bergen County, New Jersey (filed as Exhibit 10.190 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.71
|
Recourse Liabilities Guaranty dated January 15, 2010 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to certain liabilities of Mack-Cali Chestnut Ridge, L.L.C. with respect to Mack-Cali Corp. Center in Bergen County, New Jersey (filed as Exhibit 10.191 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.72
|
Recourse Liabilities Guaranty dated January 15, 2010 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to certain liabilities of Mack-Cali Realty, L.P. with respect to Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.192 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.73
|
Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Centre I in Bergen County, New Jersey (filed as Exhibit 10.193 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
123
|
Exhibit
|
||
|
Number
|
Exhibit Title
|
|
|
10.74
|
Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Centre II in Bergen County, New Jersey (filed as Exhibit 10.194 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.75
|
Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Centre III in Bergen County, New Jersey (filed as Exhibit 10.195 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.76
|
Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Centre IV in Bergen County, New Jersey (filed as Exhibit 10.196 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.77
|
Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali F Properties, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Centre VII in Bergen County, New Jersey (filed as Exhibit 10.197 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.78
|
Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Chestnut Ridge, L.L.C. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Corp. Center in Bergen County, New Jersey (filed as Exhibit 10.198 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.79
|
Amended and Restated Irrevocable Cross Collateral Guaranty of Payment and Performance dated January 15, 2010 of Mack-Cali Realty, L.P. to The Prudential Insurance Company of America and VPCM, LLC with respect to Mack-Cali Saddle River in Bergen County, New Jersey (filed as Exhibit 10.199 to the Company's Form 10-Q dated September 30, 2010 and incorporated herein by reference).
|
|
|
10.80
|
Development Agreement dated December 5, 2011 by and between M-C Plaza VI & VII L.L.C. and Ironstate Development LLC (filed as Exhibit 10.1 to the Company's Form 8-K dated December 5, 2011 and incorporated herein by reference).
|
|
|
10.81
|
Form of Amended and Restated Limited Liability Company Agreement (filed as Exhibit 10.2 to the Company's Form 8-K dated December 5, 2011 and incorporated herein by reference).
|
|
|
10.82
|
Third Amended and Restated Revolving Credit Agreement among Mack-Cali Realty, L.P., as borrower, and JPMorgan Chase Bank, N.A., as the administrative agent, the other agents listed therein and the lending institutions party thereto and referred to therein dated as of October 21, 2011 (filed as Exhibit 10.134 to the Company's Form 10-Q dated September 30, 2011 and incorporated herein by reference).
|
|
|
10.83
|
Fourth Amended and Restated Revolving Credit Agreement dated as of July 16, 2013 among Mack Cali Realty, L.P., as borrower, Mack-Cali Realty Corporation, as guarantor, and JPMorgan Chase Bank, N.A., as administrative agent and the several Lenders party thereto, as lenders (filed as Exhibit 10.1 to the Company's Form 8-K dated July 16, 2013 and incorporated herein by reference).
|
|
|
10.84
|
Multi-Year Restricted Stock Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to the Company's Form 8-K dated September 12, 2012 and incorporated herein by reference).
|
|
124
|
Exhibit
|
||
|
Number
|
Exhibit Title
|
|
|
10.85
|
Multi-Year Restricted Stock Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.2 to the Company's Form 8-K dated September 12, 2012 and incorporated herein by reference).
|
|
|
10.86
|
Multi-Year Restricted Stock Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.3 to the Company's Form 8-K dated September 12, 2012 and incorporated herein by reference).
|
|
|
10.87
|
Amended and Restated TSR-Based Performance Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to the Company's Form 8-K dated June 12, 2013 and incorporated herein by reference).
|
|
|
10.88
|
Amended and Restated TSR-Based Performance Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.2 to the Company's Form 8-K dated June 12, 2013 and incorporated herein by reference).
|
|
|
10.89
|
Amended and Restated TSR-Based Performance Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.3 to the Company's Form 8-K dated June 12, 2013 and incorporated herein by reference).
|
|
|
10.90
|
Deferred Retirement Compensation Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.7 to the Company's Form 8-K dated September 12, 2012 and incorporated herein by reference).
|
|
|
10.91
|
Deferred Retirement Compensation Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.8 to the Company's Form 8-K dated September 12, 2012 and incorporated herein by reference).
|
|
|
10.92
|
Deferred Retirement Compensation Agreement, dated as of September 12, 2012, between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.9 to the Company's Form 8-K dated September 12, 2012 and incorporated herein by reference).
|
|
|
10.93
|
Form of Restricted share Award Agreement effective December 10, 2013 by and between Mack-Cali Realty Corporation and each of Mitchell E. Hersh, Barry Lefkowitz, Roger W. Thomas and Anthony Krug (filed as Exhibit 10.1 to the Company's Form 8-K dated December 10, 2013 and incorporated herein by reference).
|
|
|
10.94
|
Form of Restricted Share Award Agreement effective December 10, 2013 by and between Mack-Cali Realty Corporation and each of William L. Mack, Alan S. Bernikow, Kenneth M. Duberstein, Nathan Gantcher, David S. Mack, Alan G. Philibosian, Dr. Irvin D. Reid, Vincent Tese and Roy J. Zuckerberg (filed as Exhibit 10.2 to the Company's Form 8-K dated December 10, 2013 and incorporated herein by reference).
|
|
|
10.95
|
Form of Restricted Share Award Agreement effective December 9, 2014 by and between Mack-Cali Realty Corporation and each of William L. Mack, Alan S. Bernikow, Kenneth M. Duberstein, Nathan Gantcher, Jonathan Litt, David S. Mack, Alan G. Philibosian, Dr. Irvin D. Reid, Vincent Tese and Roy J. Zuckerberg (filed as Exhibit 10.1 to the Company’s Form 8-K dated December 9, 2014 and incorporated herein by reference).
|
|
|
10.96
|
Membership Interest and Asset Purchase Agreement, dated as of October 8, 2012 (the "Purchase Agreement"), by and among Mack-Cali Realty, L.P., Mack-Cali Realty Corporation, Mack-Cali Realty Acquisition Corp., Roseland Partners, L.L.C., and, for the limited purposes stated in the Purchase Agreement, each of Marshall B. Tycher, Bradford R. Klatt and Carl Goldberg (filed as Exhibit 10.1 to the Company's Form 8-K dated October 8, 2012 and incorporated herein by reference).
|
|
|
10.97
|
Purchase and Sale Agreement, dated as of January 17, 2013 by and between Overlook Ridge Phase I, L.L.C., Overlook Ridge Phase IB, L.L.C. and Mack-Cali Realty Acquisition Corp. (filed as Exhibit 10.1 to the Company's Form 8-K dated January 17, 2012 and incorporated herein by reference)
|
125
|
Exhibit
|
||
|
Number
|
Exhibit Title
|
|
|
10.98
|
Agreement of Sale and Purchase dated as of July 15, 2013 by and between Mack-Cali Pennsylvania Realty Associates, L.P., as seller, and Westlakes KPG III, LLC and Westlakes Land KPG III, LLC, as purchasers (filed as Exhibit 10.1 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
|
|
|
10.99
|
Agreement of Sale and Purchase dated as of July 15, 2013 by and between M-C Rosetree Associates, L.P., as seller, and Rosetree KPG III, LLC and Rosetree Land KPG III, LLC, as purchasers (filed as Exhibit 10.2 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
|
|
|
10.100
|
Agreement of Sale and Purchase dated as of July 15, 2013 by and between Mack-Cali-R Company No. 1 L.P., as seller, and Plymouth Meeting KPG III, LLC, as purchaser (filed as Exhibit 10.3 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
|
|
|
10.101
|
Agreement of Sale and Purchase dated as of July 15, 2013 by and between Stevens Airport Realty Associates L.P., as seller, and Airport Land KPG III, LLC, as purchaser (filed as Exhibit 10.4 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
|
|
|
10.102
|
Agreement of Sale and Purchase dated as of July 15, 2013 by and between Mack-Cali Airport Realty Associates L.P., as seller, and 100 Airport KPG III, LLC, 200 Airport KPG III, LLC and 300 Airport KPG III, LLC, as purchasers (filed as Exhibit 10.5 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
|
|
|
10.103
|
Agreement of Sale and Purchase dated as of July 15, 2013 by and between Mack-Cali Property Trust, as seller, and 1000 Madison KPG III, LLC, as purchaser (filed as Exhibit 10.6 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
|
|
|
10.104
|
Agreement of Sale and Purchase dated as of July 15, 2013 by and between Monument 150 Realty L.L.C., as seller, and Monument KPG III, LLC, as purchaser (filed as Exhibit 10.7 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
|
|
|
10.105
|
Agreement of Sale and Purchase dated as of July 15, 2013 by and between 4 Sentry Realty L.L.C. and Five Sentry Realty Associates L.P., as sellers, and Four Sentry KPG, LLC and Five Sentry KPG III, LLC, as purchasers (filed as Exhibit 10.8 to the Company's Form 8-K dated July 18, 2013 and incorporated herein by reference).
|
|
|
10.106
|
Agreement of Sale and Purchase dated as of February 24, 2014 by and between Talleyrand Realty Associates, L.L.C., as seller, and H'Y2 Talleyrand, LLC, as purchaser (filed as Exhibit 10.1 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
|
|
|
10.107
|
Agreement of Sale and Purchase dated as of February 24, 2014 by and between 400 Chestnut Realty L.L.C., as seller, and H'Y2 400 Chestnut Ridge, LLC, as purchaser (filed as Exhibit 10.2 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
|
|
|
10.108
|
Agreement of Sale and Purchase dated as of February 24, 2014 by and between 470 Chestnut Realty L.L.C., as seller, and H'Y2 470 Chestnut Ridge, LLC, as purchaser (filed as Exhibit 10.3 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
|
|
|
10.109
|
Agreement of Sale and Purchase dated as of February 24, 2014 by and between 530 Chestnut Realty L.L.C., as seller, and H'Y2 530 Chestnut Ridge, LLC, as purchaser (filed as Exhibit 10.4 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
|
126
|
Exhibit
|
||
|
Number
|
Exhibit Title
|
|
|
10.110
|
Agreement of Sale and Purchase dated as of February 24, 2014 by and between Mack-Cali Taxter Associates, L.L.C., as seller, and H'Y2 Taxter, LLC, as purchaser (filed as Exhibit 10.5 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
|
|
|
10.111
|
Agreement of Sale and Purchase dated as of February 24, 2014 by and between Mack-Cali CW Realty Associates, L.L.C., as seller, and H'Y2 570 Taxter, LLC, as purchaser (filed as Exhibit 10.6 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
|
|
|
10.112
|
Agreement of Sale and Purchase dated as of February 24, 2014 by and between 1717 Realty Associates L.L.C., as seller, and H'Y2 Ruote 208, LLC, as purchaser (filed as Exhibit 10.7 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
|
|
|
10.113
|
Agreement of Sale and Purchase dated as of February 24, 2014 by and between Knightsbridge Realty L.L.C., as seller, and H'Y2 400 Knightsbridge, LLC, as purchaser (filed as Exhibit 10.8 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
|
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10.114
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Agreement of Sale and Purchase dated as of February 24, 2014 by and between Kemble Plaza II Realty L.L.C., as seller, and H'Y2 400 Mt Kemble, LLC, as purchaser (filed as Exhibit 10.9 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
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10.115
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Agreement of Sale and Purchase dated as of February 24, 2014 by and between 1266 Soundview Realty L.L.C., as seller, and H'Y2 Stamford, LLC, as purchaser (filed as Exhibit 10.10 to the Company's Form 8-K dated February 24, 2014 and incorporated herein by reference).
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10.116
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Agreement dated February 28, 2014 by and among Mack-Cali Realty Corporation, Land & Buildings Capital Growth Fund, L.P., Land & Buildings Investment Management,LLC and Jonathan Litt (filed as Exhibit 10.116 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and incorporated herein by reference).
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10.117
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Settlement and General Release Agreement dated March 1, 2014 by and between Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.117 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and incorporated herein by reference).
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10.118
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Settlement and General Release Agreement dated March 1, 2014 by and between Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.118 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and incorporated herein by reference).
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10.119
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Restricted share Award Agreement effective March 19, 2014 by and between Mack-Cali Realty Corporation and Anthony Krug (filed as Exhibit 10.1 to the Company's Form 8-K dated March 21, 2014 and incorporated herein by reference).
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10.120
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Separation Agreement dated July 18, 2014 by and between Roseland Management Services, L.P. and Bradford R. Klatt (filed as Exhibit 10.122 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and incorporated herein by reference).
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10.121
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Separation Agreement dated July 18, 2014 by and between Roseland Management Services, L.P. and Carl Goldberg (filed as Exhibit 10.123 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and incorporated herein by reference).
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10.122
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Amendment to Membership Interest and Asset Purchase Agreement, dated as of July 18, 2014, by and among Mack-Cali Realty, L.P., Mack-Cali Realty Corporation, Mack-Cali Realty Acquisition Corp., Canoe Brook Investors, L.L.C. (formerly known as Roseland Partners, L.L.C.), Marshall B. Tycher, Bradford R. Klatt and Carl Goldberg (filed as Exhibit 10.124 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and incorporated herein by reference).
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127
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Exhibit
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Number
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Exhibit Title
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10.123
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Consulting Agreement dated July 18, 2014 by and between Roseland Management Services, L.P. and Carl Goldberg and Devra Goldberg (filed as Exhibit 10.125 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and incorporated herein by reference).
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10.124
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Separation Agreement dated November 4, 2014 by and between Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November 4, 2014 and incorporated herein by reference).
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10.125
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Severance Agreement dated March 4, 2015 by and between Anthony Krug and Mack-Cali Realty Corporation (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 4, 2015 and incorporated herein by reference).
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10.126
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Severance Agreement dated March 4, 2015 by and between Gary T. Wagner and Mack-Cali Realty Corporation (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated March 4, 2015 and incorporated herein by reference).
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10.127
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Employment Agreement dated June 3, 2015 by and between Mitchell E. Rudin and Mack-Cali Realty Corporation (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated June 3, 2015 and incorporated herein by reference).
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10.128
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Employment Agreement dated June 3, 2015 by and between Michael J. DeMarco and Mack-Cali Realty Corporation (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated June 3, 2015 and incorporated herein by reference).
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10.129
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Indemnification Agreement dated June 3, 2015 by and between Mitchell E. Rudin and Mack-Cali Realty Corporation (filed as Exhibit 10.129 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 and incorporated herein by reference).
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10.130
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Indemnification Agreement dated June 3, 2015 by and between Michael J. DeMarco and Mack-Cali Realty Corporation (filed as Exhibit 10.130 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 and incorporated herein by reference).
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10.131
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Indemnification Agreement dated September 22, 2015 by and between Marshall B. Tycher and Mack-Cali Realty Corporation (filed as Exhibit 10.131 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 and incorporated herein by reference).
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10.132
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Employment Agreement dated October 23, 2012 by and between Marshall B. Tycher and Mack-Cali Realty Corporation (filed as Exhibit 10.132 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 and incorporated herein by reference).
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10.133
|
Indemnification Agreement dated June 10, 2013 by and between Ricardo Cardoso and Mack-Cali Realty Corporation (filed as Exhibit 10.133 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 and incorporated herein by reference).
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10.134
|
Term Loan Agreement dated as of January 7, 2016 among Mack Cali Realty, L.P., as borrower, Mack-Cali Realty Corporation, as guarantor, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and Wells Fargo Securities LLC as joint lead arrangers and joint bookrunners, Bank of American, N.A., as administrative agent, JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A. and Capital One, National Association, as syndication agents, U.S. Bank National Association, as documentation agent, and the several Lenders party thereto, as lenders (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 6, 2016 and incorporated herein by reference).
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128
|
Exhibit
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Number
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Exhibit Title
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10.135
|
International Swaps and Derivatives Association, Inc. 2002 Master Agreement dated as of December 30, 2015 by and between Capital One, National Association and Mack-Cali Realty, L.P. (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated January 6, 2016 and incorporated herein by reference).
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10.136
|
International Swaps and Derivatives Association, Inc. 2002 Master Agreement dated as of January 4, 2016 by and between Citibank, N.A. and Mack-Cali Realty, L.P. (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K dated January 6, 2016 and incorporated herein by reference).
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10.137
|
International Swaps and Derivatives Association, Inc. 2002 Master Agreement dated as of January 6, 2016 by and between Comerica Bank and Mack-Cali Realty, L.P. (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K dated January 6, 2016 and incorporated herein by reference).
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10.138
|
International Swaps and Derivatives Association, Inc. 2002 Master Agreement dated as of January 5, 2016 by and between PNC Bank, National Association and Mack-Cali Realty, L.P. (filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K dated January 6, 2016 and incorporated herein by reference).
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10.139
|
International Swaps and Derivatives Association, Inc. 2002 Master Agreement dated as of December 21, 2015 by and between U.S. Bank National Association and Mack-Cali Realty, L.P. (filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K dated January 6, 2016 and incorporated herein by reference).
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12.1*
|
Calculation of Ratios of Earnings to Fixed Charges.
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12.2*
|
Calculation of Ratios of Earnings to Combined Fixed Charges and Preferred Security Dividends.
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21.1*
|
Subsidiaries of the Company.
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23.1*
|
Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm.
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31.1*
|
Certification of the Company’s Chief Executive Officer, Mitchell E. Rudin, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2*
|
Certification of the Company’s President and Chief Operating Officer, Michael J. DeMarco, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.3*
|
Certification of the Company’s Chief Financial Officer, Anthony Krug, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1*
|
Certification of the Company’s Chief Executive Officer, Mitchell E. Rudin, the Company’s President and Chief Operating Officer, Michael J. DeMarco and the Company’s Chief Financial Officer, Anthony Krug, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101.1*
|
The following financial statements from Mack-Cali Realty Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015 formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statement of Changes in Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.
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* filed herewith
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129