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CLI Mack Cali Realty L P

Filed: 4 Nov 20, 4:36pm
0000924901cli:TenantLeasesMember2020-01-012020-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2020

or

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

For the transition period from            to            

Commission File Number: 1-13274 Mack-Cali Realty Corporation

Commission File Number: 333-57103 Mack-Cali Realty, L.P.

Mack-Cali Realty Corporation

Mack-Cali Realty, L.P.

(Exact name of registrant as specified in its charter)

 

Maryland (Mack-Cali Realty Corporation)

 

22-3305147 (Mack-Cali Realty Corporation)

Delaware (Mack-Cali Realty, L.P.)

 

22-3315804 (Mack-Cali Realty, L.P.)

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

Harborside 3, 210 Hudson St., Ste. 400, Jersey City, New Jersey

 

07311

(Address of principal executive offices)

 

(Zip Code)

 

(732) 590-1010

(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:
Mack-Cali Realty Corporation:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

CLI

 New York Stock Exchange 

 

Mack-Cali Realty, L.P.:
None

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ninety (90) days.

Mack-Cali Realty Corporation

YES  NO 

Mack-Cali Realty, L.P.

YES  NO 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Mack-Cali Realty Corporation

YES  NO 

Mack-Cali Realty, L.P.

YES  NO 

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.

Mack-Cali Realty Corporation:

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging Growth Company 

 Mack-Cali Realty, L.P.:

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging Growth Company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Mack-Cali Realty Corporation     

Mack-Cali Realty, L.P.                 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Mack-Cali Realty Corporation

YES  NO 

Mack-Cali Realty, L.P.

YES  NO 

As of November 2, 2020, there were 90,712,389 shares of Mack-Cali Realty Corporation’s Common Stock, par value $0.01 per share, outstanding.

Mack-Cali Realty, L.P. does not have any class of common equity that is registered pursuant to Section 12 of the Exchange Act. 

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2020 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. Unless stated otherwise or the context otherwise requires, references to the “Operating Partnership” mean Mack-Cali Realty, L.P., a Delaware limited partnership, and references to the “General Partner” mean Mack-Cali Realty Corporation, a Maryland corporation and real estate investment trust (“REIT”), and its subsidiaries, including the Operating Partnership. References to the “Company,” “we,” “us” and “our” mean collectively the General Partner, the Operating Partnership and those entities/subsidiaries consolidated by the General Partner.

The Operating Partnership conducts the business of providing leasing, management, acquisition, development, construction and tenant-related services for its General Partner. The Operating Partnership, through its operating divisions and subsidiaries, including the Mack-Cali property-owning partnerships and limited liability companies is the entity through which all of the General Partner’s operations are conducted. The General Partner is the sole general partner of the Operating Partnership and has exclusive control of the Operating Partnership’s day-to-day management.

As of September 30, 2020, the General Partner owned an approximate 90.4 percent common unit interest in the Operating Partnership. The remaining approximate 9.6 percent common unit interest is owned by limited partners. The limited partners of the Operating Partnership are (1) persons who contributed their interests in properties to the Operating Partnership in exchange for common units (each, a “Common Unit”) or preferred units of limited partnership interest in the Operating Partnership or (2) recipients of long term incentive plan units of the Operating Partnership pursuant to the General Partner’s executive compensation plans.

A Common Unit of the Operating Partnership and a share of common stock of the General Partner (the “Common Stock”) have substantially the same economic characteristics in as much as they effectively share equally in the net income or loss of the Company.  The General Partner owns a number of common units of the Operating Partnership equal to the number of issued and outstanding shares of the General Partner’s common stock. Common unitholders (other than the General Partner) have the right to redeem their Common Units, subject to certain restrictions under the Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership, as amended (the “Partnership Agreement”) and agreed upon at the time of issuance of the units that may restrict such right for a period of time, generally one year from issuance.  The redemption is required to be satisfied in shares of Common Stock of the General Partner, cash, or a combination thereof, calculated as follows:  one share of the General Partner’s Common Stock, or cash equal to the fair market value of a share of the General Partner’s Common Stock at the time of redemption, for each Common Unit.  The General Partner, in its sole discretion, determines the form of redemption of Common Units (i.e., whether a common unitholder receives Common Stock of the General Partner, cash, or any combination thereof).  If the General Partner elects to satisfy the redemption with shares of Common Stock of the General Partner as opposed to cash, the General Partner 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 General Partner under any circumstances. With each such redemption, the General Partner’s percentage ownership in the Operating Partnership will increase. In addition, whenever the General Partner issues shares of its Common Stock other than to acquire Common Units, the General Partner must contribute any net proceeds it receives to the Operating Partnership and the Operating Partnership must issue to the General Partner an equivalent number of Common Units. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT.

The Company believes that combining the quarterly reports on Form 10-Q of the General Partner and the Operating Partnership into this single report provides the following benefits:

enhance investors’ understanding of the General Partner and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business of the Company;

eliminate duplicative disclosure and provide a more streamlined and readable presentation because a substantial portion of the disclosure applies to both the General Partner and the Operating Partnership; and

create time and cost efficiencies through the preparation of one combined report instead of two separate reports.

The Company believes it is important to understand the few differences between the General Partner and the Operating Partnership in the context of how they operate as a consolidated company. The financial results of the Operating Partnership are consolidated into the financial statements of the General Partner. The General Partner does not have any other significant assets, liabilities or operations, other than its interests in the Operating Partnership, nor does the Operating Partnership have employees of its own. The Operating Partnership, not the General Partner, generally executes all significant business relationships other than transactions involving the securities of the General Partner. The Operating Partnership holds substantially all of the assets of the General Partner, including ownership interests in joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by the General Partner, which are contributed to the capital of the Operating Partnership in consideration of common or preferred units in the Operating Partnership, as applicable, the

Operating Partnership generates all remaining capital required by the Company’s business. These sources include working capital, net cash provided by operating activities, borrowings under the Company’s unsecured revolving credit facility and unsecured term loan facilities, the issuance of secured and unsecured debt and equity securities and proceeds received from the disposition of properties and joint ventures.

Shareholders’ equity, partners’ capital and noncontrolling interests are the main areas of difference between the consolidated financial statements of the General Partner and the Operating Partnership. The limited partners of the Operating Partnership are accounted for as partners’ capital in the Operating Partnership’s financial statements as is the General Partner’s interest in the Operating Partnership. The noncontrolling interests in the Operating Partnership’s financial statements comprise the interests of unaffiliated partners in various consolidated partnerships and development joint venture partners. The noncontrolling interests in the General Partner’s financial statements are the same noncontrolling interests at the Operating Partnership’s level and include limited partners of the Operating Partnership. The differences between shareholders’ equity and partners’ capital result from differences in the equity issued at the General Partner and Operating Partnership levels.

To help investors better understand the key differences between the General Partner and the Operating Partnership, certain information for the General Partner and the Operating Partnership in this report has been separated, as set forth below:

Item 1.   Financial Statements (unaudited), which includes the following specific disclosures for Mack-Cali Realty Corporation and Mack-Cali Realty, L.P.:

Note 2.     Significant Accounting Policies, where applicable;

Note 15.   Redeemable Noncontrolling Interests;

Note 16.   Mack-Cali Realty Corporation’s Stockholders’ Equity and Mack-Cali Realty, L.P.’s Partners’ Capital;

Note 17.   Noncontrolling Interests in Subsidiaries; and

Note 18.   Segment Reporting, where applicable.

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations includes information specific to each entity, where applicable.

This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of the General Partner and the Operating Partnership in order to establish that the requisite certifications have been made and that the General Partner and Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.

MACK-CALI REALTY CORPORATION

MACK-CALI REALTY, L.P.

FORM 10-Q

INDEX

Page

Part I

Financial Information

Item 1.

Financial Statements (unaudited):

Mack-Cali Realty Corporation

Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019

6

Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019

7

Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2020 and 2019

8

Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2020 and 2019

9

Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019

10

Mack-Cali Realty, L.P.

Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019

10

Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019

10

Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2020 and 2019

10

Consolidated Statements of Changes in Equity for the three and nine months ended September 30, 2020 and 2019

10

Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019

10

Mack-Cali Realty Corporation and Mack-Cali Realty, L.P.

Notes to Consolidated Financial Statements

10

Item 2.

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

10

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

10

Item 4.

Controls and Procedures

10

Part II  

Other Information

Mack-Cali Realty Corporation and Mack-Cali Realty, L.P.

Item 1.

Legal Proceedings

10

Item 1A.  

Risk Factors

10

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

10

Item 3.

Defaults Upon Senior Securities

10

Item 4.

Mine Safety Disclosures

10

Item 5.

Other Information

10

Item 6.

Exhibits

10

Exhibit Index

10

Signatures

10

MACK-CALI REALTY CORPORATION

MACK-CALI REALTY, L.P.

 

Part I – Financial Information 

Item 1.    Financial Statements 

 

The accompanying unaudited consolidated balance sheets, statements of operations, of comprehensive income, of changes in equity, and of cash flows and related notes thereto, have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. The financial statements reflect all adjustments consisting only of normal, recurring adjustments, which are, in the opinion of management, necessary for a fair statement for the interim periods. 

 

The aforementioned financial statements should be read in conjunction with the notes to the aforementioned financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in Mack-Cali Realty Corporation’s and Mack-Cali Realty, L.P.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

 

The results of operations for the three and nine-month periods ended September 30, 2020 are not necessarily indicative of the results to be expected for the entire fiscal year or any other period.

 


MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (unaudited)

September 30,

December 31,

ASSETS

2020

2019

Rental property

Land and leasehold interests

$

641,962

$

653,231

Buildings and improvements

3,669,960

3,361,435

Tenant improvements

163,900

163,299

Furniture, fixtures and equipment

78,558

78,716

4,554,380

4,256,681

Less – accumulated depreciation and amortization

(627,995)

(558,617)

3,926,385

3,698,064

Real estate held for sale, net

714,404

966,497

Net investment in rental property

4,640,789

4,664,561

Cash and cash equivalents

22,872

25,589

Restricted cash

14,507

15,577

Investments in unconsolidated joint ventures

194,779

209,091

Unbilled rents receivable, net

86,818

95,686

Deferred charges, goodwill and other assets, net

220,194

275,102

Accounts receivable

10,784

7,192

Total assets

$

5,190,743

$

5,292,798

LIABILITIES AND EQUITY

Senior unsecured notes, net

$

572,360

$

571,484

Unsecured revolving credit facility and term loans

156,000

329,000

Mortgages, loans payable and other obligations, net

2,167,522

1,908,034

Dividends and distributions payable

1,537

22,265

Accounts payable, accrued expenses and other liabilities

205,637

209,510

Rents received in advance and security deposits

36,575

39,463

Accrued interest payable

15,642

10,185

Total liabilities

3,155,273

3,089,941

Commitments and contingencies

 

 

Redeemable noncontrolling interests

511,352

503,382

Equity:

Mack-Cali Realty Corporation stockholders’ equity:

Common stock, $0.01 par value, 190,000,000 shares authorized,

90,712,055 and 90,595,176 shares outstanding

907

906

Additional paid-in capital

2,531,122

2,535,440

Dividends in excess of net earnings

(1,195,909)

(1,042,629)

Accumulated other comprehensive income (loss)

-

(18)

Total Mack-Cali Realty Corporation stockholders’ equity

1,336,120

1,493,699

Noncontrolling interests in subsidiaries:

Operating Partnership

142,469

158,480

Consolidated joint ventures

45,529

47,296

Total noncontrolling interests in subsidiaries

187,998

205,776

Total equity

1,524,118

1,699,475

Total liabilities and equity

$

5,190,743

$

5,292,798

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

MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

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

Three Months Ended

Nine Months Ended

September 30,

September 30,

REVENUES

2020

2019

2020

2019

Revenue from leases

$

65,849 

$

72,538 

$

201,091 

$

224,947 

Real estate services

2,876 

3,411 

8,624 

10,783 

Parking income

4,033 

5,716 

12,332 

16,097 

Hotel income

893 

3,325 

3,290 

5,702 

Other income

3,999 

2,400 

7,020 

6,732 

Total revenues

77,650 

87,390 

232,357 

264,261 

EXPENSES

Real estate taxes

10,816 

11,151 

32,326 

33,813 

Utilities

3,598 

4,402 

10,564 

14,605 

Operating services

18,942 

18,109 

50,639 

52,821 

Real estate services expenses

3,300 

3,905 

10,106 

12,150 

General and administrative

28,945 

12,571 

62,005 

42,836 

Depreciation and amortization

31,670 

32,605 

92,807 

96,110 

Property impairments

36,582 

-

36,582 

-

Land and other impairments

1,292 

2,589 

23,401 

5,088 

Total expenses

135,145 

85,332 

318,430 

257,423 

OTHER (EXPENSE) INCOME

Interest expense

(20,265)

(22,129)

(61,795)

(67,817)

Interest and other investment income (loss)

188 

42 

1,526 

Equity in earnings (loss) of unconsolidated joint ventures

1,373 

(113)

(281)

(882)

Gain on change of control of interests

-

-

-

13,790 

Realized gains (losses) and unrealized losses on disposition of

rental property, net

-

(34,666)

(7,915)

233,698 

Gain on disposition of developable land

-

296 

4,813 

566 

Gain on sale of investment in unconsolidated joint venture

-

-

-

903 

Gain from extinguishment of debt, net

-

(98)

-

1,801 

Total other income (expense)

(18,889)

(56,522)

(65,136)

183,585 

Income (loss) from continuing operations

(76,384)

(54,464)

(151,209)

190,423 

Discontinued operations:

Income from discontinued operations

19,491

8,506 

63,213

24,686 

Realized gains (losses) and unrealized losses on

disposition of rental property and impairments, net

15,775

(10,063)

(23,900)

(15,865)

Total discontinued operations, net

35,266 

(1,557)

39,313

8,821 

Net income (loss)

(41,118)

(56,021)

(111,896)

199,244 

Noncontrolling interests in consolidated joint ventures

895 

405 

1,900 

2,500 

Noncontrolling interests in Operating Partnership of income from

continuing operations

7,874 

6,005 

16,166 

(18,191)

Noncontrolling interests in Operating Partnership in discontinued operations

(3,388)

154 

(3,776)

(896)

Redeemable noncontrolling interests

(6,471)

(6,471)

(19,413)

(16,144)

Net income (loss) available to common shareholders

$

(42,208)

$

(55,928)

$

(117,019)

$

166,513 

Basic earnings per common share:

Income (loss) from continuing operations

$

(0.84)

$

(0.63)

$

(1.76)

$

1.50 

Discontinued operations

0.35 

(0.02)

0.39 

0.09 

Net income (loss) available to common shareholders

$

(0.49)

$

(0.65)

$

(1.37)

$

1.59 

Diluted earnings per common share:

Income (loss) from continuing operations

$

(0.84)

$

(0.63)

$

(1.76)

$

1.50 

Discontinued operations

0.35 

(0.02)

0.39 

0.09 

Net income (loss) available to common shareholders

$

(0.49)

$

(0.65)

$

(1.37)

$

1.59 

Basic weighted average shares outstanding

90,671 

90,584 

90,639 

90,539 

Diluted weighted average shares outstanding

100,307 

100,560 

100,235 

100,802 

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

MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) (unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net income (loss)

$

(41,118)

$

(56,021)

$

(111,896)

$

199,244

Other comprehensive income (loss):

Net unrealized gain (loss) on derivative instruments

for interest rate swaps

-

(878)

(16)

(9,953)

Comprehensive income (loss)

$

(41,118)

$

(56,899)

$

(111,912)

$

189,291

Comprehensive (income) loss attributable to noncontrolling

interests in consolidated joint ventures

895

405

1,900

2,500

Comprehensive (income) loss attributable to redeemable

noncontrolling interests

(6,471)

(6,471)

(19,413)

(16,144)

Comprehensive (income) loss attributable to noncontrolling

interests in Operating Partnership

4,486

6,246

12,424

(18,127)

Comprehensive income (loss) attributable to common shareholders

$

(42,208)

$

(56,719)

$

(117,001)

$

157,520

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


MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (in thousands) (unaudited)

Accumulated

Additional

Dividends in

Other

Noncontrolling

Common Stock

Paid-In

Excess of

Comprehensive

Interests

For the Three Months Ended September 30, 2020

Shares

Par Value

Capital

Net Earnings

Income (Loss)

in Subsidiaries

Total Equity

Balance at July 1, 2020

90,597

$

906

$

2,533,686

$

(1,135,559)

$

-

$

194,463

$

1,593,496

Net income (loss)

-

-

-

(42,208)

-

1,090

(41,118)

Common stock dividends

-

-

-

(18,142)

-

-

(18,142)

Common unit distributions

-

-

-

-

-

(2,029)

(2,029)

Redeemable noncontrolling interests

-

-

(2,167)

-

-

(6,701)

(8,868)

Change in noncontrolling interests in consolidated joint ventures

-

-

-

-

-

-

-

Redemption of common units for common stock

-

-

-

-

-

-

-

Redemption of common units

-

-

-

-

-

(29)

(29)

Shares issued under Dividend Reinvestment and

Stock Purchase Plan

1

-

9

-

-

-

9

Directors' deferred compensation plan

61

1

75

-

-

-

76

Stock compensation

53

-

394

-

-

329

723

Cancellation of unvested LTIP units

-

-

-

-

-

-

-

Other comprehensive income (loss)

-

-

-

-

-

-

-

Rebalancing of ownership percentage

between parent and subsidiaries

-

-

(875)

-

-

875

-

Balance at September 30, 2020

90,712

$

907

$

2,531,122

$

(1,195,909)

$

-

$

187,998

$

1,524,118

Accumulated

Additional

Dividends in

Other

Noncontrolling

Common Stock

Paid-In

Excess of

Comprehensive

Interests

For the Three Months Ended September 30, 2019

Shares

Par Value

Capital

Net Earnings

Income (Loss)

in Subsidiaries

Total Equity

Balance at July 1, 2019

90,553

$

906

$

2,539,547

$

(895,824)

$

958

$

230,461

$

1,876,048

Net income (loss)

-

-

-

(55,928)

-

(93)

(56,021)

Common stock dividends

-

-

-

(18,106)

-

-

(18,106)

Common unit distributions

-

-

-

-

-

(2,360)

(2,360)

Redeemable noncontrolling interests

-

-

(3,025)

-

-

(6,805)

(9,830)

Change in noncontrolling interests in consolidated joint ventures

-

-

-

-

-

-

-

Redemption of common units for common stock

-

-

-

-

-

-

-

Redemption of common units

-

-

(65)

(65)

Shares issued under Dividend Reinvestment and

Stock Purchase Plan

1

-

10

-

-

-

10

Directors' deferred compensation plan

-

-

81

-

-

-

81

Stock compensation

(2)

-

7

-

-

1,973

1,980

Cancellation of unvested LTIP units

-

-

-

-

-

-

-

Other comprehensive income (loss)

-

-

-

-

(791)

(87)

(878)

Rebalancing of ownership percentage

between parent and subsidiaries

-

-

1,426

-

-

(1,426)

-

Balance at September 30, 2019

90,552

$

906

$

2,538,046

$

(969,858)

$

167

$

221,598

$

1,790,859

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


MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (in thousands) (unaudited)

Accumulated

Additional

Dividends in

Other

Noncontrolling

Common Stock

Paid-In

Excess of

Comprehensive

Interests

For the Nine Months Ended September 30, 2020

Shares

Par Value

Capital

Net Earnings

Income (Loss)

in Subsidiaries

Total Equity

Balance at January 1, 2020

90,595

$

906

$

2,535,440

$

(1,042,629)

$

(18)

$

205,776

$

1,699,475

Net income (loss)

-

-

-

(117,019)

-

5,123

(111,896)

Common stock dividends

-

-

-

(36,261)

-

-

(36,261)

Common unit distributions

-

-

-

-

-

(3,509)

(3,509)

Redeemable noncontrolling interests

-

-

(7,207)

-

-

(20,176)

(27,383)

Change in noncontrolling interests in consolidated joint ventures

-

-

-

-

-

133

133

Redemption of common units of common stock

-

-

-

-

-

-

-

Redemption of common units

-

-

-

-

-

(2,170)

(2,170)

Shares issued under Dividend Reinvestment and

Stock Purchase Plan

3

-

39

-

-

-

39

Directors' deferred compensation plan

61

1

214

-

-

-

215

Stock compensation

53

-

1,158

-

-

4,534

5,692

Cancellation of unvested LTIP units

-

-

-

-

-

(201)

(201)

Other comprehensive income (loss)

-

-

-

-

18

(34)

(16)

Rebalancing of ownership percentage

between parent and subsidiaries

-

-

1,478

-

-

(1,478)

-

Balance at September 30, 2020

90,712

$

907

$

2,531,122

$

(1,195,909)

$

-

$

187,998

$

1,524,118

Accumulated

Additional

Dividends in

Other

Noncontrolling

Common Stock

Paid-In

Excess of

Comprehensive

Interests

For the Nine Months Ended September 30, 2019

Shares

Par Value

Capital

Net Earnings

Income (Loss)

in Subsidiaries

Total Equity

Balance at January 1, 2019

90,320

$

903

$

2,561,503

$

(1,084,518)

$

8,770

$

210,523

$

1,697,181

Net income (loss)

-

-

-

166,513

-

32,731

199,244

Common stock dividends

-

-

-

(54,282)

-

-

(54,282)

Common unit distributions

-

-

-

-

-

(6,417)

(6,417)

Redeemable noncontrolling interest

-

-

(22,936)

-

-

(18,685)

(41,621)

Change in noncontrolling interests in consolidated joint ventures

-

-

(1,958)

-

-

9,110

7,152

Redemption of common units for common stock

38

1

704

-

-

(705)

-

Redemption of common units

-

-

(1,665)

-

-

(5,030)

(6,695)

Shares issued under Dividend Reinvestment and

Stock Purchase Plan

2

-

31

-

-

-

31

Directors' deferred compensation plan

194

2

236

-

-

-

238

Stock compensation

-

-

490

-

-

5,561

6,051

Cancellation of unvested LTIP units

(2)

-

-

2,819

-

(2,889)

(70)

Other comprehensive income (loss)

-

-

-

(390)

(8,603)

(960)

(9,953)

Rebalancing of ownership percentage

between parent and subsidiaries

-

-

1,641

-

-

(1,641)

-

Balance at September 30, 2019

90,552

$

906

$

2,538,046

$

(969,858)

$

167

$

221,598

$

1,790,859

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

 

MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

2020

2019

Net income (loss)

$

(111,896)

$

199,244

Net (income) loss from discontinued operations

(39,313)

(8,821)

Net income (loss) from continuing operations

(151,209)

190,423

Adjustments to reconcile net income (loss) to net cash provided by

Operating activities:

Depreciation and amortization, including related intangible assets

90,198

93,385

Depreciation and amortization on discontinued operations

4,223

50,775

Amortization of directors deferred compensation stock units

215

238

Amortization of stock compensation

5,692

6,051

Amortization of deferred financing costs

3,158

3,478

Amortization of debt discount and mark-to-market

(711)

(711)

Equity in (earnings) loss of unconsolidated joint ventures

281

882

Distributions of cumulative earnings from unconsolidated joint ventures

4,734

5,520

Gain on change of control of interests

-

(13,790)

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

7,915

(233,698)

Realized (gains) losses and unrealized losses on disposition of discontinued operations, net

23,900

413

Gain on disposition of developable land

(4,813)

(566)

Property impairments on continuing operations

36,582

-

Property impairments on discontinued operations

-

11,696

Land and other impairments

23,401

8,844

Gain on sale of investments in unconsolidated joint ventures

-

(903)

(Gain)Loss from extinguishment of debt

-

(1,801)

Changes in operating assets and liabilities:

Decrease (increase) in unbilled rents receivable, net

750

(5,597)

Increase in deferred charges, goodwill and other assets

(4,309)

(13,469)

Increase in accounts receivable, net

(5,732)

(567)

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

(2,784)

20,165

Decrease in rents received in advance and security deposits

(1,441)

(23)

Increase in accrued interest payable

5,471

6,445

Net cash flows provided by operating activities - continuing operations

7,398

60,550

Net cash flows provided by operating activities - discontinued operations

69,190

60,357

Net cash provided by operating activities

$

76,588

$

120,907

CASH FLOWS FROM INVESTING ACTIVITIES

Rental property acquisitions and related intangibles

$

(16,214)

$

(901,108)

Rental property additions and improvements

(123,785)

(79,842)

Development of rental property and other related costs

(227,509)

(155,251)

Proceeds from the sales of rental property

16,455

637,982

Proceeds from the sale of investments in unconsolidated joint ventures

-

4,039

Repayment of notes receivable

333

46,430

Investment in unconsolidated joint ventures

(1,664)

(8,859)

Distributions in excess of cumulative earnings from unconsolidated joint ventures

11,960

4,977

Net cash used in investing activities - continuing operations

(340,424)

(451,632)

Net cash provided by (used in) investing activities - discontinued operations

257,462

(84,449)

Net cash used in investing activities

$

(82,962)

$

(536,081)

CASH FLOW FROM FINANCING ACTIVITIES

Borrowings from revolving credit facility

$

191,000

$

489,000

Repayment of revolving credit facility

(364,000)

(398,000)

Repayment of senior unsecured notes

-

(395,000)

Proceeds from mortgages and loans payable

258,483

764,583

Repayment of mortgages, loans payable and other obligations

(298)

(97,215)

Acquisition of noncontrolling interests

-

(5,017)

Issuance of redeemable noncontrolling interests, net

-

145,000

Common unit redemptions

(2,170)

-

Payment of financing costs

(668)

(7,003)

(Contributions) Distributions to noncontrolling interests

133

(407)

Payment of dividends and distributions

(79,895)

(75,918)

Net cash provided by financing activities

$

2,585

$

420,023

Net (decrease) increase in cash and cash equivalents

$

(3,789)

$

4,849

Cash, cash equivalents and restricted cash, beginning of period (1)

41,168

49,554

Cash, cash equivalents and restricted cash, end of period (2)

$

37,379

$

54,403

(1)Includes Restricted Cash of $15,577 and $19,921 as of December 31, 2019 and 2018, respectively.

(2)Includes Restricted Cash of $14,507 and $19,635 as of September 30, 2020 and 2019, respectively.

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

MACK-CALI REALTY, L.P. AND SUBSIDIARIES

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

September 30,

December 31,

ASSETS

2020

2019

Rental property

Land and leasehold interests

$

641,962

$

653,231

Buildings and improvements

3,669,960

3,361,435

Tenant improvements

163,900

163,299

Furniture, fixtures and equipment

78,558

78,716

4,554,380

4,256,681

Less – accumulated depreciation and amortization

(627,995)

(558,617)

3,926,385

3,698,064

Real estate held for sale, net

714,404

966,497

Net investment in rental property

4,640,789

4,664,561

Cash and cash equivalents

22,872

25,589

Restricted cash

14,507

15,577

Investments in unconsolidated joint ventures

194,779

209,091

Unbilled rents receivable, net

86,818

95,686

Deferred charges, goodwill and other assets, net

220,194

275,102

Accounts receivable

10,784

7,192

Total assets

$

5,190,743

$

5,292,798

LIABILITIES AND EQUITY

Senior unsecured notes, net

$

572,360

$

571,484

Unsecured revolving credit facility and term loans

156,000

329,000

Mortgages, loans payable and other obligations, net

2,167,522

1,908,034

Distributions payable

1,537

22,265

Accounts payable, accrued expenses and other liabilities

205,637

209,510

Rents received in advance and security deposits

36,575

39,463

Accrued interest payable

15,642

10,185

Total liabilities

3,155,273

3,089,941

Commitments and contingencies

 

 

Redeemable noncontrolling interests

511,352

503,382

Partners’ Capital:

General Partner, 90,712,055 and 90,595,176 common units outstanding

1,268,493

1,427,568

Limited partners, 9,672,558 and 9,612,064 common units/LTIPs outstanding

210,096

224,629

Accumulated other comprehensive income (loss)

-

(18)

Total Mack-Cali Realty, L.P. partners’ capital

1,478,589

1,652,179

Noncontrolling interests in consolidated joint ventures

45,529

47,296

Total equity

1,524,118

1,699,475

Total liabilities and equity

$

5,190,743

$

5,292,798

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


MACK-CALI REALTY, L.P. AND SUBSIDIARIES

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

Three Months Ended

Nine Months Ended

September 30,

September 30,

REVENUES

2020

2019

2020

2019

Revenue from leases

$

65,849 

$

72,538 

$

201,091 

$

224,947 

Real estate services

2,876 

3,411 

8,624 

10,783 

Parking income

4,033 

5,716 

12,332 

16,097 

Hotel income

893 

3,325 

3,290 

5,702 

Other income

3,999 

2,400 

7,020 

6,732 

Total revenues

77,650 

87,390 

232,357 

264,261 

EXPENSES

Real estate taxes

10,816 

11,151 

32,326 

33,813 

Utilities

3,598 

4,402 

10,564 

14,605 

Operating services

18,942 

18,109 

50,639 

52,821 

Real estate services expenses

3,300 

3,905 

10,106 

12,150 

General and administrative

28,945 

12,571 

62,005 

42,836 

Depreciation and amortization

31,670 

32,605 

92,807 

96,110 

Property impairments

36,582 

-

36,582 

-

Land and other impairments

1,292 

2,589 

23,401 

5,088 

Total expenses

135,145 

85,332 

318,430 

257,423 

OTHER (EXPENSE) INCOME

Interest expense

(20,265)

(22,129)

(61,795)

(67,817)

Interest and other investment income (loss)

188 

42 

1,526 

Equity in earnings (loss) of unconsolidated joint ventures

1,373 

(113)

(281)

(882)

Gain on change of control of interests

-

-

-

13,790 

Realized gains (losses) and unrealized losses on disposition of

rental property, net

-

(34,666)

(7,915)

233,698 

Gain on disposition of developable land

-

296 

4,813 

566 

Gain on sale of investment in unconsolidated joint venture

-

-

-

903 

Gain from extinguishment of debt, net

-

(98)

-

1,801 

Total other income (expense)

(18,889)

(56,522)

(65,136)

183,585 

Income (loss) from continuing operations

(76,384)

(54,464)

(151,209)

190,423 

Discontinued operations:

Income from discontinued operations

19,491

8,506 

63,213

24,686 

Realized gains (losses) and unrealized losses on

disposition of rental property and impairments, net

15,775

(10,063)

(23,900)

(15,865)

Total discontinued operations, net

35,266 

(1,557)

39,313

8,821 

Net income (loss)

(41,118)

(56,021)

(111,896)

199,244 

Noncontrolling interests in consolidated joint ventures

895 

405 

1,900 

2,500 

Redeemable noncontrolling interests

(6,471)

(6,471)

(19,413)

(16,144)

Net income (loss) available to common unitholders

$

(46,694)

$

(62,087)

$

(129,409)

$

185,600 

Basic earnings per common unit:

Income (loss) from continuing operations

$

(0.84)

$

(0.63)

$

(1.76)

$

1.50 

Discontinued operations

0.35 

(0.02)

0.39 

0.09 

Net income (loss) available to common unitholders

$

(0.49)

$

(0.65)

$

(1.37)

$

1.59 

Diluted earnings per common unit:

Income (loss) from continuing operations

$

(0.84)

$

(0.63)

$

(1.76)

$

1.50 

Discontinued operations

0.35 

(0.02)

0.39 

0.09 

Net income (loss) available to common unitholders

$

(0.49)

$

(0.65)

$

(1.37)

$

1.59 

Basic weighted average units outstanding

100,307 

100,560 

100,235 

100,607 

Diluted weighted average units outstanding

100,307

100,560 

100,235 

100,802 

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

MACK-CALI REALTY, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) (unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net income (loss)

$

(41,118)

$

(56,021)

$

(111,896)

$

199,244

Other comprehensive income (loss):

Net unrealized gain (loss) on derivative instruments

for interest rate swaps

-

(878)

(16)

(9,953)

Comprehensive income (loss)

$

(41,118)

$

(56,899)

$

(111,912)

$

189,291

Comprehensive (income) loss attributable to noncontrolling

interests in consolidated joint ventures

895

405

1,900

2,500

Comprehensive (income) loss attributable to redeemable

noncontrolling interests

(6,471)

(6,471)

(19,413)

(16,144)

Comprehensive income (loss) attributable to common unitholders

$

(46,694)

$

(62,965)

$

(129,425)

$

175,647

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


MACK-CALI REALTY, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (in thousands) (unaudited)

Accumulated

Noncontrolling

Limited Partner

General Partner

Limited Partner

Other

Interest

General Partner

Common Units/

Common

Common

Comprehensive

in Consolidated

For the Three Months Ended September 30, 2020

Common Units

Vested LTIP Units

Unitholders

Unitholders

Income (Loss)

Joint Ventures

Total Equity

Balance at July 1, 2020

90,597

9,586

$

1,330,531

$

216,541

$

-

$

46,424

$

1,593,496

Net income (loss)

-

-

(42,208)

(4,486)

-

5,576

(41,118)

Distributions

-

-

(18,142)

(2,029)

-

-

(20,171)

Redeemable noncontrolling interests

-

-

(2,167)

(230)

-

(6,471)

(8,868)

Change in noncontrolling interests in consolidated joint ventures

-

-

-

-

-

-

-

Redemption of limited partner common units for

shares of general partner common units

-

-

-

-

-

-

-

Vested LTIP units

-

88

-

-

-

-

-

Redemption of limited partner common units

-

(2)

-

(29)

-

-

(29)

Shares issued under Dividend Reinvestment and

Stock Purchase Plan

1

-

9

-

-

-

9

Directors' deferred compensation plan

61

-

76

-

-

-

76

Other comprehensive income (loss)

-

-

-

-

-

-

-

Stock compensation

53

-

394

329

-

-

723

Cancellation of unvested LTIP units

-

-

-

-

-

-

-

Balance at September 30, 2020

90,712

9,672

$

1,268,493

$

210,096

$

-

$

45,529

$

1,524,118

Accumulated

Noncontrolling

Limited Partner

General Partner

Limited Partner

Other

Interest

General Partner

Common Units/

Common

Common

Comprehensive

in Consolidated

For the Three Months Ended September 30, 2019

Common Units

Vested LTIP Units

Unitholders

Unitholders

Income (Loss)

Joint Ventures

Total Equity

Balance at July 1, 2019

90,553

9,976

$

1,580,023

$

245,902

$

958

$

49,165

$

1,876,048

Net income (loss)

-

-

(55,928)

(6,159)

-

6,066

(56,021)

Distributions

-

-

(18,106)

(2,360)

-

-

(20,466)

Redeemable noncontrolling interests

-

-

(3,025)

(334)

-

(6,471)

(9,830)

Change in noncontrolling interests in consolidated joint ventures

-

-

-

-

-

-

-

Redemption of limited partner common units for

shares of general partner common units

0

-

0

-

-

-

-

Vested LTIP units

-

-

-

-

-

-

-

Redemption of limited partners common units

-

(3)

-

(65)

-

-

(65)

Shares issued under Dividend Reinvestment and

Stock Purchase Plan

1

-

10

-

-

-

10

Directors' deferred compensation plan

0

-

81

-

-

-

81

Other comprehensive income (loss)

-

-

-

(87)

(791)

-

(878)

Stock compensation

(2)

-

7

1,973

-

-

1,980

Cancellation of unvested LTIP units

-

-

-

-

-

-

-

Balance at September 30, 2019

90,552

9,973

$

1,503,062

$

238,870

$

167

$

48,760

$

1,790,859

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

 


MACK-CALI REALTY, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (in thousands) (unaudited)

Accumulated

Noncontrolling

Limited Partner

General Partner

Limited Partner

Other

Interest

General Partner

Common Units/

Common

Common

Comprehensive

in Consolidated

For the Nine Month Ended September 30, 2020

Common Units

Vested LTIP Units

Unitholders

Unitholders

Income (Loss)

Joint Ventures

Total Equity

Balance at January 1, 2020

90,595

9,612

$

1,427,568

$

224,629

$

(18)

$

47,296

$

1,699,475

Net income

-

-

(117,019)

(12,390)

-

17,513

(111,896)

Distributions

-

-

(36,261)

(3,509)

-

-

(39,770)

Redeemable noncontrolling interest

-

-

(7,207)

(763)

-

(19,413)

(27,383)

Change in noncontrolling interests in consolidated joint ventures

-

-

-

-

-

133

133

Redemption of limited partner common units for

shares of general partner common units

-

-

-

-

-

-

-

Vested LTIP units

-

160

-

-

-

-

-

Redemption of limited partner common units

-

(100)

-

(2,170)

-

-

(2,170)

Shares issued under Dividend

Reinvestment and Stock

Purchase Plan

3

-

39

-

-

-

39

Directors' deferred compensation plan

61

-

215

-

-

-

215

Other comprehensive income (loss)

-

-

-

(34)

18

-

(16)

Stock compensation

53

-

1,158

4,534

-

-

5,692

Cancellation of unvested LTIP units

-

-

-

(201)

-

-

(201)

Balance at September 30, 2020

90,712

9,672

$

1,268,493

$

210,096

$

-

$

45,529

$

1,524,118

Accumulated

Noncontrolling

Limited Partner

General Partner

Limited Partner

Other

Interest

General Partner

Common Units/

Common

Common

Comprehensive

in Consolidated

For the Nine Months Ended September 30, 2019

Common Units

Vested LTIP Units

Unitholders

Unitholders

Income (Loss)

Joint Ventures

Total Equity

Balance at January 1, 2019

90,320

10,229

$

1,413,497

$

232,764

$

8,770

$

42,150

$

1,697,181

Net income (loss)

-

-

166,513

19,087

-

13,644

199,244

Distributions

-

-

(54,282)

(6,417)

-

-

(60,699)

Redeemable noncontrolling interest

-

-

(22,936)

(2,541)

-

(16,144)

(41,621)

Change in noncontrolling interest in consolidated joint ventures

-

(1,958)

-

-

9,110

7,152

Redemption of limited partner common units for

shares of general partner common units

38

(20)

705

(705)

-

-

-

Vested LTIP units

-

68

-

-

-

-

-

Redemption of limited partner common units

-

(304)

(1,665)

(5,030)

-

-

(6,695)

Shares issued under Dividend Reinvestment and

Stock Purchase Plan

2

-

31

-

-

-

31

Directors' deferred compensation plan

194

-

238

-

-

-

238

Other comprehensive income (loss)

-

-

(390)

(960)

(8,603)

-

(9,953)

Stock compensation

(2)

-

490

5,561

-

-

6,051

Cancellation of unvested LTIP units

-

-

2,819

(2,889)

-

-

(70)

Balance at September 30, 2019

90,552

9,973

$

1,503,062

$

238,870

$

167