<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)
/X/      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1999

                                       OR

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

For the transition period from               to
                               --------------  --------------------------------
Commission file number 333-57103

                             Mack-Cali Realty, L.P.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Delaware                                     22-3315804
-----------------------------------        -------------------------------------
 (State or other jurisdiction of                    (I.R.S. Employer
  incorporation or organization)                  Identification Number)

               11 Commerce Drive, Cranford, New Jersey 07016-3501

-------------------------------------------------------------------------------

                     (Address or principal executive office)
                                   (Zip Code)

                                 (908) 272-8000

-------------------------------------------------------------------------------


              (Registrant's telephone number, including area code)

                                 Not Applicable

-------------------------------------------------------------------------------


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

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or such shorter period that the
Registrant was required to file such report) YES X NO   and (2) has been
                                                ---  ---
subject to such filing requirements for the past ninety (90) days YES X NO    .
                                                                     ---   ---

<PAGE>


                             MACK-CALI REALTY, L.P.

                                    FORM 10-Q

                                      INDEX
<TABLE>
<CAPTION>

PART I        FINANCIAL INFORMATION                                                                       PAGE
<S>                                                                                                      <C>
              Item 1.    Financial Statements:

                         Consolidated Balance Sheets as of June 30, 1999
                             and December 31, 1998.................................................         4

                         Consolidated Statements of Operations for the three and six
                             month periods ended June 30, 1999 and 1998............................         5

                         Consolidated Statement of Changes in Partners' Capital
                             for the six months ended June 30, 1999................................         6

                         Consolidated Statements of Cash Flows for the six months
                             ended June 30, 1999 and 1998..........................................         7

                         Notes to Consolidated Financial Statements................................       8-31

              Item 2.    Management's Discussion and Analysis of Financial Condition
                             and Results of Operations.............................................       32-46

              Item 3.    Quantitative and Qualitative Disclosures about Market Risk................        47

PART II       OTHER INFORMATION AND SIGNATURES

              Item 1.    Legal Proceedings.........................................................        48

              Item 2.    Changes in Securities and Use of Proceeds.................................        48

              Item 3.    Defaults Upon Senior Securities...........................................        48

              Item 4.    Submission of Matters to a Vote of Security Holders.......................        48

              Item 5.    Other Information.........................................................        48

              Item 6.    Exhibits..................................................................      49-51

                         Signatures................................................................        52

</TABLE>


                                       2
<PAGE>

                             MACK-CALI REALTY, L.P.

                         PART I - FINANCIAL INFORMATION



ITEM I.       FINANCIAL STATEMENTS

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

              The aforementioned financial statements should be read in
              conjunction with the notes to the aforementioned financial
              statements and Management's Discussion and Analysis of Financial
              Condition and Results of Operations and the financial statements
              and notes thereto included in the Operating Partnership's Annual
              Report on Form 10-K and Form 10-K/A for the fiscal year ended
              December 31, 1998.

              The results of operations for the three and six month periods
              ended June 30, 1999 are not necessarily indicative of the results
              to be expected for the entire fiscal year or any other period.



                                       3
<PAGE>


MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT UNIT AMOUNTS)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------

                                                                              June 30,            December 31,
ASSETS                                                                         1999                  1998
-----------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                   <C>
Rental property
    Land and leasehold interests                                          $    523,250          $    510,534
    Buildings and improvements                                               2,934,780             2,887,115
    Tenant improvements                                                         83,030                64,464
    Furniture, fixtures and equipment                                            5,795                 5,686
-----------------------------------------------------------------------------------------------------------------

                                                                             3,546,855             3,467,799
Less - accumulated depreciation and amortization                              (220,152)             (177,934)
-----------------------------------------------------------------------------------------------------------------

    Total rental property                                                    3,326,703             3,289,865
Cash and cash equivalents                                                       11,519                 5,809
Investments in unconsolidated joint ventures                                    86,380                66,508
Unbilled rents receivable                                                       48,435                41,038
Deferred charges and other assets, net                                          52,703                39,020
Restricted cash                                                                  6,160                 6,026
Accounts receivable, net of allowance for doubtful accounts
    of $346 and $670                                                             6,698                 3,928
-----------------------------------------------------------------------------------------------------------------

Total assets                                                              $  3,538,598          $  3,452,194
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------

LIABILITIES AND PARTNERS' CAPITAL
-----------------------------------------------------------------------------------------------------------------

Senior Unsecured Notes                                                    $    597,344          $         --
Revolving credit facilities                                                    148,600               671,600
Mortgages and loans payable                                                    749,041               749,331
Distributions payable                                                           40,926                40,564
Accounts payable and accrued expenses                                           39,644                33,253
Rents received in advance and security deposits                                 31,117                29,980
Accrued interest payable                                                        14,729                 2,246
-----------------------------------------------------------------------------------------------------------------
    Total liabilities                                                        1,621,401             1,526,974
-----------------------------------------------------------------------------------------------------------------

Commitments and contingencies

PARTNERS' CAPITAL:
    Preferred units, 229,304 and 250,256 units outstanding                     235,200               223,330
    General partner, 58,915,684 and 57,266,137 common units outstanding      1,458,653             1,387,674
    Limited partners, 8,299,690 and 9,086,585 common units outstanding         214,820               305,692
    Unit warrants, 2,000,000 and 2,000,000 outstanding                           8,524                 8,524
-----------------------------------------------------------------------------------------------------------------

    Total partners' capital                                                  1,917,197             1,925,220
-----------------------------------------------------------------------------------------------------------------

Total liabilities and partners' capital                                   $  3,538,598          $  3,452,194
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS


                                       4
<PAGE>


MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                              Three Months Ended June 30,              Six Months Ended June 30,
REVENUES                                                         1999             1998                   1999           1998
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>            <C>                   <C>             <C>
Base rents                                                    $   116,499    $   105,861           $   232,579     $   198,777
Escalations and recoveries from tenants                            16,366         12,358                31,226          22,715
Parking and other                                                   3,061          2,836                 6,961           4,818
Interest income                                                       215            916                   470           1,459
Equity in earnings of unconsolidated joint ventures                   834             70                   628              95
------------------------------------------------------------------------------------------------------------------------------------
    Total revenues                                                136,975        122,041               271,864         227,864
------------------------------------------------------------------------------------------------------------------------------------

EXPENSES
------------------------------------------------------------------------------------------------------------------------------------
Real estate taxes                                                  14,208         11,854                28,051          21,926
Utilities                                                           9,829          9,115                19,421          17,417
Operating services                                                 17,227         15,629                34,143          28,321
General and administrative                                          5,770          6,394                13,904          12,591
Depreciation and amortization                                      22,465         19,093                44,434          35,324
Interest expense                                                   25,697         21,786                49,319          40,265
Non-recurring charges                                              16,458             --                16,458              --
------------------------------------------------------------------------------------------------------------------------------------
    Total expenses                                                111,654         83,871               205,730         155,844
------------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item                                   25,321         38,170                66,134          72,020
Extraordinary item - loss on early retirement of debt                  --         (2,670)                   --          (2,670)
------------------------------------------------------------------------------------------------------------------------------------
Net income                                                         25,321         35,500                66,134          69,350
Preferred unit distributions                                       (3,869)        (3,985)               (7,738)         (7,896)
------------------------------------------------------------------------------------------------------------------------------------
Net income available to common unitholders                    $    21,452    $    31,515           $    58,396     $    61,454
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
BASIC EARNINGS PER UNIT:
Income before extraordinary item                              $      0.32    $      0.53           $      0.87     $     1.05
Extraordinary item - loss on early retirement of debt                  --          (0.04)                   --          (0.04)
------------------------------------------------------------------------------------------------------------------------------------
Net income                                                    $      0.32    $      0.49           $      0.87     $     1.01
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS PER UNIT:
Income before extraordinary item                              $      0.32    $      0.53           $      0.87     $     1.04
Extraordinary item - loss on early retirement of debt                  --          (0.04)                   --          (0.04)
------------------------------------------------------------------------------------------------------------------------------------
Net income                                                    $      0.32    $      0.49           $      0.87     $     1.00
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Distributions declared per common unit                        $      0.55    $      0.50           $      1.10     $     1.00
------------------------------------------------------------------------------------------------------------------------------------

Basic weighted average units outstanding                           67,173         64,145                67,092          61,055

Diluted weighted average units outstanding                         67,486         64,626                67,385          61,671
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       5
<PAGE>

MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS= CAPITAL (IN THOUSANDS)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------

                                              General    Limited
                                   Preferred  Partner    Partner     Preferred    General      Limited    Unit
                                     Units     Units      Units     Unitholders   Partner     Partners  Warrants      Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>      <C>        <C>        <C>         <C>            <C>         <C>       <C>
Balance at January 1, 1999           250      57,266     9,087      $223,330    $1,387,674     $305,692  $8,524    $1,925,220
  Net income                          --          --        --         7,738        50,750        7,646      --        66,134
  Distributions                       --          --        --        (7,738)      (64,559)      (9,386)     --       (81,683)
Conversion of preferred units
  to limited partner units           (21)         --       605       (21,491)           --       21,491      --            --
Redemption of limited partner
  units for shares of common stock    --       1,634    (1,634)           --        48,287      (48,287)     --            --
Issuance of limited partner units     --          --       242            --            --        7,258      --         7,258
Contributions - proceeds from
  stock options exercised             --          41        --            --           933           --      --           933
Repurchase of general partner units   --         (26)       --            --          (713)          --      --          (713)
Deferred compensation plan
  for directors                       --          --        --            --            38           --      --            38
Contributions - proceeds from
  dividend reinvestment
  and stock purchase plan             --           1        --            --            10           --      --            10
Allocation of net equity              --          --        --        33,361        36,233      (69,594)     --            --
------------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1999             229      58,916     8,300      $235,200    $1,458,653     $214,820  $8,524    $1,917,197
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.



                                       6
<PAGE>


MACK-CALI REALTY, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
                                                                                    Six Months Ended June 30,
CASH FLOWS FROM OPERATING ACTIVITIES                                                  1999              1998
--------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>              <C>
Net income                                                                        $   66,134       $    69,350
Adjustments to reconcile net income to net cash
  provided by operating activities:
     Depreciation and amortization                                                    44,434            35,324
     Amortization of deferred financing costs                                          1,518               654
     Equity in earnings of unconsolidated joint ventures                                (628)              (95)
     Extraordinary item - loss on early retirement of debt                                --             2,670
Changes in operating assets and liabilities:
     Increase in unbilled rents receivable                                            (7,397)           (6,339)
     Increase in deferred charges and other assets, net                              (10,794)           (4,569)
     Increase in accounts receivable, net                                             (2,770)           (1,793)
     Increase in accounts payable and accrued expenses                                 5,891               366
     Increase in rents received in advance and security deposits                       1,137             8,425
     Increase (decrease) in accrued interest payable                                  12,483            (1,476)
--------------------------------------------------------------------------------------------------------------------
   Net cash provided by operating activities                                      $  110,008       $   102,517
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
--------------------------------------------------------------------------------------------------------------------
Additions to rental property                                                      $  (71,107)      $  (625,434)
Issuance of mortgage note receivable                                                      --           (20,000)
Repayment of mortgage note receivable                                                     --            20,000
Investments in unconsolidated joint ventures                                         (29,941)          (39,031)
Distributions from unconsolidated joint ventures                                      10,634             1,000
(Increase) decrease in restricted cash                                                  (134)            1,361
--------------------------------------------------------------------------------------------------------------------

   Net cash used in investing activities                                          $  (90,548)      $  (662,104)
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
--------------------------------------------------------------------------------------------------------------------
Proceeds from Senior Unsecured Notes                                              $  597,252       $        --
Proceeds from revolving credit facilities                                            130,900         1,307,452
Proceeds from mortgages and loans payable                                             45,500                --
Repayments of revolving credit facilities                                           (653,900)         (880,111)
Repayments of mortgages and loans payable                                            (45,819)          (69,704)
Redemption of common units                                                                --            (3,163)
Payment of financing costs                                                            (6,592)           (7,492)
Repurchase of general partner units                                                     (713)               --
Net proceeds from common stock offerings                                                  --           284,453
Proceeds from stock options exercised                                                    933             5,271
Proceeds from dividend reinvestment and stock purchase plan                               10                --
Payment of distributions                                                             (81,321)          (63,228)
--------------------------------------------------------------------------------------------------------------------

   Net cash (used in) provided by financing activities                            $  (13,750)      $   573,478
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents                                         $    5,710       $    13,891
Cash and cash equivalents, beginning of period                                    $    5,809       $     2,704
--------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                                          $   11,519       $    16,595
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.


                                       7
<PAGE>




MACK-CALI REALTY, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER
UNIT AMOUNTS)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

1.     ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION
Mack-Cali Realty, L.P., a Delaware limited partnership, and its subsidiaries
(the "Operating Partnership") was formed on August 31, 1994 to conduct the
business of leasing, management, acquisition, development, construction, and
tenant-related services for its sole general partner, Mack-Cali Realty
Corporation and its subsidiaries (the "Corporation" or "General Partner"). The
Operating Partnership, through its operating divisions and subsidiaries,
including the Mack-Cali property-owning partnerships and limited liability
companies (collectively, the "Property Partnerships"), as described below, is
the entity through which all of the General Partner's operations are conducted.

The Property Partnerships, not a legal entity, consist of partnerships and
limited liability companies which are engaged in the ownership and operation of
the Properties (as hereinafter defined) of the Operating Partnership, excluding
certain Properties which are wholly-owned by the Operating Partnership. Prior to
January 1, 1998 the Property Partnerships were owned 99 percent by the Operating
Partnership as a non-controlling limited partner, and one percent by the General
Partner, as a controlling general partner. During 1998, the Operating
Partnership obtained control of the Property Partnerships pursuant to agreements
with the General Partner.

The General Partner is a fully integrated, self-administered, self-managed real
estate investment trust ("REIT"). The General Partner controls the Operating
Partnership as its sole general partner, and owned an 87.7 percent and 86.3
percent common unit interest in the Operating Partnership as of June 30, 1999
and December 31, 1998, respectively.

The General Partner's business is the ownership of interests in and operation of
the Operating Partnership, and all of the General Partner's expenses are
incurred for the benefit of the Operating Partnership. The General Partner is
reimbursed by the Operating Partnership for all expenses it incurs relating to
the ownership and operation of the Operating Partnership. The Operating
Partnership earns a management fee of between three percent and five percent of
revenues, as defined, for its management of the Property Partnerships.

As of June 30, 1999, the Operating Partnership owned or had interests in 254
properties plus developable land (collectively, the "Properties"). The
Properties aggregate approximately 28.1 million square feet, and are comprised
of 160 office buildings and 81 office/flex buildings totaling approximately 27.7
million square feet (which included four office buildings and one office/flex
building, aggregating 1.0 million square feet, owned by unconsolidated joint
ventures in which the Operating Partnership has investment interests), six
industrial/warehouse buildings totaling approximately 387,400 square feet, two
multi-family residential complexes consisting of 453 units, two stand-alone
retail properties and three land leases. The Properties are located in 12
states, primarily in the Northeast, plus the District of Columbia.

BASIS OF PRESENTATION
The accompanying consolidated financial statements include all accounts of the
Operating Partnership and its subsidiaries, including the Property Partnerships.
During 1998, the Operating Partnership obtained control of the Property
Partnerships pursuant to agreements with the General Partner, as discussed
above. Accordingly, the accounts of the Property Partnerships are consolidated
with the financial statements of the Operating Partnership effective January 1,
1998. Prior to January 1, 1998, the Operating Partnership accounted for the
Property Partnerships under the equity method of accounting. All significant
intercompany accounts and transactions have been eliminated. See Investments in
Unconsolidated Joint Ventures in Note 2 for the Operating Partnership's
accounting treatment of unconsolidated joint venture interests.

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



                                       8
<PAGE>


2.     SIGNIFICANT ACCOUNTING POLICIES

RENTAL
PROPERTY                Rental properties are stated at cost less accumulated
                        depreciation and amortization. Costs directly related to
                        the acquisition and development of rental properties are
                        capitalized. Capitalized development costs include
                        interest, property taxes, insurance and other project
                        costs incurred during the period of construction.
                        Ordinary repairs and maintenance are expensed as
                        incurred; major replacements and betterments, which
                        improve or extend the life of the asset, are capitalized
                        and depreciated over their estimated useful lives.
                        Fully-depreciated assets are removed from the accounts.

                        Properties are depreciated using the straight-line
                        method over the estimated useful lives of the assets.
                        The estimated useful lives are as follows:
<TABLE>
                     <S>                                                     <C>
                        Leasehold interests                              Remaining lease term
                        ---------------------------------------------------------------------
                        Buildings and improvements                              5 to 40 years
                        ---------------------------------------------------------------------
                        Tenant improvements                        The shorter of the term of
                                                             the related lease or useful life
                        ---------------------------------------------------------------------
                        Furniture, fixtures and equipment                       5 to 10 years
                        ---------------------------------------------------------------------
</TABLE>

                        On a periodic basis, management assesses whether there
                        are any indicators that the value of the real estate
                        properties may be impaired. A property's value is
                        impaired only if management's estimate of the aggregate
                        future cash flows (undiscounted and without interest
                        charges) to be generated by the property are less than
                        the carrying value of the property. To the extent
                        impairment has occurred, the loss shall be measured as
                        the excess of the carrying amount of the property over
                        the fair value of the property. Management does not
                        believe that the value of any of its rental properties
                        is impaired.

INVESTMENTS IN
UNCONSOLIDATED
JOINT VENTURES         The Operating Partnership accounts for its investments
                       in unconsolidated joint ventures under the equity
                       method of accounting as the Operating Partnership
                       exercises significant influence, but does not control
                       these entities. These investments are recorded
                       initially at cost, as Investments in Unconsolidated
                       Joint Ventures, and subsequently adjusted for equity in
                       net earnings (loss) and cash contributions and
                       distributions. Any difference between the carrying
                       amount of these investments on the balance sheet of the
                       Operating Partnership and the underlying equity in
                       net assets is amortized as an adjustment to equity in
                       earnings (loss) of unconsolidated joint ventures over
                       40 years. See Note 4.

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


DEFERRED
FINANCING COSTS         Costs incurred in obtaining financing are
                        capitalized and amortized on a straight-line basis,
                        which approximates the effective interest method, over
                        the term of the related indebtedness. Amortization of
                        such costs is included in interest expense and was $917
                        and $400 for the three months ended June 30, 1999 and
                        1998, respectively, and $1,518 and $654 for the six
                        months ended June 30, 1999 and 1998, respectively.

DEFERRED
LEASING COSTS           Costs incurred in connection with leases are
                        capitalized and amortized on a straight-line basis over
                        the terms of the related leases and included in
                        depreciation and amortization. Unamortized deferred
                        leasing costs are charged to amortization expense upon
                        early termination of the lease. Certain employees
                        provide leasing services to the Properties and receive
                        compensation based on space leased. The portion of such
                        compensation, which is capitalized and amortized,
                        approximated $743 and $659 for the three months ended
                        June 30, 1999 and 1998, respectively, and $1,401 and
                        $1,236 for the six months ended June 30, 1999 and 1998,
                        respectively.


                                        9
<PAGE>

REVENUE
RECOGNITION             Base rental revenue is recognized on a straight-line
                        basis over the terms of the respective leases. Unbilled
                        rents receivable represents the amount by which
                        straight-line rental revenue exceeds rents currently
                        billed in accordance with the lease agreements. Parking
                        revenue includes income from parking spaces leased to
                        tenants. Rental income on residential property under
                        operating leases having terms generally of one year or
                        less is recognized when earned.

                        Reimbursements are received from tenants for certain
                        costs as provided in the lease agreements. These costs
                        generally include real estate taxes, utilities,
                        insurance, common area maintenance and other recoverable
                        costs. See Note 14.

INCOME AND
OTHER TAXES             The Operating Partnership is a partnership and, as
                        a result, all income and losses of the partnership are
                        allocated to the partners for inclusion in their
                        respective income tax returns. Accordingly, no provision
                        or benefit for income taxes has been made in the
                        accompanying financial statements.

INTEREST RATE
CONTRACTS               Interest rate contracts are utilized by the Operating
                        Partnership to reduce interest rate risks. The Operating
                        Partnership does not hold or issue derivative financial
                        instruments for trading purposes. The differentials to
                        be received or paid under contracts designated as hedges
                        are recognized over the life of the contracts as
                        adjustments to interest expense.

                        In certain situations, the Operating Partnership uses
                        forward treasury lock agreements to mitigate the
                        potential effects of changes in interest rates for
                        prospective transactions. Gains and losses are deferred
                        and amortized as adjustments to interest expense over
                        the remaining life of the associated debt to the extent
                        that such debt remains outstanding.

EARNINGS
PER UNIT                In accordance with the Statement of Financial
                        Accounting Standards No. 128 ("FASB No. 128"), the
                        Operating Partnership presents both basic and diluted
                        earnings per unit ("EPU"). Basic EPU excludes dilution
                        and is computed by dividing net income available to
                        common unitholders by the weighted average number of
                        units outstanding for the period. Diluted EPU reflects
                        the potential dilution that could occur if securities
                        or other contracts to issue common units were exercised
                        or converted into common units, where such exercise or
                        conversion would result in a lower EPU amount.

DISTRIBUTIONS
PAYABLE                 The distributions payable at June 30, 1999 represents
                        distributions payable to common unitholders of record on
                        July 6, 1999 (67,408,967 common units), and preferred
                        distributions to preferred unitholders (229,304
                        preferred units) for the second quarter 1999. The second
                        quarter 1999 common unit distribution of $0.55 per
                        common unit (pro-rated for units issued during the
                        quarter), as well as the second quarter preferred unit
                        distribution of $16.875 per preferred unit, were
                        approved by the General Partner on June 10, 1999 and
                        paid on July 23, 1999.

UNDERWRITING
COMMISSIONS
AND COSTS               Underwriting commissions and costs incurred in
                        connection with the Corporation's stock offerings, and
                        subsequent reinvestment in general partner units, are
                        reflected as a reduction of these unit values.


                                       10
<PAGE>



STOCK OPTIONS           The Operating Partnership accounts for stock-based
                        compensation using the intrinsic value method
                        prescribed in Accounting Principles Board Opinion No.
                        25, "Accounting for Stock Issued to Employees," and
                        related Interpretations ("APB No. 25"). Under APB No.
                        25, compensation cost is measured as the excess, if
                        any, of the quoted market price of the Corporation's
                        stock at the date of grant over the exercise price of
                        the option granted. Compensation cost for stock
                        options, if any, is recognized ratably over the vesting
                        period. The Corporation's policy is to grant options
                        with an exercise price equal to the quoted closing
                        market price of the Corporation's stock on the business
                        day preceding the grant date. Accordingly, no
                        compensation cost has been recognized for the
                        Corporation's stock option plans. See Note 10.



EXTRAORDINARY
ITEM                   Extraordinary item represents the effect resulting from
                       the early settlement of certain debt obligations,
                       including related deferred financing costs, prepayment
                       penalties, yield maintenance payments and other related
                       items.

NON-RECURRING
CHARGES                The Operating Partnership considers non-recurring charges
                       as costs incurred specific to significant non-recurring
                       events that impact the comparative measurement of the
                       Operating Partnership's performance.






                          11
<PAGE>


3.  ACQUISITIONS/TRANSACTIONS

OPERATING PROPERTY ACQUISITIONS
The Operating Partnership acquired the following operating properties during the
six months ended June 30, 1999:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 Investment by
Acquisition                                                                                # of      Rentable      Operating
     Date    Property/Portfolio Name               Location                                Bldgs.   Square Feet   Partnership (a)
----------------------------------------------------------------------------------------------------------------------------------
<S>         <C>                                   <C>                                      <C>       <C>          <C>
OFFICE
3/05/99      Pacifica Portfolio - Phase III (b)    Colorado Springs, El Paso County, CO       2        94,737      $   5,709
----------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTY ACQUISITIONS:                                                           2        94,737      $   5,709
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The Operating Partnership acquired the following operating properties during the
year ended December 31, 1998:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
OFFICE
                                                                                                                     Investment by
Acquisition                                                                                 # of        Rentable       Operating
   Date      Property/Portfolio Name                 Location                               Bldgs.     Square Feet   Partnership (a)
------------------------------------------------------------------------------------------------------------------------------------
<S>          <C>                                     <C>                                      <C>        <C>          <C>
2/05/98      500 West Putnam Avenue (c)              Greenwich, Fairfield County, CT           1         121,250      $  20,125
2/25/98      10 Mountainview Road                    Upper Saddle River, Bergen County, NJ     1         192,000         24,754
3/12/98      1250 Capital of Texas Highway South     Austin, Travis County, TX                 1         270,703         37,266
3/27/98      Prudential Business Campus (d)          Parsippany, Morris County, NJ             5         703,451        130,437
3/27/98      Pacifica Portfolio- Phase I (b) (e)     Denver & Colorado Springs, CO            10         620,017         74,966
3/30/98      Morris County Financial Center          Parsippany, Morris County, NJ             2         301,940         52,763
5/13/98      3600 South Yosemite                     Denver, Denver County, CO                 1         133,743         13,555
5/22/98      500 College Road East (f)               Princeton, Mercer County, NJ              1         158,235         21,334
6/01/98      1709 New York Ave./1400 L Street N.W.   Washington, D.C.                          2         325,000         90,385
6/03/98      400 South Colorado Boulevard            Denver, Denver County, CO                 1         125,415         12,147
6/08/98      Pacifica Portfolio - Phase II (b)(e)(g) Denver & Colorado Springs, CO             6         514,427         85,910
7/16/98      4200 Parliament Drive (h)               Lanham, Prince George's County, MD        1         122,000         15,807
9/10/98      40 Richards Avenue (e)                  Norwalk, Fairfield County, CT             1         145,487         19,587
9/15/98      Seven Skyline Drive (i)                 Hawthorne, Westchester County, NY         1         109,000         13,379
------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTY ACQUISITIONS:                                                           34       3,842,668      $ 612,415
------------------------------------------------------------------------------------------------------------------------------------

OFFICE/FLEX
1/30/98      McGarvey Portfolio (j)                  Moorestown, Burlington County, NJ        17         748,660      $  47,526
7/14/98      1510 Lancer Road (k)                    Moorestown, Burlington County, NJ         1          88,000          3,700
------------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTY ACQUISITIONS:                                                      18         836,660      $  51,226
------------------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING PROPERTY ACQUISITIONS:                                                        52       4,679,328      $ 663,641
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>


PROPERTIES PLACED IN SERVICE
The Operating Partnership placed in service the following properties through the
completion of development during the six months ended June 30, 1999:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                                  Investment by
Date Placed                                                                                 # of      Rentable      Operating
  in Service Property Name                         Location                               Bldgs.     Square Feet  Partnership (a)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                          <C>        <C>         <C>
OFFICE/FLEX
3/01/99      One Center Court                      Totowa, Passaic County, NJ                1          38,961      $   2,140
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES PLACED IN SERVICE:                                              1          38,961      $   2,140
-----------------------------------------------------------------------------------------------------------------------------------
LAND LEASE
2/01/99      Horizon Center Business Park (l)      Hamilton Township, Mercer County, NJ    N/A       27.7 acres     $   1,007
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL LAND LEASE TRANSACTIONS:                                                                       27.7 acres     $   1,007
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES PLACED IN SERVICE:                                                          1          38,961      $   3,147
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

SEE FOOTNOTES TO THESE SCHEDULES ON SUBSEQUENT PAGE.

                                       12
<PAGE>


The Operating Partnership placed in service the following properties through the
completion of development or redevelopment during the year ended December 31,
1998:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                                  Investment by
Date Placed                                                                                # of       Rentable      Operating
  in Service Property Name                        Location                                Bldgs      Square Feet  Partnership (a)
-----------------------------------------------------------------------------------------------------------------------------------
<S>         <C>                                   <C>                                      <C>       <C>          <C>
OFFICE
1/15/98      224 Strawbridge Drive                Moorestown, Burlington County, NJ          1          74,000      $   7,796
8/01/98      228 Strawbridge Drive                Moorestown, Burlington County, NJ          1          74,000          7,986
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE PROPERTIES PLACED IN SERVICE:                                                   2         148,000      $  15,782
-----------------------------------------------------------------------------------------------------------------------------------

OFFICE/FLEX
6/08/98      Two Center Court                     Totowa, Passaic County, NJ                 1          30,600      $   2,231
10/23/98     650 West Avenue                      Stamford, Fairfield County, CT             1          40,000          4,952
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL OFFICE/FLEX PROPERTIES PLACED IN SERVICE:                                              2          70,600      $   7,183
-----------------------------------------------------------------------------------------------------------------------------------

TOTAL PROPERTIES PLACED IN SERVICE:                                                          4         218,600      $  22,965
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a)  Unless otherwise noted, transactions were funded by the Operating
     Partnership primarily with funds made available through draws on the
     Operating Partnership's credit facilities.
(b)  The Operating Partnership may be required to pay additional consideration
     due to earn-out provisions in the agreement. William L. Mack, a director
     and equity holder of the Operating Partnership, was an indirect owner of an
     interest in certain of the buildings contained in the Pacifica portfolio.
(c)  The acquisition was funded with cash as well as the assumption of mortgage
     debt (estimated fair value of approximately $12,104, with annual effective
     interest rate of 6.52 percent).
(d)  The acquisition was funded primarily from proceeds received from the sale
     of 2,705,628 shares of common stock (see Note 10). Also included in the
     acquisition, but excluded from this schedule, is (i) Nine Campus Drive, in
     which the Operating Partnership has a 50 percent interest through an
     unconsolidated joint venture (see Note 4), and (ii) developable land
     adjacent to the acquired portfolio (see "1998 Redevelopment
     Properties/Developable Land Acquisitions").
(e)  The acquisition was funded with cash and the issuance of common units to
     the seller (see Note 11).
(f)  The property was acquired subject to a ground lease, which is prepaid
     through 2031, and has two 10-year renewal options, at rent levels as
     defined in the lease agreement.
(g)  Also included in the acquisition, but excluded from this schedule, is
     developable land adjacent to the acquired portfolio (see "1998
     Redevelopment Properties/Developable Land Acquisitions").
(h)  Includes land adjacent to the operating property, which may be sub-divided
     for future development.
(i)  The property was acquired through the exercise of a purchase option
     obtained in connection with the Operating Partnership's acquisition of 65
     properties from Robert Martin Company, LLC in January 1997. The acquisition
     was funded with cash, net of the repayment by the seller of the remaining
     balance of a note receivable.
(j)  The acquisition was funded with cash as well as the assumption of mortgage
     debt (aggregate estimated fair value of approximately $8,354, with a
     weighted average annual effective interest rate of 6.24 percent). The
     Operating Partnership is under contract to acquire an additional four
     office/flex properties and has a right of first refusal to acquire six
     additional office/flex properties.
(k)  The property was acquired through the exercise of a purchase option
     obtained in the acquisition of the McGarvey portfolio in January 1998.
(l)  On February 1, 1999, the Operating Partnership entered into a ground lease
     agreement to lease 27.7 acres of developable land located at the Operating
     Partnership's Horizon Center Business Park, located in Hamilton Township,
     Mercer County, New Jersey on which Home Depot is developing a 134,000
     square-foot retail store.

-------------------------------

1999 REDEVELOPMENT PROPERTIES/DEVELOPABLE LAND TRANSACTIONS
On February 26, 1999, the Operating Partnership acquired approximately 2.3 acres
of vacant land adjacent to one of the Operating Partnership's operating
properties located in San Antonio, Bexar County, Texas for approximately $1,524,
which was made available from the Operating Partnership's cash reserves.

On March 15, 1999, the Operating Partnership entered into a joint venture with
SJP 106 Allen Road to form MC-SJP Pinson Development, LLC, which acquired vacant
land located in Bernards Township, Somerset County, New Jersey. The venture has
commenced construction of a 135,000 square-foot office building on this site.
The Operating Partnership provided a construction loan with a total commitment
of $22,859 (aggregate borrowings of $4,987 as of June 30, 1999) to the venture.
Upon completion of the building, the Operating Partnership's construction loan
will convert to an equity interest in the venture. The Operating Partnership
accounts for its investment in the joint venture on a consolidated basis.



                                       13
<PAGE>




On May 4, 1999, the Operating Partnership acquired, from an entity whose
principals include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg,
each of whom are affiliated with the Operating Partnership as the President of
the Operating Partnership, a current member of the Board of Directors and a
former member of the Board of Directors of the Corporation, approximately 2.5
acres of vacant land in the Stamford Executive Park, located in Stamford,
Fairfield County, Connecticut. The Operating Partnership acquired the land for
approximately $2,181. $1,681 of the purchase price was funded from the Operating
Partnership's cash reserves with an additional $500 due three years from the
closing date contingent upon certain conditions per the acquisition contract and
subject to interest over the term.

On June 1, 1999, the Operating Partnership acquired 795 Folsom Street, a 183,445
square-foot office building located in San Francisco, San Francisco County,
California. The building was acquired for approximately $34,282, which was made
available from drawing on one of the Operating Partnership's credit facilities.
The Operating Partnership is currently redeveloping the property for lease-up
and operation.

1998 REDEVELOPMENT PROPERTIES/DEVELOPABLE LAND ACQUISITIONS
On January 23, 1998, the Operating Partnership acquired, from an entity whose
principals include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg,
each of whom are affiliated with the Operating Partnership as the President of
the Operating Partnership, a current member of the Board of Directors and a
former member of the Board of Directors of the Corporation, approximately 10
acres of vacant land in the Stamford Executive Park, located in Stamford,
Fairfield County, Connecticut for approximately $1,341, which was funded from
the Operating Partnership's cash reserves. In October 1998, the Operating
Partnership completed and placed in service a 40,000 square-foot office/flex
property on the acquired land (see "Properties Placed in Service").

On February 2, 1998, the Operating Partnership acquired 2115 Linwood Avenue, a
68,000 square-foot vacant office building located in Fort Lee, Bergen County,
New Jersey. The building was acquired for approximately $5,164, which was made
available from drawing on one of the Operating Partnership's credit facilities.
The Operating Partnership is currently redeveloping the property for future
lease-up and operation.

On March 27, 1998, as part of the purchase of the Prudential Business Campus
(see "Operating Property Acquisitions"), the Operating Partnership acquired
approximately 95 acres of vacant land adjacent to the operating properties for
approximately $27,500.

On June 8, 1998, as part of the Pacifica portfolio-phase II acquisition (see
"Operating Property Acquisitions"), the Operating Partnership acquired vacant
land adjacent to the operating properties for approximately $2,006.

On September 4, 1998, the Operating Partnership acquired approximately 128 acres
of vacant land located at the Operating Partnership's Horizon Center Business
Park, Hamilton Township, Mercer County, New Jersey, through the exercise of a
purchase option obtained in the Operating Partnership's acquisition of the
Horizon Center Business Park in November 1995. The land was acquired for
approximately $1,698, which was funded from the Operating Partnership's cash
reserves. Subsequently in February 1999, the Operating Partnership leased 27.7
acres of the acquired land to Home Depot (see "Properties Placed in Service").

On November 10, 1998, the Operating Partnership acquired approximately 10.1
acres of land located at Three Vaughn Drive, Princeton, Mercer County, New
Jersey. The Operating Partnership acquired the land for approximately $2,146,
which was funded from the Operating Partnership's cash reserves.

On December 3, 1998, the Operating Partnership acquired, from an entity whose
principals include Timothy M. Jones, Martin S. Berger and Robert F. Weinberg,
each of whom are affiliated with the Operating Partnership as the President of
the Operating Partnership, a current member of the Board of Directors and a
former member of the Board of Directors of the Corporation, approximately 2.7
acres of land located at 12 Skyline Drive, Hawthorne, Westchester County, New
York. The Operating Partnership acquired the land for approximately $1,540,
which was funded from the Operating Partnership's cash reserves. The Operating
Partnership is currently constructing a 47,000 square-foot office/flex property
on the land parcel.

SUBSEQUENT ACQUISITION
On July 21, 1999, the Operating Partnership acquired 1201 Connecticut Avenue,
NW, a 169,000 square-foot office property, located in Washington, D.C., for
approximately $32,200, which was made available from drawing on one of the
Operating Partnership's credit facilities.


                                       14
<PAGE>


4.     INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

PRU-BETA 3 (NINE CAMPUS DRIVE)
On March 27, 1998, the Operating Partnership acquired a 50 percent interest in
an existing joint venture with The Prudential Insurance Company of America
("Prudential"), known as Pru-Beta 3, which owns and operates Nine Campus Drive,
a 156,495 square-foot office building, located in the Prudential Business Campus
office complex in Parsippany, Morris County, New Jersey (see Note 3). The
Operating Partnership performs management and leasing services for the property
owned by the joint venture and received $75 and $43 in fees for such services in
the six months ended June 30, 1999 and 1998, respectively.

HPMC (CONTINENTAL GRAND II/SUMMIT RIDGE/LAVA RIDGE)
On April 23, 1998, the Operating Partnership entered into a joint venture
agreement with HCG Development, L.L.C. and Summit Partners I, L.L.C. to form
HPMC Development Partners, L.P. and, on July 21, 1998, entered into a second
joint venture, HPMC Development Partners II, L.P. (formerly known as HPMC Lava
Ridge Partners, L.P.), with these same parties. HPMC Development Partners,
L.P.'s efforts have focused on two development projects, commonly referred to as
Continental Grand II and Summit Ridge. Continental Grand II is a 4.2 acre site
located in El Segundo, Los Angeles County, California, acquired by the venture
upon which it has commenced construction of a 237,000 square-foot office
property. Summit Ridge is a 7.3-acre site located in San Diego, San Diego
County, California, acquired by the venture upon which it has commenced
construction of a 132,000 square-foot office/flex property. HPMC Development
Partners II, L.P. has commenced construction of three two-story buildings
aggregating 183,200 square-feet of office space on a 12.1-acre site located in
Roseville, Placer County, California and is currently in negotiations with the
City of Daly City, California to purchase a parcel of land for future
development into office space, a hotel and other retail establishments. Among
other things, the partnership agreements provide for a preferred return on the
Operating Partnership's invested capital in each venture, in addition to 50
percent of such venture's profit above the preferred returns, as defined in each
agreement.

G&G MARTCO (CONVENTION PLAZA)
On April 30, 1998, the Operating Partnership acquired a 49.9 percent interest in
an existing joint venture, known as G&G Martco, which owns Convention Plaza, a
305,618 square-foot office building, located in San Francisco, San Francisco
County, California. A portion of its initial investment was financed through the
issuance of common units (see Note 11) as well as funds drawn from the Operating
Partnership's credit facilities. Subsequently, on June 4, 1999, the Operating
Partnership acquired an additional 0.1 percent interest in G&G Martco through
the issuance of common units (see Note 11). The Operating Partnership performs
management and leasing services for the property owned by the joint venture and
received $108 and none in fees for such services in the six months ended June
30, 1999 and 1998, respectively.

AMERICAN FINANCIAL EXCHANGE L.L.C.
On May 20, 1998, the Operating Partnership entered into a joint venture
agreement with Columbia Development Corp. to form American Financial Exchange
L.L.C. The venture was initially formed to acquire land for future development,
located on the Hudson River waterfront in Jersey City, Hudson County, New
Jersey, adjacent to the Operating Partnership's Harborside Financial Center
office complex. The Operating Partnership holds a 50 percent interest in the
joint venture. Among other things, the partnership agreement provides for a
preferred return on the Operating Partnership's invested capital in the venture,
in addition to the Operating Partnership's proportionate share of the venture's
profit, as defined in the agreement. The joint venture acquired land on which it
constructed a parking facility, which is currently leased to a parking operator
under a 10-year agreement. Such parking facility serves a ferry service between
the Operating Partnership's Harborside property and Manhattan.

RAMLAND REALTY ASSOCIATES, L.L.C. (ONE RAMLAND ROAD)
On August 20, 1998, the Operating Partnership entered into a joint venture
agreement with S.B. New York Realty Corp. to form Ramland Realty Associates
L.L.C. The venture was formed to own, manage and operate One Ramland Road, a
232,000 square-foot office/flex building plus adjacent developable land, located
in Orangeburg, Rockland County, New York. The office/flex building is being
redeveloped for future lease-up and operation. The Operating Partnership holds a
50 percent interest in the joint venture.

ASHFORD LOOP ASSOCIATES L.P. (1001 SOUTH DAIRY ASHFORD/2100 WEST LOOP SOUTH)
On September 18, 1998, the Operating Partnership entered into a joint venture
agreement with Prudential to form Ashford Loop Associates L.P. The venture was
formed to own, manage and operate 1001 South Dairy Ashford, a 130,000
square-foot office building acquired on September 18, 1998 and 2100 West Loop
South, a 168,000 square-foot office building acquired on November 25, 1998, both
located in Houston, Harris County, Texas. The Operating Partnership holds a 20
percent interest in the joint venture. The joint venture may be required to pay
additional

                                       15
<PAGE>

consideration due to earn-out provisions in the acquisition contracts. During
the six months ended June 30, 1999, the venture paid $2,317 ($463 representing
the Operating Partnership's share) in accordance with the earn-out provisions in
the acquisition contracts. The Operating Partnership performs management and
leasing services for the properties owned by the joint venture and received $63
and none in fees for such services in the six months ended June 30, 1999 and
1998, respectively.

ARCAP INVESTORS, L.L.C.
On March 18, 1999, the Operating Partnership invested in ARCap Investors,
L.L.C., a joint venture with several participants, which was formed to invest in
sub-investment grade tranches of commercial mortgage-backed securities ("CMBS").
The Operating Partnership has agreed to invest $20,000 in the venture. William
L. Mack, a director and equity holder of the Operating Partnership, is a
principal of the managing member of the venture. During the six months ended
June 30, 1999, the venture purchased approximately $221,539 face value of CMBS
bonds for an aggregate cost of $107,981.

SUMMARIES OF UNCONSOLIDATED JOINT VENTURES
The following is a summary of the financial position of the unconsolidated joint
ventures in which the Operating Partnership had investment interests as of June
30, 1999 and December 31, 1998:

<TABLE>
<CAPTION>
                                                                  June 30, 1999
                                ---------------------------------------------------------------------------------------------
                                                                   American
                                                           G&G     Financial   Ramland    Ashford            Combined
                                Pru-Beta 3       HPMC     Martco   Exchange    Realty       Loop      ARCap   Total
-----------------------------------------------------------------------------------------------------------------------------
<S>                              <C>           <C>      <C>        <C>        <C>        <C>       <C>        <C>
ASSETS:
   Rental property, net          $  22,301     $ 50,252 $ 13,150   $ 10,678   $ 15,606   $ 21,309  $      --  $ 133,296
   Other assets                      3,598        1,283    3,287        495        273      1,365    147,781    158,082
-----------------------------------------------------------------------------------------------------------------------------
   Total assets                  $  25,899     $ 51,535 $ 16,437   $ 11,173   $ 15,879   $ 22,674  $ 147,781  $ 291,378
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------

LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
   Mortgages and loans payable   $      --     $ 24,042 $ 42,671   $     --   $     --   $     --  $  73,840  $ 140,553
   Other liabilities                   486        5,035    1,368          1      2,661        354        554     10,459
   Partners'/members' capital       25,413       22,458  (27,602)    11,172     13,218     22,320     73,387    140,366
-----------------------------------------------------------------------------------------------------------------------------
   Total liabilities and
    partners'/members' capital   $  25,899     $ 51,535 $ 16,437   $ 11,173   $ 15,879   $ 22,674  $ 147,781  $ 291,378
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Operating Partnership's net
   investment in unconsolidated
   joint ventures                $  17,381     $19,839  $  8,956   $ 11,221   $  6,923   $  4,808  $  17,252  $  86,380
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                                        December 31, 1998
                                --------------------------------------------------------------------------------------
                                                                   American
                                                            G&G    Financial  Ramland     Ashford             Combined
                                Pru-Beta 3       HPMC     Martco   Exchange    Realty       Loop      ARCap     Total
-----------------------------------------------------------------------------------------------------------------------------
ASSETS:
<S>                              <C>         <C>        <C>        <C>          <C>      <C>           <C>    <C>
   Rental property, net          $  22,711   $ 30,278   $ 11,099   $ 10,621     $8,467   $ 19,166        --   $ 102,342
   Other assets                      3,995      1,097      4,058        389      1,101        378        --      11,018
-----------------------------------------------------------------------------------------------------------------------------
   Total assets                  $  26,706   $ 31,375   $ 15,157   $ 11,010     $9,568   $ 19,544        --   $ 113,360
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------

LIABILITIES AND PARTNERS'/
MEMBERS' CAPITAL:
   Mortgages and loans payable   $      --   $    632   $ 39,762   $     --     $   --   $     --        --   $  40,394
   Other liabilities                   484      3,522      2,096         79          6        509        --       6,696
   Partners'/members' capital       26,222     27,221    (26,701)    10,931      9,562     19,035        --      66,270
-----------------------------------------------------------------------------------------------------------------------------
   Total liabilities and
   partners'/members' capital    $  26,706   $ 31,375   $ 15,157   $ 11,010     $9,568   $ 19,544        --   $ 113,360
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Operating Partnership's net
   investment in unconsolidated
   joint ventures                $  17,980   $ 17,578   $ 10,964   $ 10,983     $4,851   $  4,152        --   $  66,508
-----------------------------------------------------------------------------------------------------------------------------

</TABLE>

                                       16
<PAGE>


The following is a summary of the results of operations of the unconsolidated
joint ventures for the period in which the Operating Partnership had investment
interests during the three and six month periods ended June 30, 1999 and 1998:

<TABLE>
<CAPTION>

                                                                Three Months Ended June 30, 1999
                                ---------------------------------------------------------------------------------------------
                                                                   American
                                                           G&G     Financial  Ramland    Ashford               Combined
                                Pru-Beta 3       HPMC     Martco   Exchange   Realty       Loop        ARCap    Total
-----------------------------------------------------------------------------------------------------------------------------
<S>                                <C>         <C>    <C>        <C>              <C>      <C>        <C>       <C>
Total revenues                     $1,239          --   $  2,160   $    229         --    $ 1,071    $ 2,528   $ 7,227
Operating and other expenses         (371)         --       (699)       (61)        --       (575)    (1,622)   (3,328)
Depreciation and amortization        (307)         --       (230)       (23)        --       (108)        --      (668)
Interest expense                       --          --       (738)        --         --         --       (519)   (1,257)
-----------------------------------------------------------------------------------------------------------------------------
Net income                         $  561          --   $    493   $    145         --    $   388    $   387   $ 1,974
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Operating Partnership's equity in
   earnings of unconsolidated
   joint ventures                  $  242          --   $     89   $    145         --    $    78    $   280   $   834
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                                Three Months Ended June 30, 1998
                                --------------------------------------------------------------------------------------
                                                                  American
                                                           G&G    Financial    Ramland    Ashford              Combined
                                Pru-Beta 3       HPMC     Martco   Exchange    Realty        Loop      ARCap     Total
-----------------------------------------------------------------------------------------------------------------------------
<S>                                <C>         <C>    <C>        <C>              <C>      <C>        <C>       <C>
Total revenues                     $1,105          --   $   671         --          --         --         --   $ 1,776
Operating and other expenses         (346)         --      (306)        --          --         --         --      (652)
Depreciation and amortization        (344)         --      (135)        --          --         --         --      (479)
Interest expense                       --          --      (505)        --          --         --         --      (505)
-----------------------------------------------------------------------------------------------------------------------------
Net income (loss)                  $  415          --   $  (275)        --          --         --         --   $   140
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Operating Partnership's equity in
   earnings (loss) of unconsolidated
   joint ventures                  $  207          --   $  (137)        --          --         --         --   $    70
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                                 Six Months Ended June 30, 1999
                                 --------------------------------------------------------------------------------------
                                                                    American
                                                           G&G      Financial   Ramland     Ashford           Combined
                                  Pru-Beta 3   HPMC       Martco    Exchange    Realty       Loop      ARCap    Total
-----------------------------------------------------------------------------------------------------------------------------
<S>                                <C>         <C>    <C>        <C>              <C>      <C>        <C>       <C>
Total revenues                     $2,470         --      $4,150   $  417          --     $ 1,988    $2,775    $ 11,800
Operating and other expenses         (745)        --      (1,390)    (130)         --      (1,048)   (2,012)     (5,325)
Depreciation and amortization        (625)        --        (463)     (46)         --        (216)       --      (1,350)
Interest expense                       --         --      (1,448)      --          --          --      (544)     (1,992)
-----------------------------------------------------------------------------------------------------------------------------
Net income                         $1,100         --      $  849   $  241          --     $   724    $  219    $  3,133
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Operating Partnership's equity in
   earnings (loss) of
   unconsolidated joint ventures   $  356         --      $ (277)  $  191          --     $   134    $  224    $    628
-----------------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                                 Six Months Ended June 30, 1998
                                 --------------------------------------------------------------------------------------
                                                                    American
                                                            G&G     Financial   Ramland     Ashford            Combined
                                  Pru-Beta 3   HPMC       Martco    Exchange    Realty       Loop      ARCap    Total
-----------------------------------------------------------------------------------------------------------------------------
<S>                                <C>         <C>    <C>        <C>              <C>      <C>        <C>       <C>
Total revenues                     $ 1,135        --      $  671       --          --          --        --    $ 1,806
Operating and other expenses          (352)       --        (306)      --          --          --        --       (658)
Depreciation and amortization         (344)       --        (135)      --          --          --        --       (479)
Interest expense                        --        --        (505)      --          --          --        --       (505)
-----------------------------------------------------------------------------------------------------------------------------
Net income (loss)                  $   439        --      $ (275)      --          --          --        --    $   164
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
Operating Partnership's equity in
   earnings (loss) of
   unconsolidated joint ventures   $   232        --      $ (137)      --          --          --        --    $    95
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>



                                       17
<PAGE>

5.     DEFERRED CHARGES AND OTHER ASSETS

<TABLE>
<CAPTION>
                                                                   June 30,            December 31,
                                                                     1999                  1998
----------------------------------------------------------------------------------------------------------
<S>                                                                <C>                    <C>
   Deferred leasing costs                                          $ 44,977               $ 35,151
   Deferred financing costs                                          16,825                  9,962
----------------------------------------------------------------------------------------------------------
                                                                     61,802                 45,113
   Accumulated amortization                                         (15,761)               (13,527)
----------------------------------------------------------------------------------------------------------
   Deferred charges, net                                             46,041                 31,586
   Prepaid expenses and other assets                                  6,662                  7,434
----------------------------------------------------------------------------------------------------------

   Total deferred charges and other assets, net                    $ 52,703               $ 39,020
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
</TABLE>

6.     RESTRICTED CASH

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

<TABLE>
<CAPTION>
                                                                   June 30,            December 31,
                                                                     1999                  1998
-----------------------------------------------------------------------------------------------------------
<S>                                                                <C>                    <C>
         Security deposits                                         $ 5,986                $ 5,696
         Escrow and other reserve funds                                174                    330
-----------------------------------------------------------------------------------------------------------
         Total restricted cash                                     $ 6,160                $ 6,026
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
</TABLE>

7.     SENIOR UNSECURED NOTES

On March 16, 1999, the Operating Partnership issued $600,000 of senior unsecured
notes ("Senior Unsecured Notes") under a shelf registration statement which was
declared effective by the SEC in September 1998. Interest on the Senior
Unsecured Notes is payable semi-annually in arrears. The Senior Unsecured Notes
are redeemable at any time at the option of the Operating Partnership, subject
to certain conditions including yield maintenance. The total proceeds from the
issuance (net of selling commissions and discount) of approximately $593,500
were used to pay down outstanding borrowings under the 1998 Unsecured Facility,
as defined below, and to pay off certain mortgage loans. The Senior Unsecured
Notes were issued at a discount of approximately $2,748, which is being
amortized over the terms of the respective tranches as an adjustment to interest
expense. Including amortization of offering costs, the weighted average
effective annual interest rate for the Senior Unsecured Notes is approximately
7.38 percent.

A summary of the terms of the Senior Unsecured Notes outstanding as of June 30,
1999 is presented below:

<TABLE>
<CAPTION>
                                                                                         EFFECTIVE
                                                                        AMOUNT           RATE (1)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                 <C>
   7.00% Senior Unsecured Notes, due March 15, 2004                     $299,624            7.27%
   7.25% Senior Unsecured Notes, due March 15, 2009                     $297,720            7.49%
------------------------------------------------------------------------------------------------------------------------------------

   Total Senior Unsecured Notes                                         $597,344            7.38%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

In August 1999, the Operating Partnership issued an additional $185,283 of
unsecured corporate debt with an interest rate of 7.18 percent payable monthly
and maturity date of December 31, 2003. The Operating Partnership used the
proceeds to retire the TIAA Mortgage as defined below (see Note 9).

                                       18
<PAGE>


The terms of the Senior Unsecured Notes and the unsecured corporate debt include
certain restrictions and covenants which require compliance with financial
ratios relating to the maximum amount of debt leverage, the maximum amount of
secured indebtedness, the minimum amount of debt service coverage and the
maximum amount of unsecured debt as a percent of unsecured assets.


8.     REVOLVING CREDIT FACILITIES

ORIGINAL UNSECURED FACILITY
The Original Unsecured Facility ("Original Unsecured Facility") was repaid in
full and retired in connection with the Operating Partnership obtaining the 1998
Unsecured Facility in April 1998, as defined below. On account of prepayment
fees, loan origination fees, legal fees, and other costs incurred in the
retirement of the Original Unsecured Facility, an extraordinary loss of $2,478
was recorded for the year ended December 31, 1998.

1998 UNSECURED FACILITY
In April 1998, the Operating Partnership repaid in full and terminated the
Original Unsecured Facility and obtained a new unsecured revolving credit
facility ("1998 Unsecured Facility") with a current borrowing capacity of
$1,000,000 from a group of 28 lenders. The interest rate is based on the
Operating Partnership's achievement of investment grade unsecured debt ratings
and is currently 90 basis points over London Inter-Bank Offered Rate ("LIBOR")
(5.05 percent at June 30, 1999). The 1998 Unsecured Facility matures in April
2001.

The terms of the 1998 Unsecured Facility include certain restrictions and
covenants which limit, among other things, the payment of dividends (as
discussed below), the incurrence of additional indebtedness, the incurrence of
liens and the disposition of assets, and which require compliance with financial
ratios relating to the maximum leverage ratio, the maximum amount of secured
indebtedness, the minimum amount of tangible net worth, the minimum amount of
debt service coverage, the minimum amount of fixed charge coverage, the maximum
amount of unsecured indebtedness, the minimum amount of unencumbered property
debt service coverage and certain investment limitations. The dividend
restriction referred to above provides that, except to enable the Corporation to
continue to qualify as a REIT under the Code, the Corporation will not during
any four consecutive fiscal quarters make distributions with respect to common
stock or other equity interests in an aggregate amount in excess of 90 percent
of funds from operations for such period, subject to certain other adjustments.
The 1998 Unsecured Facility also requires a 17.5 basis point fee on the unused
balance payable quarterly in arrears.

PRUDENTIAL FACILITY
The Operating Partnership has a revolving credit facility ("Prudential
Facility") from Prudential Securities Corp. ("PSC") in the amount of $100,000,
which currently bears interest at 110 basis points over one-month LIBOR, with a
maturity date of June 30, 2000. The Prudential Facility is a recourse liability
of the Operating Partnership and is secured by the Operating Partnership's
equity interest in Harborside. The Prudential Facility limits the ability of the
Operating Partnership to make any distributions during any fiscal quarter in an
amount in excess of 100 percent of the Operating Partnership's available funds
from operations for the immediately preceding fiscal quarter (except to the
extent such excess distributions or dividends are attributable to gains from the
sale of the Operating Partnership's assets or are required for the Corporation
to maintain its status as a REIT under the Code); provided, however, that the
Operating Partnership may make distributions and pay dividends in excess of 100
percent of available funds from operations for the preceding fiscal quarter for
not more than three consecutive quarters. In addition to the foregoing, the
Prudential Facility limits the liens placed upon the subject property and
certain collateral, the use of proceeds from the Prudential Facility, and the
maintenance of ownership of the subject property and assets derived from said
ownership.

SUMMARY
As of June 30, 1999, the Operating Partnership had outstanding borrowings of
$148,600 under its revolving credit facilities (with aggregate borrowing
capacity of $1,100,000). The total outstanding borrowings were from the 1998
Unsecured Facility, with no outstanding borrowings on its Prudential Facility.


                                       19
<PAGE>

9.     MORTGAGES AND LOANS PAYABLE

<TABLE>
<CAPTION>
                                                 June 30,                  December 31,
                                                   1999                        1998
------------------------------------------------------------------------------------------------
<S>                                               <C>                         <C>
   Portfolio Mortgages                            $335,283                    $335,283
   Property Mortgages                              413,758                     414,048
------------------------------------------------------------------------------------------------

   Total Mortgages and Loans Payable              $749,041                    $749,331
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
</TABLE>

PORTFOLIO MORTGAGES
TIAA MORTGAGE
Several of the Property Partnerships have an aggregate $185,283 non-recourse
mortgage loan with Teachers Insurance and Annuity Association of America, with
interest only payable monthly at a fixed annual rate of 7.18 percent ("TIAA
Mortgage"). The TIAA Mortgage is secured and cross-collateralized by 43
properties and matures in December 2003. The Property Partnerships have the
option to convert, without any yield maintenance obligation or prepayment
premium, the TIAA Mortgage to unsecured public debt as a result of the
achievement of an investment grade credit rating. The TIAA Mortgage is
prepayable in whole or in part subject to certain provisions, including yield
maintenance.

Using the proceeds from the issuance of $185,283 of unsecured corporate debt in
August 1999 (see Note 7), the Property Partnerships repaid in full and retired
the TIAA Mortgage.

$150,000 PRUDENTIAL MORTGAGE LOAN
On April 30, 1998, the Operating Partnership obtained a $150,000, interest-only,
non-recourse mortgage loan from Prudential ("$150,000 Prudential Mortgage
Loan"). The loan, which is secured by 12 properties, has an effective annual
interest rate of 7.10 percent and a seven-year term. The Operating Partnership
has the option to convert the mortgage loan to unsecured debt as a result of the
achievement of an investment grade credit rating. The mortgage loan is
prepayable in whole or in part subject to certain provisions, including yield
maintenance.

Certain mortgages and loans payable were repaid and retired in connection with
the Operating Partnership obtaining the $150,000 Prudential Mortgage Loan. On
account of prepayment fees, loan origination fees, legal fees and other costs
incurred in the retirement of certain mortgages and loans payable in April 1998,
an extraordinary loss of $192 was recorded for the year ended December 31, 1998.

PROPERTY MORTGAGES
Property mortgages are comprised of various non-recourse loans which are
collateralized by certain of the Operating Partnership's and Property
Partnerships' rental properties. Payments on property mortgages are generally
due in monthly installments of principal and interest, or interest only.

A summary of the Operating Partnership's and Property Partnerships' property
mortgages as of June 30, 1999 and December 31, 1998 is as follows:


                                       20
<PAGE>

<TABLE>
<CAPTION>

                                                                               PRINCIPAL BALANCE AT
                                                                 INTEREST     JUNE 30,    DECEMBER 31,    DATE OF
PROPERTY NAME                    LENDER                            RATE         1999          1998       MATURITY
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                                <C>      <C>              <C>          <C>
Mack-Cali Centre VI              CIGNA                             7.600%  $       --       $29,223        03/31/99
Mack-Cali Airport                CIGNA                             7.600%          --         6,849        03/31/99
Mack-Cali Murray Hill            Horace Mann                       7.850%          --         8,027        05/01/99
Mack-Cali Manhasset              IDA Financing                       TENR       8,000         8,000        12/01/99
201 Commerce Drive               Sun Life Assurance Co.            6.240%       1,090         1,121        09/01/00
3 & 5 Terri Lane                 First Union National Bank         6.220%       4,455         4,476        10/31/00
101 & 225 Executive Drive        Sun Life Assurance Co.            6.270%       2,465         2,553        06/01/01
Mack-Cali Morris Plains          Corestates Bank                   7.510%       2,261         2,292        12/31/01
Harborside Financial Center(1)   Contingent Obligation(1)          6.764%       6,358         6,150        11/04/02
Mack-Cali Willowbrook            CIGNA                             8.670%      10,560        10,918        10/01/03
1717 Route 208, Fair Lawn        Prudential Insurance Co.          8.250%      17,348        17,586        10/01/03
400 Chestnut Ridge               Prudential Insurance Co.          9.440%      14,781        14,983        07/01/04
Mack-Cali Centre VI              Principal Life Insurance Co.      6.865%      35,000            --        04/01/05
Mack-Cali Bridgewater I          New York Life Ins. Co.            7.000%      23,000        23,000        09/10/05
Mack-Cali Woodbridge II          New York Life Ins. Co.            7.500%      17,500        17,500        09/10/05
Mack-Cali Short Hills            Prudential Insurance Co.          7.740%      27,110        27,696        10/01/05
500 West Putnam Avenue           New York Life Ins. Co.            6.520%      11,127        11,471        10/10/05
Harborside - Plaza I             U.S. West Pension Trust           6.990%      49,949        48,148        01/01/06
Harborside - Plaza II and III    Northwestern Mutual Life Ins.     7.320%     100,051       101,852        01/01/06
Mack-Cali Airport                Allstate Life Insurance Co.       7.050%      10,500            --        04/01/07
Kemble Plaza II                  Mitsubishi Tr & Bk Co.       LIBOR+0.65%      40,025        40,025        01/31/08
Kemble Plaza I                   Mitsubishi Tr & Bk Co.       LIBOR+0.65%      32,178        32,178        01/31/09
------------------------------------------------------------------------------------------------------------------------------------
Total Property Mortgages                                                     $413,758      $414,048
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  As part of the Harborside acquisition in November 1996, a Property
     Partnership agreed to make payments (with an estimated net present value of
     approximately $5,252 at acquisition date) to the seller for development
     rights ("Contingent Obligation") if and when such Property Partnership
     commences construction on the acquired site during the next several years.
     However, the agreement provides, among other things, that even if the
     Property Partnership does not commence construction, the seller may
     nevertheless require the Property Partnership to acquire these rights
     during the six-month period after the end of the sixth year. After such
     period, the seller's option lapses, but any development in years 7 through
     30 will require a payment, on an increasing scale, for the development
     rights. The Property Partnership is currently in the pre-development phase
     of a long-range plan to develop the Harborside site on multi-property,
     multi-use basis.

INTEREST RATE CONTRACTS
On May 24, 1995, the Operating Partnership entered into an interest rate swap
agreement with a commercial bank. The swap agreement fixes the Operating
Partnership's one-month LIBOR base to 6.285 percent per annum on a notional
amount of $24,000. The swap agreement expires on August 15, 1999.

On January 23, 1996, the Operating Partnership entered into an interest rate
swap agreement with a commercial bank. The swap agreement fixed the Operating
Partnership's one-month LIBOR base to 5.265 percent per annum on a notional
amount of $26,000. The swap agreement expired in January 1999.

On October 1, 1998, the Operating Partnership entered into a forward treasury
rate lock agreement with a commercial bank. The agreement locked an interest
rate of 4.089 percent per annum for the three-year U.S. Treasury Note effective
November 4, 1999, on a notional amount of $50,000. The agreement will be used to
fix the Index Rate on $50,000 of the Harborside-Plaza I mortgage, for which the
Operating Partnership's interest rate re-sets for three years beginning November
4, 1999 to the three-year U.S. Treasury Note plus 110 basis points (see
"Property Mortgages: Harborside-Plaza I").

In connection with the issuance of the Senior Unsecured Notes, the Operating
Partnership entered into and settled forward treasury rate lock agreements in
March 1999. These agreements were settled at a cost of approximately $517, which
is being amortized to interest expense over the terms of the respective
tranches.

                                       21
<PAGE>

The Operating Partnership is exposed to credit loss in the event of
non-performance by the other parties to the interest rate contracts. However,
the Operating Partnership does not anticipate non-performance by any of the
counterparties. The Operating Partnership is also exposed to market risk from
the movement in interest rates pertaining to the forward treasury rate lock
agreement.

SCHEDULED PRINCIPAL PAYMENTS
Scheduled principal payments and related weighted average annual interest rates
for the Senior Unsecured Notes, revolving credit facilities and mortgages and
loans payable as of June 30, 1999 are as follows:

<TABLE>
<CAPTION>
                                                                                                 WEIGHTED AVG.
                                           SCHEDULED          PRINCIPAL                        INTEREST RATE OF
YEAR                                     AMORTIZATION        MATURITIES         TOTAL        FUTURE REPAYMENTS (A)
----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>               <C>            <C>                       <C>
July through December 1999                $   1,503         $     8,000    $     9,503               6.26%
2000                                          3,336               5,419          8,755               6.77%
2001                                          3,583             152,811        156,394               6.01%
2002                                          3,823               7,814         11,637               7.09%
2003                                          4,180             206,971        211,151               7.31%
Thereafter                                    4,721           1,092,824      1,097,545               7.19%
----------------------------------------------------------------------------------------------------------------------
Totals/Weighted Average                   $  21,146         $ 1,473,839    $ 1,494,985               7.08%
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(a)  Assumes LIBOR rate at June 30, 1999 of 5.05 percent in calculating
     revolving credit facility and other variable rate debt interest rates.

CASH PAID FOR INTEREST & INTEREST CAPITALIZED
Cash paid for interest for the six months ended June 30, 1999 and 1998, was
$38,216 and $61,440, respectively. Interest capitalized by the Operating
Partnership for the six months ended June 30, 1999 and 1998 was $3,019 and
$1,293, respectively.

SUMMARY OF INDEBTEDNESS
As of June 30, 1999, the Operating Partnership's total indebtedness of
$1,494,985, (weighted average interest rate of 7.08 percent) was comprised of
$228,803 of credit facility borrowings and other variable rate mortgage debt
(average rate of 5.84 percent), fixed rate debt of $1,259,824 (average rate of
7.31 percent), and a Contingent Obligation of $6,358.

10.    PARTNERS' CAPITAL

Partners' capital in the accompanying financial statements of the Operating
Partnership, prior to August 21, 1998, relates to common units held by the
Corporation in the Operating Partnership, in addition to warrants to purchase
common units ("Unit Warrants") in the Operating Partnership issued in connection
with the Operating Partnership's December 1997 acquisition of 54 office
properties ("Mack Properties") from the Mack Company and Patriot American Office
Group ("Mack Transaction"). Subsequent to August 21, 1998, partners' capital
also includes common units held by the limited partners and preferred units
("Preferred Units") held by the preferred unitholders of the Operating
Partnership.

Net income allocated to the preferred unitholders and limited partners reflects
their pro-rata share of net income and distributions subsequent to August 21,
1998. Net income and distributions for the period prior to August 21, 1998 is
included in the changes in redeemable partnership units (see Note 11).

COMMON STOCK
On February 25, 1998, the Corporation completed an underwritten public offer and
sale of 2,500,000 shares of its common stock and used the net proceeds, which
totaled approximately $92,194 (after offering costs) to pay down a portion of
the outstanding borrowings under the Operating Partnership's credit facilities
and fund the acquisition of 10 Mountainview Road (see Note 3).

On March 18, 1998, in connection with the acquisition of Prudential Business
Campus, the Corporation completed an offer and sale of 2,705,628 shares of its
common stock using the net proceeds of approximately $99,899 (after offering
costs) in the funding of such acquisition (see Note 3).


                                       22
<PAGE>

On March 27, 1998, the Corporation completed an underwritten public offer and
sale of 650,407 shares of its common stock and used the net proceeds, which
totaled approximately $23,690 (after offering costs) to pay down a portion of
the outstanding borrowings under the Operating Partnership's credit facilities.

On April 29, 1998, the Corporation completed an underwritten offer and sale of
994,228 shares of its common stock and used the net proceeds, which totaled
approximately $34,570 (after offering costs), primarily to pay down a portion of
the outstanding borrowings under the Operating Partnership's credit facilities.

On May 29, 1998, the Corporation completed an underwritten offer and sale of
984,615 shares of its common stock and used the net proceeds, which totaled
approximately $34,100 (after offering costs), primarily to pay down a portion of
the outstanding borrowings under the Operating Partnership's credit facilities.

On December 31, 1998, the Corporation completed an offer and sale of 132,710
shares of its common stock, using the net proceeds of approximately $3,940 for
general corporate purposes.

The proceeds of the above offerings were contributed by the Corporation to the
Operating Partnership in exchange for units.

On August 6, 1998, the Board of Directors of the Corporation authorized a share
repurchase program ("Repurchase Program") under which the Corporation was
permitted to purchase up to $100,000 of the Corporation's outstanding common
stock. Purchases could be made from time to time in open market transactions at
prevailing prices or through privately negotiated transactions.

For the year ended December 31, 1998, the Corporation purchased, for
constructive retirement, 854,700 shares of its outstanding common stock for an
aggregate cost of approximately $25,058. Concurrent with these purchases, the
Corporation sold to the Operating Partnership 854,700 common units for
approximately $25,058.

For the six months ended June 30, 1999, the Corporation purchased, for
constructive retirement, 26,000 shares of its outstanding common stock for an
aggregate cost of approximately $713. Concurrent with these purchases, the
Corporation sold to the Operating Partnership 26,000 common units for
approximately $713.

DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Corporation filed a registration statement with the SEC for the
Corporation's dividend reinvestment and stock purchase plan ("Plan") which was
declared effective in February 1999. The Plan commenced on March 1, 1999.

During the six months ended June 30, 1999, 320 shares were issued and proceeds
of approximately $10 were received from stock purchases and/or dividend
reinvestments under the Plan.

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

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


                                       23

<PAGE>

STOCK OPTION PLANS
In 1994, and as subsequently amended, the Corporation established the Mack-Cali
Employee Stock Option Plan ("Employee Plan") and the Mack-Cali Director Stock
Option Plan ("Director Plan") under which a total of 5,380,188 shares (subject
to adjustment) of the Corporation's common stock have been reserved for issuance
(4,980,188 shares under the Employee Plan and 400,000 shares under the Director
Plan). Stock options granted under the Employee Plan in 1994 and 1995 become
exercisable over a three-year period and those options granted under the
Employee Plan in 1996, 1997 and 1998 become exercisable over a five-year period.
All stock options granted under the Director Plan become exercisable in one
year. All options were granted at the fair market value at the dates of grant
and have terms of ten years. As of June 30, 1999 and December 31, 1998, the
stock options outstanding had a weighted average remaining contractual life of
approximately 7.6 and 8.5 years, respectively.

Information regarding the Corporation's stock option plans is summarized below:
<TABLE>
<CAPTION>
                                                                                            Weighted
                                                                    Shares                   Average
                                                                    Under                   Exercise
                                                                    Options                   Price
----------------------------------------------------------------------------------------------------------------
<S>                                                            <C>                        <C>
         Outstanding at January 1, 1998                           3,287,290                  $31.47
              Granted                                             1,048,620                  $35.90
              Exercised                                           (267,660)                  $20.47
              Lapsed or canceled                                  (128,268)                  $36.61
----------------------------------------------------------------------------------------------------------------
         Outstanding at December 31, 1998                         3,939,982                  $33.22
              Granted                                                37,000                  $31.63
              Exercised                                            (41,063)                  $22.87
              Lapsed or canceled                                  (289,434)                  $37.38
----------------------------------------------------------------------------------------------------------------
         Outstanding at June 30, 1999                             3,646,485                  $32.99
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
         Options exercisable at December 31, 1998                 1,334,137                  $27.84
         Options exercisable at June 30, 1999                     1,904,177                  $30.49
----------------------------------------------------------------------------------------------------------------
         Available for grant at December 31, 1998                   709,223
         Available for grant at June 30, 1999                       961,657
----------------------------------------------------------------------------------------------------------------
</TABLE>

STOCK WARRANTS
The Corporation has outstanding a total of 400,000 warrants to purchase an equal
number of shares of common stock ("Stock Warrants") at $33 per share (the market
price at date of grant). Such warrants generally vest equally over a three-year
period through January 31, 2000 and expire on January 31, 2007.

The Corporation also has outstanding a total of 514,976 Stock Warrants to
purchase an equal number of shares of common stock at $38.75 per share (the
market price at date of grant). Such warrants vest equally over a five-year
period through December 12, 2002 and expire on December 12, 2007.

As of June 30, 1999 and December 31, 1998, there were 914,976 Stock Warrants
outstanding. As of June 30, 1999 and December 31, 1998, there were 585,989 and
565,991 Stock Warrants exercisable, respectively. No Stock Warrants have been
exercised or canceled.

EXECUTIVE STOCK COMPENSATION
Effective July 1, 1999, the Corporation entered into amended and restated
employment contracts with six of its key executive officers which provided for,
among other things, compensation in the form of stock awards ("Restricted Stock
Awards") and associated tax obligation payments. In connection with the
Restricted Stock Awards, the executive officers are to receive up to a total of
193,593 shares of the Corporation's common stock vesting over a five-year period
contingent upon the Corporation meeting certain performance and/or stock
appreciation objectives.

                                       24
<PAGE>

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

During the six months ended June 30, 1999, 1,309 deferred stock units were
earned.

EARNINGS PER UNIT
FASB No. 128 requires a dual presentation of basic and diluted EPU on the face
of the income statement for all companies with complex capital structures even
where the effect of such dilution is not material. Basic EPU excludes dilution
and is computed by dividing net income available to common unitholders by the
weighted average number of units outstanding for the period. Diluted EPU
reflects the potential dilution that could occur if securities or other
contracts to issue common units were exercised or converted into common units.

The following information presents the Operating Partnership's results for the
three and six month periods ended June 30, 1999 and 1998 in accordance with FASB
No. 128.
<TABLE>
<CAPTION>
                                                         Three Months Ended June 30,
                                                 1999                                    1998
                                      Basic EPU        Diluted EPU           Basic EPU         Diluted EPU
-----------------------------------------------------------------------------------------------------------------
<S>                                   <C>               <C>                  <C>                <C>
Net income                            $21,452           $ 21,452             $ 31,515           $ 31,515
Weighted average units                 67,173             67,486               64,145             64,626
-----------------------------------------------------------------------------------------------------------------
Per Unit                              $  0.32           $   0.32             $   0.49           $   0.49
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
<CAPTION>

                                                         Six Months Ended June 30,
                                                 1999                                    1998
                                      Basic EPU        Diluted EPU           Basic EPU         Diluted EPU
-----------------------------------------------------------------------------------------------------------------
<S>                                   <C>               <C>                  <C>                <C>
Net income                            $58,396           $ 58,396             $ 61,454           $ 61,454
Weighted average units                 67,092             67,385               61,055             61,671
-----------------------------------------------------------------------------------------------------------------
Per Unit                              $  0.87           $   0.87             $   1.01           $   1.00
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
</TABLE>

The following schedule reconciles the units used in the basic EPU calculation to
the units used in the diluted EPU calculation.
<TABLE>
<CAPTION>
                                             Three Months                                Six Months
                                            Ended June 30,                             Ended June 30,
                                           1999               1998                1999                1998
-----------------------------------------------------------------------------------------------------------------
<S>                                      <C>                <C>                 <C>                 <C>
Basic EPU Units:                         67,173             64,145              67,092              61,055
    Add:   Stock options                    313                444                 293                 529
           Stock Warrants                    --                 37                  --                  87
-----------------------------------------------------------------------------------------------------------------
Diluted EPU Units:                       67,486             64,626              67,385              61,671
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
</TABLE>

Preferred Units and Contingent Units outstanding in 1999 and 1998 were not
included in the computation of diluted EPU as such units were anti-dilutive
during the period.

Pursuant to the Repurchase Program, during 1998, the Corporation purchased for
constructive retirement, 854,700 shares of its outstanding common stock for
approximately $25,058. Additionally, during the six months ended June 30, 1999,
the Corporation purchased for constructive retirement, 26,000 shares of its
outstanding common stock for approximately $713.



                                       25
<PAGE>


11.    REDEEMABLE PARTNERSHIP UNITS

The outstanding preferred and common units, excluding those common units held by
the Corporation, have been classified as redeemable partnership units outside of
permanent partners' capital prior to August 21, 1998. These units were initially
recorded at fair value and subsequently adjusted based on the fair value at the
balance sheet date as measured by the closing price of the Corporation's common
stock on that date multiplied by the total number of units outstanding.

Effective August 21, 1998, pursuant to an amendment to the Operating Partnership
agreement, in which the Operating Partnership obtained the control over the
redemption rights of the units, these units were reclassified as a component of
permanent partners' capital. The fair value of the reclassified units was
measured by the closing price of the Corporation's common stock on that date
multiplied by the total number of units outstanding.

PREFERRED UNITS
In connection with the Mack Transaction in December 1997, the Operating
Partnership issued 15,237 Series A Preferred Units and 215,325 Series B
Preferred Units, with an aggregate value of $236,491. The Preferred Units have a
stated value of $1,000 per unit and are preferred as to assets over any class of
common units or other class of preferred units of the Operating Partnership,
based on circumstances per the applicable unit certificates.

The quarterly distribution on each Preferred Unit (representing 6.75 percent of
the Preferred Unit stated value of $1,000 on an annualized basis) is an amount
equal to the greater of (i) $16.875 or (ii) the quarterly distribution
attributable to a Preferred Unit determined as if such unit had been converted
into common units, subject to adjustment for customary anti-dilution rights.
Each of the Series A Preferred Units may be converted at any time into common
units at a conversion price of $34.65 per unit, and, after the one year
anniversary of the date of the Series A Preferred Units' initial issuance,
common units received pursuant to such conversion may be redeemed into common
stock. Each of the Series B Preferred Units may be converted at any time into
common units at a conversion price of $34.65 per unit, and, after the three year
anniversary of the date of the Series B Preferred Units' initial issuance,
common units received pursuant to such conversion may be redeemed into common
stock. Each of the common units are redeemable for an equal number of shares of
common stock.

During 1998, the Operating Partnership issued 19,694 additional Preferred Units
(11,895 of Series A and 7,799 of Series B), convertible into 568,369 common
units and valued at approximately $20,200, in connection with the achievement of
certain performance goals at the Mack Properties in redemption of an equivalent
number of contingent Preferred Units.

During the six months ended June 30, 1999, 20,952 Series A Preferred Units were
converted into 604,675 common units.

As of June 30, 1999, there were 229,304 Preferred Units outstanding (convertible
into 6,617,721 common units).

COMMON UNITS
Certain individuals and entities own common units in the Operating Partnership.
A common unit and a share of common stock of the General Partner have
substantially the same economic characteristics in as much as they effectively
share equally in the net income or loss of the Operating Partnership.

Common units are redeemable by the common unitholders (other than the General
Partner) at their option, subject to certain restrictions, on the basis of one
common unit for either one share of common stock or cash equal to the fair
market value of a share at the time of the redemption. The General Partner has
the option to deliver shares of common stock in exchange for all or any portion
of the cash requested. When a unitholder redeems a common unit for common stock
of the Corporation, limited partner's capital is reduced and the General
Partner's capital is increased. Effective August 21, 1998, the partnership
agreement was amended to vest this right in the Operating Partnership, rather
than in the General Partnership (see Note 2). Common units held by the General
Partner are not redeemable.

During 1998, the Operating Partnership redeemed a total of 82,880 common units
in exchange for an aggregate of $3,163 in cash. Additionally, the Operating
Partnership redeemed an aggregate of 29,300 common units for an equivalent
number of shares of common stock in the General Partner.

On March 26, 1998, in connection with the Pacifica portfolio-phase I
acquisition, the Operating Partnership issued 100,175 common units, valued at
approximately $3,779.

                                       26
<PAGE>

On April 30, 1998, in connection with the acquisition of a 49.9 percent interest
in the G&G Martco joint venture (see Note 4), the Operating Partnership issued
218,105 common units, valued at approximately $8,334.

On June 8, 1998, in connection with the Pacifica portfolio-phase II acquisition,
the Operating Partnership issued 585,263 common units, valued at approximately
$20,753.

On July 20, 1998, in connection with the expansion of one of the Mack
Properties, the Operating Partnership issued 52,245 common units, valued at
approximately $1,632.

On September 10, 1998, in connection with the acquisition of 40 Richards Avenue,
the Operating Partnership issued 414,114 common units, valued at approximately
$12,615.

During 1998, the Operating Partnership also issued 1,731,386 common units,
valued at approximately $58,936, in connection with the achievement of certain
performance goals at the Mack Properties in redemption of an equivalent number
of contingent common units.

On June 4, 1999, in connection with the acquisition of a 0.1 percent interest in
G&G Martco joint venture (see Note 4), the Operating Partnership issued 437
common units, valued at approximately $17.

During the six months ended June 30, 1999, the Operating Partnership redeemed an
aggregate of 1,634,164 common units for an equivalent number of shares of common
stock in the Corporation.

During the six months ended June 30, 1999, the Operating Partnership also issued
242,157 common units, valued at approximately $7,241, in connection with the
achievement of certain performance goals at the Mack Properties in redemption of
an equivalent number of contingent common units.

As of June 30, 1999, there were 8,299,690 common units outstanding.

CONTINGENT COMMON & PREFERRED UNITS
In conjunction with the Mack Transaction in December 1997, 2,006,432 contingent
common units, 11,895 Series A contingent Preferred Units and 7,799 Series B
contingent Preferred Units were issued as contingent non-participating units
("Contingent Units"). Such Contingent Units have no voting, distribution or
other rights until such time as they are redeemed into common units, Series A
Preferred Units, and Series B Preferred Units, respectively. Redemption of such
Contingent Units shall occur upon the achievement of certain performance goals
relating to certain of the Mack Properties, specifically the achievement of
certain leasing activity. When Contingent Units are redeemed for common and
Preferred Units, an adjustment to the purchase price of certain of the Mack
Properties is recorded, based on the value of the units issued.

On account of certain of the performance goals at the Mack Properties having
been achieved during 1998, the Operating Partnership redeemed 1,731,386
contingent common units and 19,694 contingent Preferred Units and issued an
equivalent number of common and Preferred Units, as indicated above.

On account of certain of the performance goals at the Mack Properties having
been achieved during the six months ended June 30, 1999, the Company redeemed
242,157 contingent common units and issued an equivalent number of common units,
as indicated above. There were no contingent Preferred Units outstanding and
32,889 contingent common units outstanding as of June 30, 1999.

UNIT WARRANTS
The Operating Partnership has 2,000,000 Unit Warrants outstanding. The Unit
Warrants are exercisable at $37.80 per common unit and expire on December 11,
2002.




                                       27
<PAGE>


CHANGES IN REDEEMABLE PARTNERSHIP UNITS
The following table sets forth the changes in redeemable partnership units for
the year ended December 31, 1998:
<TABLE>
<CAPTION>

                                                                    Limited
                                                         Preferred  Partner     Preferred     Limited
                                                           Units     Units     Unitholders   Partners       Total
------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>      <C>        <C>          <C>           <C>
Balance at January 1, 1998                                  231      6,097   $  272,815   $  249,997    $  522,812
   Net income                                                --         --       10,267        9,260        19,527
   Distributions                                             --         --       (7,896)      (6,827)      (14,723)
   Issuance of units in connection with acquisitions         --      1,735           --       64,628        64,628
   Redemption of units for shares of common stock            --        (22)          --         (848)         (848)
   Redemption of units                                       --        (83)          --       (3,163)       (3,163)
   Issuance of Preferred Units                               17         --       17,943           --        17,943
   Adjustment to reflect preferred unitholders'
     and limited partners' capital at redemption value       --         --      (69,686)     (46,172)     (115,858)
   Reclassification of redeemable partnership units
     as permanent partners' capital                        (248)    (7,727)    (223,443)    (266,875)     (490,318)
------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998                                 --         --   $       --   $       --    $       --
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
</TABLE>

12.    EMPLOYEE BENEFIT PLAN

All employees of the Corporation who meet certain minimum age and period of
service requirements are eligible to participate in a 401(k) defined
contribution plan (the "401(k) Plan"). The 401(k) Plan allows eligible employees
to defer up to 15 percent of their annual compensation. The amounts contributed
by employees are immediately vested and non-forfeitable. The Corporation, at
management's discretion, may match employee contributions, although no employer
contributions have been made to date.


13.    COMMITMENTS AND CONTINGENCIES

TAX ABATEMENT AGREEMENTS
   GROVE STREET PROPERTY
   Pursuant to an agreement with the City of Jersey City, New Jersey, as
   amended, expiring in 2004, one of the Property Partnerships is required to
   make payments in lieu of property taxes ("PILOT") on its property at 95
   Christopher Columbus Drive, Jersey City, Hudson County, New Jersey. Such
   PILOT, as defined, is $1,267 per annum through May 31, 1999 and $1,584 per
   annum through May 31, 2004.

   HARBORSIDE FINANCIAL CENTER PROPERTY
   Pursuant to an agreement with the City of Jersey City, New Jersey obtained by
   the former owner of the Harborside property in 1988 and assumed by one of the
   Property Partnerships as part of the acquisition of the property in November
   1996, the Property Partnerships are required to make PILOT payments on its
   Harborside property. The agreement, which commenced in 1990, is for a term of
   15 years. Such PILOT is equal to two percent of Total Project Costs, as
   defined, in year one and increases by $75 per annum through year fifteen.
   Total Project Costs, as defined, are $145,644. Such PILOT totaled $1,302 and
   $1,239 for the six months ended June 30, 1999 and 1998, respectively.

GROUND LEASE AGREEMENTS
Future minimum rental payments under the terms of all non-cancelable ground
leases, under which the Operating Partnership or Property Partnerships are the
lessees as of June 30, 1999, are as follows:
<TABLE>
<CAPTION>
YEAR                                                                                                      AMOUNT
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                <C>
July 1, 1999 to December 31, 1999                                                                      $     213
2000                                                                                                         425
2001                                                                                                         427
2002                                                                                                         427
2003                                                                                                         427
Thereafter                                                                                                21,934
------------------------------------------------------------------------------------------------------------------------

Total                                                                                                    $23,853
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
</TABLE>



                                       28
<PAGE>

OTHER
On April 19, 1999, the Corporation announced the following changes in the
membership of its Board of Directors and the identities, titles and
responsibilities of its executive officers: (i) Thomas A. Rizk resigned from the
Board of Directors, the Executive Committee of the Board of Directors, his
position as Chief Executive Officer and as an employee of the Corporation; (ii)
Mitchell E. Hersh was appointed Chief Executive Officer of the Corporation
simultaneous with his resignation from his positions as President and Chief
Operating Officer of the Corporation; (iii) Timothy M. Jones was appointed
President of the Corporation simultaneous with his resignation from his
positions as Executive Vice President and Chief Investment Officer of the
Corporation; and (iv) Brant Cali was appointed to the Board of Directors of the
Corporation to fill the remainder of Thomas A. Risk's term as a Class III
Director and was appointed Chief Operating Officer of the Corporation, also
remaining as an Executive Vice President and Assistant Secretary of the
Corporation.

Pursuant to the terms of Mr. Rizk's employment agreement entered into with the
Corporation in December 1997 and an agreement entered into simultaneous with his
resigning from the Corporation, Mr. Rizk received a payment of approximately
$14,490 in April 1999 and will receive $500 annually over the next three years.
All costs associated with Mr. Rizk's resignation are included in non-recurring
charges for the three and six month periods ended June 30, 1999.

The Operating Partnership is a defendant in certain litigation arising in the
normal course of business activities. Management does not believe that the
resolution of these matters will have a materially adverse effect upon the
Operating Partnership and the Property Partnerships.


14.      TENANT LEASES

The Properties are leased to tenants under operating leases with various
expiration dates through 2016. Substantially all of the leases provide for
annual base rents plus recoveries and escalation charges based upon the tenant's
proportionate share of and/or increases in real estate taxes and certain
operating costs, as defined, and the pass through of charges for electrical
usage.


15.      SEGMENT REPORTING

The Operating Partnership operates in one business segment - real estate. The
Operating Partnership provides leasing, management, acquisition, development,
construction and tenant-related services for its portfolio. The Operating
Partnership does not have any foreign operations. The accounting policies of the
segment are the same as those described in Note 2, excluding straight-line rent
adjustments and depreciation and amortization.

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

Selected results of operations for the three and six month periods ended June
30, 1999 and 1998 and selected asset information as of June 30, 1999 and
December 31, 1998 regarding the Operating Partnership's operating segment are as
follows:



                                       29
<PAGE>

<TABLE>
<CAPTION>
                                                          Total            Corporate &             Total
                                                         Segment            Other (e)      Operating Partnership
------------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                   <C>                <C>
TOTAL CONTRACT REVENUES (A):
Three months ended:
     June 30, 1999                                   $    132,575          $     567          $   133,142  (f)
     June 30, 1998                                        116,878              2,021              118,899  (g)
Six months ended:
     June 30, 1999                                   $    264,344          $     142          $   264,486  (h)
     June 30, 1998                                        218,479              3,040              221,519  (i)

TOTAL OPERATING AND INTEREST EXPENSES (B):
Three months ended:
     June 30, 1999                                   $     28,110          $  61,079          $    89,189
     June 30, 1998                                         38,750             26,028               64,778
Six months ended:
     June 30, 1999                                   $     71,265          $  90,031          $   161,296
     June 30, 1998                                         71,696             48,824              120,520

NET OPERATING INCOME (C):
Three months ended:
     June 30, 1999                                   $    104,465          $ (60,512)         $    43,953  (f)
     June 30, 1998                                         78,128            (24,007)              54,121  (g)
Six months ended:
     June 30, 1999                                   $    193,079          $ (89,889)         $   103,190  (h)
     June 30, 1998                                        146,783            (45,784)             100,999  (i)

TOTAL ASSETS:
     June 30, 1999                                   $  3,512,260          $  26,338          $ 3,538,598
     December 31, 1998                                  3,430,865             21,329            3,452,194

TOTAL LONG-LIVED ASSETS (D):
     June 30, 1999                                   $  3,457,321          $   4,196          $ 3,461,517
     December 31, 1998                                  3,393,313              4,098            3,397,411
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a)  Total contract revenues represents all revenues during the period
     (including the Operating Partnership's share of net income from
     unconsolidated joint ventures), excluding adjustments for straight-lining
     of rents and the Operating Partnership's share of straight-line rent
     adjustments from unconsolidated joint ventures. All interest income is
     excluded from the segment amounts and is classified in Corporate and Other
     for all periods.
(b)  Total operating and interest expenses represents the sum of real estate
     taxes, utilities, operating services, general and administrative and
     interest expense. All interest expense (including for property-level
     mortgages) is excluded from the segment amounts and is classified in
     Corporate and Other for all periods.
(c)  Net operating income represents total contract revenues [as defined in Note
     (a)] less total operating and interest expenses [as defined in Note (b)]
     for the period.
(d)  Long-lived assets are comprised of total rental property, unbilled rents
     receivable and investments in unconsolidated joint ventures.
(e)  Corporate & Other represents all corporate-level items (including interest
     income, interest expense and non-property general and administrative
     expense) as well as intercompany eliminations necessary to reconcile to
     consolidated Operating Partnership totals.
(f)  Excludes $3,859 of adjustments for straight lining of rents and $(26) for
     the Operating Partnership's share of straight-line rent adjustments from
     unconsolidated joint ventures.
(g)  Excludes $3,136 of adjustments for straight lining of rents and $6 for the
     Operating Partnership's share of straight-line rent adjustments from
     unconsolidated joint ventures.
(h)  Excludes $7,422 of adjustments for straight lining of rents and $(44) for
     the Operating Partnership's share of straight-line rent adjustments from
     unconsolidated joint ventures.
(i)  Excludes $6,339 of adjustments for straight lining of rents and $6 for the
     Operating Partnership's share of straight-line rent adjustments from
     unconsolidated joint ventures.

                                       30
<PAGE>


16.      IMPACT OF RECENTLY-ISSUED ACCOUNTING STANDARDS

In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 98-5,
"Reporting on the Cost of Start-Up Activities" ("SOP 98-5"), which is effective
for fiscal years beginning after December 15, 1998. SOP 98-5 requires costs of
start-up and organizational activities be expensed as incurred. The adoption of
SOP 98-5 did not have a material effect on the Operating Partnership's financial
statements.

In June 1998, the FASB issued Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities ("FASB No.
133"). FASB No. 133 is effective for all fiscal quarters of all fiscal years
beginning after June 15, 1999. In June 1999, the FASB delayed the implementation
date of FASB No. 133 by one year (January 1, 2001 for the Operating
Partnership). FASB No. 133 requires that all derivative instruments be recorded
on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. Management of the
Operating Partnership anticipates that, due to its limited use of derivative
instruments, the adoption of FASB No. 133 will not have a significant effect on
the Operating Partnership's results of operations or its financial position.


17.    PRO FORMA FINANCIAL INFORMATION

The following pro forma financial information for the six months ended June 30,
1999 and 1998 are presented as if all acquisitions and common stock offerings
completed during the six months ended June 30, 1999 and the year ended December
31, 1998 had occurred on January 1, 1998. In management's opinion, all
adjustments necessary to reflect the effects of these transactions have been
made.

This pro forma financial information is not necessarily indicative of what the
actual results of operations of the Operating Partnership would have been
assuming such transactions had been completed as of January 1, 1998, nor do they
represent the results of operations of future periods.
<TABLE>
<CAPTION>
                                                                           Six Months
                                                                         Ended June 30,
                                                                    1999              1998
-------------------------------------------------------------------------------------------------------
<S>                                                             <C>                 <C>
Total revenues                                                  $  271,864          $  252,675
Operating and other expenses                                        81,615              74,327
General and administrative                                          13,904              13,746
Depreciation and amortization                                       44,434              39,211
Interest expense                                                    49,319              50,090
Non-recurring charges                                               16,458                  --
-------------------------------------------------------------------------------------------------------
Income before preferred unit distributions                          66,134              75,301
Preferred units distributions                                      (7,738)             (7,896)
-------------------------------------------------------------------------------------------------------

Income available to common unitholders                          $   58,396          $   67,405
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
Basic earnings per common unit                                  $     0.87          $     1.02
Diluted earnings per common unit                                $     0.87          $     1.01
-------------------------------------------------------------------------------------------------------
Basic weighted average units outstanding                            67,092              65,825
Diluted weighted average units outstanding                          67,385              66,441
-------------------------------------------------------------------------------------------------------
</TABLE>




                                       31
<PAGE>

                     MACK-CALI REALTY, L.P. AND SUBSIDIARIES


                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

The following comparisons for the three and six month periods ended June 30,
1999 ("1999"), as compared to the three and six month periods ended June 30,
1998 ("1998") make reference to the following: (i) the effect of the "Same-Store
Properties," which represents all in-service properties owned by the Operating
Partnership at March 31, 1998 (for the three-month period comparisons), and
which represents all in-service properties owned by the Operating Partnership at
December 31, 1997 (for the six-month period comparisons) and (ii) the effect of
the "Acquired Properties," which represents all properties acquired or placed in
service by the Operating Partnership from April 1, 1998 through June 30, 1999
(for the three-month period comparisons), and which represents all properties
acquired or placed in service by the Operating Partnership from January 1, 1998
through June 30, 1999 (for the six-month period comparisons).
<TABLE>
<CAPTION>
                             THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998

                                                      Quarter Ended
                                                        June 30,                  Dollar             Percent
(IN THOUSANDS)                                   1999              1998           Change             Change
----------------------------------------------------------------------------------------------------------------
REVENUE FROM RENTAL OPERATIONS:
<S>                                          <C>               <C>               <C>                  <C>
Base rents                                   $116,499          $105,861          $10,638              10.0%
Escalations and recoveries from tenants        16,366            12,358            4,008              32.4
Parking and other                               3,061             2,836              225               7.9
----------------------------------------------------------------------------------------------------------------
   Sub-total                                  135,926           121,055           14,871              12.3

Interest income                                   215               916            (701)             (76.5)
Equity in earnings of
   unconsolidated joint ventures                  834                70              764           1,091.4
----------------------------------------------------------------------------------------------------------------
   Total revenues                             136,975           122,041           14,934              12.2
----------------------------------------------------------------------------------------------------------------

PROPERTY EXPENSES:
Real estate taxes                              14,208            11,854            2,354              19.9
Utilities                                       9,829             9,115              714               7.8
Operating services                             17,227            15,629            1,598              10.2
----------------------------------------------------------------------------------------------------------------
   Sub-total                                   41,264            36,598            4,666              12.7

General and administrative                      5,770             6,394            (624)              (9.8)
Depreciation and amortization                  22,465            19,093            3,372              17.7
Interest expense                               25,697            21,786            3,911              18.0
Non-recurring charges                          16,458                --           16,458              --
----------------------------------------------------------------------------------------------------------------
   Total expenses                             111,654            83,871           27,783              33.1
----------------------------------------------------------------------------------------------------------------

Income before extraordinary item               25,321            38,170         (12,849)             (33.7)
Extraordinary item - loss on
   early retirement of debt                        --           (2,670)            2,670             100.0
----------------------------------------------------------------------------------------------------------------
Net income                                     25,321            35,500         (10,179)             (28.7)
Preferred unit distribution                   (3,869)           (3,985)              116              (2.9)
----------------------------------------------------------------------------------------------------------------

Net income available to
   common unitholders                       $  21,452         $  31,515        $(10,063)             (31.9)%
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
</TABLE>

                                       32
<PAGE>


The following is a summary of the changes in revenue from rental operations and
property expenses divided into Acquired Properties and Same-Store Properties (in
thousands).
<TABLE>
<CAPTION>
                                                     Total                  Acquired               Same-Store
                                             Operating Partnership         Properties              Properties
                                             ---------------------         ----------              ----------
                                               Dollar     Percent      Dollar     Percent      Dollar       Percent
                                               Change      Change      Change      Change      Change        Change
------------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>           <C>        <C>           <C>       <C>           <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents                                    $10,638       10.0%      $7,529        7.1%      $3,109        2.9%
Escalations and recoveries from tenants         4,008       32.4          994        8.0        3,014       24.4
Parking and other                                 225        7.9           96        3.4          129        4.5
------------------------------------------------------------------------------------------------------------------------------------
   Total                                      $14,871       12.3%      $8,619        7.1%      $6,252        5.2%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------

PROPERTY EXPENSES:
Real estate taxes                              $2,354       19.9%      $  959        8.1%      $1,395       11.8%
Utilities                                         714        7.8          645        7.0           69        0.8
Operating services                              1,598       10.2        1,255        8.0          343        2.2
------------------------------------------------------------------------------------------------------------------------------------
   Total                                       $4,666       12.7%      $2,859        7.8%      $1,807        4.9%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------

OTHER DATA:
Number of wholly-owned properties                 249                      22                     227
Square feet (in thousands)                     27,152                   2,161                  24,991

</TABLE>

Base rents for the Same-Store Properties increased $3.1 million, or 2.9 percent,
for 1999 as compared to 1998, due primarily to occupancy and rental rate
increases in 1999. Escalations and recoveries from tenants for the Same-Store
Properties increased $3.0 million, or 24.4 percent, for 1999 over 1998, due to
the recovery of an increased amount of total property expenses, as well as
additional settle-up billings in 1999. Parking and other income for the
Same-Store Properties increased $0.1 million, or 4.5 percent, which is primarily
attributable to lease termination fees received in 1999.

Real estate taxes on the Same-Store Properties increased $1.4 million, or 11.8
percent, for 1999 as compared to 1998, due primarily to property tax rate
increases in certain municipalities in 1999. Utilities for the Same-Store
Properties increased $0.1 million, or 0.8 percent, for 1999 as compared to 1998,
due primarily to increased electric rates and usage in 1999. Operating services
for the Same-Store Properties increased $0.3 million, or 2.2 percent, due
primarily to additional maintenance costs incurred.

Equity in earnings of unconsolidated joint ventures increased $0.8 million in
1999 as compared to 1998. This is due to additional joint ventures being entered
into by the Operating Partnership (see Note 4 to the Financial Statements).

Interest income decreased by approximately $0.7 million, or 76.5 percent, for
1999 as compared to 1998. This decrease was due primarily to repayment by a
borrower of a mortgage note receivable in 1998 with no interest income from
mortgage note receivables in 1999.

General and administrative decreased by $0.6 million, or 9.8 percent for 1999 as
compared to 1998. This decrease is due primarily to decreased payroll and
related costs in 1999.

Depreciation and amortization increased by $3.4 million, or 17.7 percent, for
1999 over 1998. Of this increase, $1.7 million, or 8.8 percent, is attributable
to the Acquired Properties, and $1.7 million, or 8.9 percent, is due to the
Same-Store Properties.

Interest expense increased $3.9 million, or 18.0 percent, for 1999 as compared
to 1998. This increase is due primarily to the replacement in 1999 of short-term
credit facility borrowings with long-term fixed rate unsecured debt and net
additional drawings from the Operating Partnership's revolving credit facilities
generally as a result of Operating Partnership acquisitions in 1998. These
increases were partially offset by a reduction in LIBOR in 1999, the reduction
in spread over LIBOR due to the 1998 Unsecured Facility signed in April 1998 and
the achievement by the Operating Partnership of investment grade credit ratings
in November 1998.



                                       33
<PAGE>


Non-recurring charges of $16.5 million were incurred in 1999, as a result of the
resignation of Thomas A. Rizk (see Note 12 to the Financial Statements).

Net income available to common unitholders decreased to $21.5 million in 1999
from $31.5 million in 1998. The decrease of $10.0 million is due to the factors
discussed above, partially offset by an extraordinary item of $2.7 million in
1998. Additionally, there were preferred dividends of $3.9 million in 1999 and
$4.0 million in 1998.

<TABLE>
<CAPTION>
                               SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998

                                                      Quarter Ended
                                                        June 30,                  Dollar             Percent
(IN THOUSANDS)                                   1999              1998           Change             Change
----------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>               <C>               <C>                     <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents                                  $  232,579        $  198,777        $  33,802               17.0%
Escalations and recoveries from tenants         31,226            22,715            8,511               37.5
Parking and other                                6,961             4,818            2,143               44.5
----------------------------------------------------------------------------------------------------------------------------
   Sub-total                                   270,766           226,310           44,456               19.6

Interest income                                    470             1,459            (989)              (67.8)
Equity in earnings of
   unconsolidated joint ventures                   628                95              533              561.1
----------------------------------------------------------------------------------------------------------------------------
   Total revenues                              271,864           227,864           44,000               19.3
----------------------------------------------------------------------------------------------------------------------------

PROPERTY EXPENSES:
Real estate taxes                               28,051            21,926            6,125               27.9
Utilities                                       19,421            17,417            2,004               11.5
Operating services                              34,143            28,321            5,822               20.6
----------------------------------------------------------------------------------------------------------------------------
   Sub-total                                    81,615            67,664           13,951               20.6

General and administrative                      13,904            12,591            1,313               10.4
Depreciation and amortization                   44,434            35,324            9,110               25.8
Interest expense                                49,319            40,265            9,054               22.5
Non-recurring charges                           16,458                --           16,458               --
----------------------------------------------------------------------------------------------------------------------------
   Total expenses                              205,730           155,844           49,886               32.0
----------------------------------------------------------------------------------------------------------------------------

Income before extraordinary item                66,134            72,020          (5,886)               (8.2)
Extraordinary item - loss on early
   retirement of debt                               --           (2,670)            2,670              100.0
----------------------------------------------------------------------------------------------------------------------------
Net income                                      66,134            69,350          (3,216)               (4.6)
Preferred unit distribution                    (7,738)           (7,896)              158               (2.0)
----------------------------------------------------------------------------------------------------------------------------

Net income available to
   common unitholders                       $   58,396        $   61,454        $ (3,058)               (5.0)%
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       34
<PAGE>


The following is a summary of the changes in revenue from rental operations and
property expenses divided into Acquired Properties and Same-Store Properties (in
thousands).
<TABLE>
<CAPTION>
                                                     Total                  Acquired               Same-Store
                                             Operating Partnership         Properties              Properties
                                             ---------------------         ----------              ----------
                                               Dollar     Percent      Dollar     Percent      Dollar       Percent
                                               Change      Change      Change      Change      Change        Change
------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>           <C>       <C>           <C>      <C>             <C>
REVENUE FROM RENTAL OPERATIONS:
Base rents                                    $33,802       17.0%     $26,271       13.2%     $ 7,531        3.8%
Escalations and recoveries from tenants         8,511       37.5        4,735       20.9        3,776       16.6
Parking and other                               2,143       44.5        1,430       29.7          713       14.8
------------------------------------------------------------------------------------------------------------------------
   Total                                      $44,456       19.6%     $32,436       14.3%     $12,020        5.3%
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------

PROPERTY EXPENSES:
Real estate taxes                             $ 6,125       27.9%     $ 4,206       19.2%     $ 1,919        8.7%
Utilities                                       2,004       11.5        2,200       12.6         (196)      (1.1)
Operating services                              5,822       20.6        5,004       17.7          818        2.9
------------------------------------------------------------------------------------------------------------------------
   Total                                      $13,951       20.6%     $11,410       16.9%      $2,541        3.7%
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------

OTHER DATA:
Number of wholly-owned properties                          249                      60                     189
Square feet (in thousands)                              27,152                   5,187                  21,965
</TABLE>

Base rents for the Same-Store Properties increased $7.5 million, or 3.8 percent,
for 1999 as compared to 1998, due primarily to occupancy and rental rate
increases in 1999. Escalations and recoveries from tenants for the Same-Store
Properties increased $3.8 million, or 16.6 percent, for 1999 over 1998, due to
the recovery of an increased amount of total property expenses, as well as
additional settle-up billings in 1999. Parking and other income for the
Same-Store Properties increased $0.7 million, or 14.8 percent, which is
primarily attributable to lease termination fees received in 1999.

Real estate taxes on the Same-Store Properties increased $1.9 million, or 8.7
percent, for 1999 as compared to 1998, due primarily to property tax rate
increases in certain municipalities in 1999. Utilities for the Same-Store
Properties decreased $0.2 million, or 1.1 percent, for 1999 as compared to 1998,
due primarily to decreased electric rates and usage in 1999. Operating services
for the Same-Store Properties increased $0.8 million, or 2.9 percent, due
primarily to increased snow removal costs incurred at the Same-Store Properties
in 1999.

Equity in earnings of unconsolidated joint ventures increased $0.5 million in
1999 as compared to 1998. This is due to additional joint ventures being entered
into by the Operating Partnership (see Note 4 to the Financial Statements).

Interest income decreased by approximately $1.0 million, or 67.8 percent, for
1999 as compared to 1998. This decrease was due primarily to repayment by a
borrower of a mortgage note receivable in 1998 with no interest income from
mortgage note receivables in 1999.

General and administrative increased by $1.3 million, or 10.4 percent for 1999
as compared to 1998. This increase is due primarily to an increase in payroll
and related costs and professional fees as a result of the Operating
Partnership's expansion in 1998.

Depreciation and amortization increased by $9.1 million, or 25.8 percent, for
1999 over 1998. Of this increase, $6.8 million, or 19.4 percent, is attributable
to the Acquired Properties, and $2.3 million, or 6.4 percent, is due to the
Same-Store Properties.

Interest expense increased $9.1 million, or 22.5 percent, for 1999 as compared
to 1998. This increase is due primarily to the replacement in 1999 of short-term
credit facility borrowings with long-term fixed rate unsecured debt and net
additional drawings from the Operating Partnership's revolving credit facilities
generally as a result of Operating Partnership acquisitions in 1998. These
increases were partially offset by a reduction in LIBOR in 1999, the reduction
in spread over LIBOR due to the 1998 Unsecured Facility signed in April 1998 and
the achievement by the Operating Partnership of investment grade credit ratings
in November 1998.

                                       35
<PAGE>

Non-recurring charges of $16.5 million were incurred in 1999, as a result of the
resignation of Thomas A. Rizk (see Note 12 to the Financial Statements).

Net income available to common unitholders decreased to $58.4 million in 1999
from $61.5 million in 1998. The decrease of $3.1 million is due to the factors
discussed above, partially offset by an extraordinary item of $2.7 million in
1998. Additionally, there were preferred dividends of $7.7 million in 1999 and
$7.9 million in 1998.

LIQUIDITY AND CAPITAL RESOURCES

STATEMENT OF CASH FLOWS
During the six months ended June 30, 1999, the Operating Partnership generated
$110.0 million in cash flows from operating activities, and together with $773.6
million in borrowings from the Operating Partnership's revolving credit
facilities, the issuance of unsecured notes and funds from additional mortgage
debt, $0.9 million in proceeds from stock options exercised, $10.6 million in
distributions received from unconsolidated joint ventures, used an aggregate of
approximately $895.1 million to acquire properties and land parcels and pay for
other tenant and building improvements totaling $71.1 million, repay outstanding
borrowings on its revolving credit facilities and other mortgage debt of $699.7
million, pay quarterly distributions of $81.3 million, invest $29.9 million in
unconsolidated joint ventures, repurchase 26,000 shares of the Corporation's
outstanding common stock for $0.7 million, pay deferred financing costs of $6.6
million, add $0.1 million to restricted cash and increase the Operating
Partnership's cash and cash equivalents by $5.7 million.

CAPITALIZATION
During the six months ended June 30, 1999, in conjunction with the redemption of
certain of the contingent units issued in the Mack Transaction, the Operating
Partnership issued a total of 242,157 common units with a total value of
approximately $7.2 million at time of issuance.

In August 1998, the Board of Directors of the Corporation authorized a share
repurchase program under which the Corporation was permitted to purchase up to
$100.0 million of the Corporation's outstanding common stock. Purchases could be
made from time to time in open market transactions at prevailing prices or
through privately negotiated transactions. Subsequently, through June 30, 1999,
the Corporation purchased, for constructive retirement, 880,700 shares of its
outstanding common stock for an aggregate cost of approximately $25.8 million.
Concurrent with these purchases, the Corporation sold to the Operating
Partnership 880,700 common units for approximately $25.8 million.

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

The Rights will be attached to each share of common stock. The Rights will
generally be exercisable only if a person or group becomes the beneficial owner
of 15 percent or more of the outstanding common stock or announces a tender
offer for 15 percent or more of the outstanding common stock. In the event that
a person or group becomes an Acquiring Person, each holder of a Right will have
the right to receive, upon exercise, common stock having a market value equal to
two times the Purchase Price of the Right. The Corporation's adoption of the
shareholder rights plan was not taken in response to any known effort to acquire
control of the Corporation.

As of June 30, 1999, the Operating Partnership's total indebtedness of $1.5
billion (weighted average interest rate of 7.08 percent) was comprised of $228.8
million of revolving credit facility borrowings and other variable rate mortgage
debt (average rate of 5.84 percent), fixed rate debt of $1.3 billion (average
rate of 7.31 percent), and a Contingent Obligation of $6.4 million.

As of June 30, 1999, the Operating Partnership had outstanding borrowings of
$148.6 million under its revolving credit facilities (with aggregate borrowing
capacity of $1.1 billion). The total outstanding borrowings were from the 1998
Unsecured Facility, with no outstanding borrowings on the Prudential Facility.
The 1998 Unsecured Facility, with 28 lender banks, carries an interest rate of
90 basis points over LIBOR and matures in April 2001. The Prudential Facility
carries an interest rate of 110 basis points over LIBOR and matures in June
2000.



                                       36
<PAGE>


The terms of the 1998 Unsecured Facility include certain restrictions and
covenants which limit, among other things, the payment of dividends (as
discussed below), the incurrence of additional indebtedness, the incurrence of
liens and the disposition of assets, and which require compliance with financial
ratios relating to the maximum leverage ratio, the maximum amount of secured
indebtedness, the minimum amount of tangible net worth, the minimum amount of
debt service coverage, the minimum amount of fixed charge coverage, the maximum
amount of unsecured indebtedness, the minimum amount of unencumbered property
debt service coverage and certain investment limitations. The dividend
restriction referred to above provides that, except to enable the Corporation to
continue to qualify as a REIT under the Code, the Corporation will not during
any four consecutive fiscal quarters make distributions with respect to common
stock or other equity interests in an aggregate amount in excess of 90 percent
of funds from operations for such period, subject to certain other adjustments.
The 1998 Unsecured Facility also requires a 17.5 basis point fee on the unused
balance payable quarterly in arrears.

The Operating Partnership has three investment grade credit ratings. Duff &
Phelps Credit Rating Co. ("DCR") and Standard & Poors Rating Services ("S&P")
have each assigned their BBB rating to the $785.3 million of total unsecured
corporate debt of the Operating Partnership. DCR and S&P have also assigned
their BBB- rating to prospective preferred stock offerings of the Corporation.
Moody's Investors Service has assigned its Baa3 rating to the unsecured
corporate debt and its Ba1 rating to prospective preferred stock offerings of
the Corporation.

The terms of the unsecured corporate debt include certain restrictions and
covenants which require compliance with financial ratios relating to the maximum
amount of debt leverage, the maximum amount of secured indebtedness, the minimum
amount of debt service coverage and the maximum amount of unsecured debt as a
percent of unsecured assets.

In May 1995, the Operating Partnership entered into an interest rate swap
agreement with a commercial bank. The swap agreement fixes the Operating
Partnership's one-month LIBOR base to 6.285 percent per annum on a notional
amount of $24.0 million. The swap agreement expires on August 15, 1999.

In October 1998, the Operating Partnership entered into a forward treasury rate
lock agreement with a commercial bank. The agreement locked an interest rate of
4.089 percent per annum for the three-year U.S. Treasury Note effective November
4, 1999, on a notional amount of $50.0 million. The agreement will be used to
fix the Index Rate on $50.0 million of the Harborside - Plaza I mortgage, for
which the Operating Partnership's interest rate re-sets for three years
beginning November 4, 1999 to the interpolated three-year U.S. Treasury Note
plus 110 basis points (see Note 9 to the Financial Statements - "Property
Mortgages: Harborside-Plaza I").

Using the proceeds from the issuance of $185.3 million of unsecured corporate
debt in August 1999, the Operating Partnership repaid in full and retired the
TIAA Mortgage, which was secured by 43 properties aggregating 3.1 million square
feet. Following the repayment, the Operating Partnership had 217 unencumbered
properties, totaling 20.1 million square feet, representing 73.5 percent of the
Operating Partnership's total portfolio on a square footage basis. The Operating
Partnership is currently reviewing its option to convert the $150.0 Million
Prudential Mortgage Loan, encumbering 12 properties aggregating 2.4 million
square feet, to unsecured corporate debt.

The Operating Partnership and Corporation has an effective shelf registration
statement with the SEC for an aggregate of $2.0 billion in debt securities,
preferred stock and preferred stock represented by depositary shares, under
which the Operating Partnership has issued an aggregate of $785.3 million of
unsecured corporate debt.

Historically, rental revenue has been the principal source of funds to pay
operating expenses, debt service and capital expenditures, excluding
non-recurring capital expenditures. Management believes that the Operating
Partnership will have access to the capital resources necessary to expand and
develop its business. To the extent that the Operating Partnership's cash flow
from operating activities is insufficient to finance its non-recurring capital
expenditures such as property acquisition and construction project costs and
other capital expenditures, the Operating Partnership expects to finance such
activities through borrowings under its credit facilities and other debt and
equity financing.

The Operating Partnership expects to meet its short-term liquidity requirements
generally through its working capital and net cash provided by operating
activities, along with the 1998 Unsecured Facility and the Prudential Facility.
The Operating Partnership is frequently examining potential property
acquisitions and construction projects and, at any given time, one or more of
such acquisitions may be under consideration. Accordingly, the ability to fund
property acquisitions is a major part of the Operating Partnership's financing
requirements. The Operating Partnership expects to meet its financing
requirements through funds generated from operating activities, long-term or
short-term borrowings (including draws on the Operating Partnership's revolving
credit facilities) and the issuance of additional debt or equity securities. In
addition, the Operating Partnership anticipates utilizing the 1998 Unsecured
Facility and the Prudential Facility primarily to fund property acquisitions.

                                       37
<PAGE>

As of quarter end, the Operating Partnership's total debt had a weighted average
term to maturity of 5.9 years. The Operating Partnership does not intend to
reserve funds to retire its unsecured corporate debt, Harborside mortgages,
$150.0 Million Prudential Mortgage Loan, its other property mortgages or other
long-term mortgages and loans payable upon maturity. Instead, the Operating
Partnership will seek to refinance such debt at maturity or retire such debt
through the issuance of additional debt or equity securities. The Operating
Partnership is reviewing various refinancing options, including the issuance of
additional unsecured corporate debt, preferred stock, and/or obtaining
additional mortgage debt, some or all of which may be completed during 1999. The
Operating Partnership anticipates that its available cash and cash equivalents
and cash flows from operating activities, together with cash available from
borrowings and other sources, will be adequate to meet the Operating
Partnership's capital and liquidity needs both in the short and long-term.
However, if these sources of funds are insufficient or unavailable, the
Operating Partnership's ability to make the expected distributions discussed
below may be adversely affected.

To maintain its qualification as a REIT, the Corporation must make annual
distributions to its stockholders of at least 95 percent of its REIT taxable
income, determined without regard to the dividends paid deduction and by
excluding net capital gains. The Corporation currently relies on the
distributions it receives from the Operating Partnership to make its
distributions to its stockholders. Moreover, the Operating Partnership intends
to continue to make regular quarterly distributions to its unitholders which,
based upon current policy, in the aggregate would equal approximately $130.4
million on an annualized basis. However, any such distribution would only be
paid out of available cash after meeting operating requirements, scheduled debt
service on mortgages and loans payable, and preferred unit distributions.



                                       38
<PAGE>

SIGNIFICANT TENANTS

The following table sets out a schedule of the Operating Partnership's 20
largest tenants, for the Operating Partnership's wholly-owned properties as of
June 30, 1999, based upon annualized base rents:

<TABLE>
<CAPTION>
                                                                     Percentage of                    Percentage of
                                                 Annualized      Operating Partnership   Square           Total            Year of
                                  Number of      Base Rental        Annualized Base       Feet    Operating Partnership     Lease
                                 Properties    Revenue ($)(1)     Rental Revenue (%)     Leased     Leased Sq.Ft. (%)    Expiration
-----------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>          <C>                    <C>           <C>               <C>              <C>
AT&T Corporation                     6            15,433,135             3.5           1,034,779         4.0              2009 (2)
Donaldson, Lufkin &
  Jenrette Securities Corp.          2             9,960,413             2.3             527,506         2.1              2009 (3)
AT&T Wireless Services               2             7,826,368             1.8             365,593         1.4              2007 (4)
International Business
  Machines Corporation               5             7,522,499             1.7             390,370         1.5              2007 (5)
Allstate Insurance Company          10             6,377,507             1.4             293,820         1.1              2009 (6)
Prentice-Hall Inc.                   1             5,794,893             1.3             474,801         1.9              2014
Nabisco Inc.                         2             5,467,178             1.2             300,378         1.2              2000
Toys R US - NJ, Inc.               1             5,342,672             1.2             242,518         0.9              2012
American Institute of Certified
 Public Accountants                  1             4,981,357             1.1             249,768         1.0              2012
CMP Media Inc                        1             4,826,107             1.1             206,274         0.8              2014
Board of Gov./Federal Reserve        1             4,605,090             1.0             117,008         0.5              2009 (7)
Winston & Strawn                     1             4,214,885             1.0             108,100         0.4              2003
Dow Jones Telerate Systems Inc.      1             3,660,064             0.8             194,219         0.8              2006 (8)
KPMG Peat Marwick, LLP               2             3,510,412             0.8             161,760         0.6              2007 (9)
Bank of Tokyo - Mitsubishi Ltd       1             3,378,923             0.8             137,076         0.5              2009
Bankers Trust Harborside Inc.        1             3,272,500             0.7             385,000         1.5              2003
Morgan Stanley Dean Witter           1             3,188,532             0.7             179,131         0.7              2008
Dean Witter Reynolds Inc.            4             3,185,372             0.7             137,181         0.5              2008(10)
Deloitte & Touche USA LLP            1             3,162,933             0.7             118,864         0.5              2000
Cendant Operations Inc.              1             3,117,051             0.7             148,431         0.6              2008
-----------------------------------------------------------------------------------------------------------------------------------
Totals                              45           108,827,891            24.5           5,772,577        22.5
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Annualized base rental revenue is based on actual June 1999 billings times
     12. For leases whose rent commences after June 30, 1999, annualized base
     rental revenue is based on the first 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.
(2)  39,183 square feet expire February 2000; 66,268 square feet expire December
     2000; 3,950 square feet expire August 2002; 63,278 square feet expire May
     2004; 475,100 square feet expire January 2008; 387,000 square feet expire
     January 2009.
(3)  426,691 square feet expire July 2009; 100,815 square feet expire November
     2009.
(4)  341,512 square feet expire March 2007; 24,081 square feet expire June 2007.
(5)  29,157 square feet expire October 2000; 85,000 square feet expire December
     2000; 26,749 square feet expire January 2002; 1,065 square feet expire
     November 2002; 248,399 square feet expire December 2007.
(6)  22,444 square feet expire July 2001; 70,517 square feet expire June 2002;
     71,030 square feet expire September 2002; 18,882 square feet expire April
     2003; 2,867 square feet expire January 2004; 36,305 square feet expire
     January 2005; 23,024 square feet expire October 2005; 6,108 square feet
     expire August 2006; 31,143 square feet expire April 2008; 11,500 square
     feet expire April 2009.
(7)  94,719 square feet expire May 2005; 22,289 square feet expire June 2009.
(8)  144,332 square feet expire June 2000; 4,700 square feet expire March 2001;
     45,187 square feet expire June 2006.
(9)  104,556 square feet expire September 2002; 57,204 square feet expire July
     2007.
(10) 13,140 square feet expire April 2005; 19,390 square feet expire October
     2007; 85,151 square feet expire February 2008; 19,500 square feet expire
     June 2008.



                                       39
<PAGE>

SCHEDULE OF LEASE EXPIRATIONS

The following table sets forth a schedule of the lease expirations for the total
of the Operating Partnership's wholly-owned office, office/flex,
industrial/warehouse and stand-alone retail properties beginning July 1, 1999,
assuming that none of the tenants exercises renewal options:
<TABLE>
<CAPTION>
                                                                                          Average Annual
                                                 Percentage Of                            Rent Per Net
                               Net Rentable      Total Leased          Annualized         Rentable          Percentage Of
                               Area Subject      Square Feet           Base Rental        Square Foot       Annual Base
                Number Of      To Expiring       Represented By        Revenue Under      Represented       Rent Under
Year Of         Leases         Leases            Expiring              Expiring           By Expiring       Expiring
Expiration      Expiring (1)   (Sq. Ft.)         Leases (%) (2)        Leases ($)(3)      Leases ($)        Leases (%)
------------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>         <C>                    <C>              <C>                   <C>                 <C>
1999..........        284         1,268,000              5.0              23,022,486            18.16               5.2

2000..........        512         3,826,970             14.9              65,672,700            17.16              14.8

2001..........        491         2,879,134             11.2              47,247,344            16.41              10.6

2002..........        461         3,435,094             13.4              59,678,362            17.37              13.4

2003..........        375         3,798,347             14.8              64,709,328            17.04              14.6

2004..........        217         1,988,936              7.8              35,264,420            17.73               7.9

2005..........         87         1,381,554              5.4              27,012,032            19.55               6.1

2006..........         51           869,866              3.4              16,718,122            19.22               3.8

2007..........         37         1,200,573              4.7              23,166,129            19.30               5.2

2008..........         36         1,506,175              5.9              23,403,100            15.54               5.3

2009..........         30         1,369,950              5.3              24,385,015            17.80               5.5

2010 and thereafter    38         2,114,619              8.2              33,883,564            16.02               7.6
------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
  Average           2,619        25,639,218           100.0(4)           444,162,602            17.32             100.0
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  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.
(2)  Excludes all space vacant as of June 30, 1999.
(3)  Annualized base rental revenue is based on actual June 1999 billings times
     12. For leases whose rent commences after June 30, 1999, annualized base
     rental revenue is based on the first 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.
(4)  Reconciliation to the Operating Partnership's total net rentable square
     footage is as follows:
<TABLE>
<CAPTION>

                                                                               Square Feet       Percentage of Total
                                                                               -----------       -------------------
<S>                                                                               <C>                     <C>
Square footage leased to commercial tenants                                       25,639,218              94.7%
Square footage used for corporate offices, management offices,
 building use, retail tenants, food services, other ancillary
 service tenants and occupancy adjustments                                           442,122               1.6
Square footage vacant                                                              1,002,786               3.7
                                                                                 -----------        ----------
Total net rentable square footage (does not include
 residential, land lease, retail or not-in-service properties)                    27,084,126             100.0%
                                                                                 -----------        ----------
                                                                                 -----------        ----------
</TABLE>

                                       40
<PAGE>


SCHEDULE OF LEASE EXPIRATIONS: OFFICE PROPERTIES

The following table sets forth a schedule of the lease expirations for the
office properties beginning July 1, 1999, assuming that none of the tenants
exercises renewal options:
<TABLE>
<CAPTION>
                                                                                          Average Annual
                                                 Percentage Of                            Rent Per Net
                               Net Rentable      Total Leased          Annualized         Rentable          Percentage Of
                               Area Subject      Square Feet           Base Rental        Square Foot       Annual Base
                Number Of      To Expiring       Represented By        Revenue Under      Represented       Rent Under
Year Of         Leases         Leases            Expiring              Expiring           By Expiring       Expiring
Expiration      Expiring (1)   (Sq. Ft.)         Leases (%) (2)        Leases ($)(3)      Leases ($)        Leases (%)
------------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>         <C>                    <C>              <C>                   <C>                 <C>
1999..........        238         1,033,094              4.8              20,710,575            20.05               5.2

2000..........        436         3,281,927             15.3              59,699,510            18.19              15.0

2001..........        406         2,298,371             10.7              40,607,660            17.67              10.2

2002..........        375         2,624,143             12.2              51,060,129            19.46              12.8

2003..........        314         3,211,580             14.9              58,891,050            18.34              14.8

2004..........        179         1,560,537              7.3              30,467,625            19.52               7.7

2005..........         67         1,136,112              5.3              24,235,117            21.33               6.1

2006..........         42           662,641              3.1              13,191,575            19.91               3.3

2007..........         31         1,086,992              5.1              21,561,795            19.84               5.4

2008..........         33         1,356,580              6.3              22,461,242            16.56               5.7

2009..........         22         1,240,750              5.8              22,842,195            18.41               5.7

2010 and thereafter    33         1,979,931              9.2              32,071,515            16.20               8.1
------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
  Average           2,176        21,472,658            100.0             397,799,988            18.53             100.0
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


(1)  Includes office tenants only. Excludes leases for amenity, retail, parking
     and month-to-month office tenants. Some tenants have multiple leases.
(2)  Excludes all space vacant as of June 30, 1999.
(3)  Annualized base rental revenue is based on actual June 1999 billings times
     12. For leases whose rent commences after June 30, 1999, annualized base
     rental revenue is based on the first 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.

                                       41
<PAGE>


SCHEDULE OF LEASE EXPIRATIONS: OFFICE/FLEX PROPERTIES

The following table sets forth a schedule of the lease expirations for the
office/flex properties beginning July 1, 1999, assuming that none of the tenants
exercises renewal options:
<TABLE>
<CAPTION>
                                                                                          Average Annual
                                                 Percentage Of                            Rent Per Net
                               Net Rentable      Total Leased          Annualized         Rentable          Percentage Of
                               Area Subject      Square Feet           Base Rental        Square Foot       Annual Base
                Number Of      To Expiring       Represented By        Revenue Under      Represented       Rent Under
Year Of         Leases         Leases            Expiring              Expiring           By Expiring       Expiring
Expiration      Expiring (1)   (Sq. Ft.)         Leases (%) (2)        Leases ($) (3)     Leases ($)        Leases (%)
------------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>          <C>                  <C>               <C>                   <C>                <C>
1999..........         43           229,521              6.1               2,262,141             9.86               5.4

2000..........         72           524,939             13.9               5,736,473            10.93              13.6

2001..........         80           549,216             14.6               6,035,657            10.99              14.3

2002..........         84           764,511             20.3               8,123,571            10.63              19.2

2003..........         58           495,293             13.1               5,386,530            10.88              12.7

2004..........         30           245,579              6.5               2,896,790            11.80               6.8

2005..........         20           245,442              6.5               2,776,915            11.31               6.6

2006..........          9           207,225              5.5               3,526,547            17.02               8.3

2007..........          6           113,581              3.0               1,604,334            14.13               3.8

2008..........          3           149,595              4.0                 941,858             6.30               2.2

2009..........          7           117,400              3.1               1,436,620            12.24               3.4

2010 and thereafter     4           126,688              3.4               1,547,049            12.21               3.7
------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
  Average             416         3,768,990            100.0              42,274,485            11.22             100.0
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


(1)  Includes office/flex tenants only. Excludes leases for amenity, retail,
     parking and month-to-month office/flex tenants. Some tenants have multiple
     leases.
(2)  Excludes all space vacant as of June 30, 1999.
(3)  Annualized base rental revenue is based on actual June 1999 billings times
     12. For leases whose rent commences after June 30, 1999, annualized base
     rental revenue is based on the first 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.


                                       42
<PAGE>


SCHEDULE OF LEASE EXPIRATIONS: INDUSTRIAL/WAREHOUSE PROPERTIES

The following table sets forth a schedule of the lease expirations for the
industrial/warehouse properties beginning July 1, 1999, assuming that none of
the tenants exercises renewal options:
<TABLE>
<CAPTION>
                                                                                          Average Annual
                                                 Percentage Of                            Rent Per Net
                               Net Rentable      Total Leased          Annualized         Rentable          Percentage Of
                               Area Subject      Square Feet           Base Rental        Square Foot       Annual Base
                Number Of      To Expiring       Represented By        Revenue Under      Represented       Rent Under
Year Of         Leases         Leases            Expiring              Expiring           By Expiring       Expiring
Expiration      Expiring (1)   (Sq. Ft.)         Leases (%) (2)        Leases ($) (3)     Leases ($)        Leases (%)
------------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>           <C>                <C>                  <C>                <C>                <C>
1999..........          3             5,385              1.4                  49,770             9.24               1.4

2000..........          4            20,104              5.3                 236,717            11.77               6.5

2001..........          5            31,547              8.3                 604,027            19.15              16.7

2002..........          2            46,440             12.2                 494,662            10.65              13.6

2003..........          3            91,474             24.1                 431,748             4.72              11.9

2004..........          7           173,520             45.6               1,705,005             9.83              47.0

2009..........          1            11,800              3.1                 106,200             9.00               2.9
------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
  Average              25           380,270            100.0               3,628,129             9.54             100.0
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Includes industrial/warehouse tenants only. Excludes leases for amenity,
     retail, parking and month-to-month industrial/warehouse tenants. Some
     tenants have multiple leases.
(2)  Excludes all space vacant as of June 30, 1999.
(3)  Annualized base rental revenue is based on actual June 1999 billings times
     12. For leases whose rent commences after June 30, 1999, annualized base
     rent revenue is based on the first month's billing times 12. As annualized
     base rental revenue is not derived from historical GAAP results, the
     historical results may differ from those set forth above.


SCHEDULE OF LEASE EXPIRATIONS: STAND-ALONE RETAIL PROPERTIES

The following table sets forth a schedule of the lease expirations for the
stand-alone retail properties beginning July 1, 1999, assuming that none of the
tenants exercises renewal options:
<TABLE>
<CAPTION>
                                                                                          Average Annual
                                                 Percentage Of                            Rent Per Net
                               Net Rentable      Total Leased          Annualized         Rentable          Percentage Of
                               Area Subject      Square Feet           Base Rental        Square Foot       Annual Base
                Number Of      To Expiring       Represented By        Revenue Under      Represented       Rent Under
Year Of         Leases         Leases            Expiring              Expiring           By Expiring       Expiring
Expiration      Expiring (1)   (Sq. Ft.)         Leases (%)            Leases ($) (2)     Leases ($)               Leases (%)
------------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>           <C>               <C>                  <C>                <C>                <C>
2004..........          1             9,300             53.8                 195,000            20.97              42.4

2012 .........          1             8,000             46.2                 265,000            33.12              57.6
------------------------------------------------------------------------------------------------------------------------------------
Totals/Weighted
  Average               2            17,300            100.0                 460,000            26.59             100.0
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Includes stand-alone retail property tenants only.
(2)  Annualized base rental revenue is based on actual June 1999 billings times
     12. For leases whose rent commences after June 30, 1999 annualized base
     rental revenue is based on the first 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.


                                       43
<PAGE>


FUNDS FROM OPERATIONS

The Operating Partnership considers funds from operations ("FFO"), after
adjustment for straight lining of rents, one measure of REIT performance. Funds
from operations is defined as net income (loss) before distribution to preferred
unitholders, computed in accordance with generally accepted accounting
principles ("GAAP"), excluding gains (or losses) from debt restructuring, other
extraordinary and significant non-recurring items, and sales of property, plus
real estate-related depreciation and amortization. Funds from operations should
not be considered as an alternative to net income as an indication of the
Operating Partnership's performance or to cash flows as a measure of liquidity.
Funds from operations presented herein is not necessarily comparable to funds
from operations presented by other real estate companies due to the fact that
not all real estate companies use the same definition. However, the Operating
Partnership's funds from operations is comparable to the funds from operations
of real estate companies that use the current definition of the National
Association of Real Estate Investment Trusts ("NAREIT"), after the adjustment
for straight-lining of rents.

NAREIT's definition of funds from operations indicates that the calculation
should be made before any extraordinary item (determined in accordance with
GAAP), and before any deduction of significant non-recurring events that
materially distort the comparative measurement of the Operating Partnership's
performance.

Funds from operations for the three and six month periods ended June 30, 1999
and 1998, as calculated in accordance with NAREIT's definition as published in
March 1995 after adjustment for straight-line of rents, are summarized in the
following table (IN THOUSANDS):
<TABLE>
<CAPTION>

                                                                Three Months                    Six Months
                                                               Ended June 30,                 Ended June 30,
                                                            1999           1998            1999            1998
--------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>              <C>             <C>
Income before non-recurring charges, distributions
   to preferred unitholders and extraordinary item     $   41,779      $   38,170       $   82,592      $   72,020
Add: Real estate-related depreciation and
   amortization (1)                                        22,769          19,211           45,720          35,330
Deduct: Rental income adjustment for
   straight-lining of rents (1)                           (3,833)         (3,142)          (7,378)         (6,345)
--------------------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment
   for straight-lining of rents, before distributions
   to preferred unitholders                            $   60,715      $   54,239       $  120,934      $  101,005
Deduct: Distributions to preferred unitholders            (3,869)         (3,985)          (7,738)         (7,896)
--------------------------------------------------------------------------------------------------------------------
Funds from operations, after adjustment for
   straight-lining of rents, after distributions
   to preferred unitholders                            $   56,846      $   50,254       $  113,196      $   93,109
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Cash flows provided by operating activities                                             $  110,008      $  102,517
Cash flows used in investing activities                                                 $ (90,548)      $(662,104)
Cash flows (used in) provided by financing activities                                   $ (13,750)      $  573,478
--------------------------------------------------------------------------------------------------------------------
Basic weighted average units outstanding (2)               67,173          64,145           67,092          61,055
--------------------------------------------------------------------------------------------------------------------
Diluted weighted average units outstanding (2)             74,104          71,444           74,040          68,425
--------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Includes FFO adjustments related to the Operating Partnership's investments
     in unconsolidated joint ventures.
(2)  See calculations for the amounts presented in the following reconciliation.


                                       44

<PAGE>


The following schedule reconciles the Operating Partnership's basic weighted
average units to the diluted weighted average units presented above:
<TABLE>
<CAPTION>
                                                                Three Months                    Six Months
                                                               Ended June 30,                 Ended June 30,
                                                            1999           1998            1999            1998
-----------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>             <C>              <C>             <C>
Basic weighted average units:                              67,173          64,145           67,092          61,055
Add: Weighted average preferred units                       6,618           6,818            6,655           6,754
         (after conversion to common units)
Stock options                                                 313             444              293             529
Stock warrants                                                 --              37               --              87
-----------------------------------------------------------------------------------------------------------------------
Diluted weighted average units:                            74,104          71,444           74,040          68,425
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

INFLATION

The Operating Partnership's leases with the majority of its tenants provide for
recoveries and escalation charges based upon the tenant's proportionate share
of, and/or increases in, real estate taxes and certain operating costs, which
reduce the Operating Partnership's exposure to increases in operating costs
resulting from inflation.

DISRUPTION IN OPERATIONS DUE TO YEAR 2000 PROBLEMS.

GENERAL
The Year 2000 issue is the result of computer programs and embedded chips using
a two-digit format, as opposed to four digits, to indicate the year. Such
computer systems may be unable to interpret dates beyond the year 1999, which
could cause a system failure or other computer errors, leading to disruptions in
operations. We have developed a three-phase Year 2000 project (the "Project") to
determine our Year 2000 systems compliance. Phase I was to identify those
systems with which we have exposure to Year 2000 issues. Phase II was the
development and implementation of action plans to be Year 2000 compliant in all
areas. Phase III is the final testing of each major area of exposure to assure
compliance. We have identified three major areas critical for successful Year
2000 compliance: (i) our central accounting and operating computer system at our
Cranford, New Jersey headquarters and local networks and related systems in our
regional offices, (ii) inquiries of our tenants and key vendors as to their Year
2000 readiness and (iii) assessment of our individual buildings as to the Year
2000 readiness of their operating systems. We believe that progress in all such
areas is proceeding on schedule and that we will experience no material adverse
effect as a result of the Year 2000 issue. There can, however, be no assurance
that this will be the case. Set forth below is a more detailed analysis of the
Project and its anticipated impact on us.

CENTRAL ACCOUNTING AND OPERATING SYSTEMS
We have completed a review of key computer hardware and software and other
equipment, and have modified, upgraded or replaced all identified hardware and
equipment in our corporate and regional offices that we believe may be affected
by problems associated with Year 2000. Such hardware includes, but is not
limited to, desktop and laptop computers, servers, printers, telecopier machines
and telephones. We, as part of our routine modernization efforts, have completed
necessary upgrades to identified secondary software systems, such as word
processing, spreadsheet applications, telephone voicemail systems and computer
calendar programs. The software supplier of our accounting system completed its
Year 2000 upgrade and supplied us with Year 2000 compliant software at no cost
to us. We have substantially completed our internal testing of such software
with satisfactory results.

TENANT COMPLIANCE
We believe that the completion of the Project as scheduled will minimize Year
2000 related issues in our internal operations. However, we may still be
adversely impacted by Year 2000 related issues as a result of problems outside
our control, such as the inability of tenants to pay rent when due. In order to
gauge such risk, we sent questionnaires to each of our then existing tenants in
August 1998 to assess their Year 2000 compliance status. The responses to these
questionnaires continue to be received, reviewed and evaluated. Based on the
responses received, we do not anticipate any material adverse impact on the
orderly payment of monthly rent. Therefore, while there can be no assurance that
Year 2000 problems of tenants will not have a material adverse effect on our
operating results or financial condition, the information available to us
indicates such an occurrence is not likely.


                                       45
<PAGE>


PROPERTY COMPLIANCE
Our property managers have completed Phase I of the Project, a building by
building survey of all of our properties to determine whether building support
systems such as heat, power, light, security, garages and elevators will be
affected by the advent of the Year 2000. Most of such systems either are already
Year 2000 compliant or contain no computerized parts. Our property managers have
completed Phase II of the Project, the development and implementation of action
plans to modify, upgrade or replace non-compliant building systems. The
compliance testing of these installed building systems is in progress pursuant
to Phase III of the Project.

We have communicated with vendors of building systems or other services to our
buildings regarding their Year 2000 compliance. In many instances, we will rely
on the written representations from these vendors regarding the Year 2000
compliance of their product or service. We are also relying on assurances
requested from utility providers of their Year 2000 compliance and their
continued ability to provide uninterrupted service to our buildings. We
anticipate incurring a total of approximately $1.0 million in costs to modify,
upgrade and/or replace identified building support systems for Year 2000
compliance.

WORST CASE EXPOSURE
We are aware that it is generally believed that the Year 2000 problem, if
uncorrected, may result in a worldwide economic crisis. We are unable to
determine whether such predictions are true or false. However, if such
predictions prove true, we assume that all companies (including ours) will
experience the effects in one way or another. The most reasonably likely worst
case scenario we anticipate in connection with the Year 2000 issue relates to
the failure of the upgrade to our accounting system to effectively become Year
2000 compliant. We believe that such an event is most unlikely, but an
occurrence of the foregoing might have a material adverse impact on our
operations. We cannot currently assess the financial impact of such a worst case
scenario.

CONTINGENCY PLANS
We are developing contingency plans to address the Year 2000 non-compliance of
(i) critical building support systems and (ii) our accounting system.

         CRITICAL BUILDING SYSTEMS. We believe that the failure of any of the
following critical building support systems due to Year 2000 issues could have a
material adverse impact on the performance of an individual building: security
systems, elevator systems or fire/life safety systems. We believe that in the
event of a Year 2000 related failure in a building security system, we would be
able to maintain adequate security at the building through the use of security
guards. We believe that in the event of a Year 2000 related failure in a
building elevator system, adequate access would exist at most of our buildings
through existing stairways. We believe that in the event of a Year 2000 related
failure in a building fire/life safety system, our property's management staff
would be able to manually operate such system.

         ACCOUNTING SOFTWARE. We believe that failure of the Year 2000
compliance upgrade to our accounting software might have a material adverse
impact on our operations. However, we believe that financial data within any
given fiscal year will remain intact and retrievable. We believe that
alternative accounting software and/or manual bookkeeping would minimize the
impact of a Year 2000 related failure of our current accounting software.

RISKS
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect our results of
operations, liquidity and financial condition. Due to the general uncertainty
inherent in the Year 2000 problem, resulting in part from the uncertainty of the
Year 2000 readiness of third-party vendors and tenants, we are unable to
determine at this time whether the consequences of Year 2000 failures will have
a material impact on our results of operations, liquidity or financial
condition. The Project is expected to significantly reduce our level of
uncertainty about the Year 2000 problem. We believe that, with the
implementation and completion of the Project as scheduled, the possibility of
significant interruptions of normal operations should be reduced.


                                       46
<PAGE>


Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Approximately $1.3 billion of the Operating Partnership's long-term debt bears
interest at fixed rates, and therefore the fair value of these instruments is
affected by changes in the market interest rates. The following table presents
principal cash flows (in thousands) based upon maturity dates of the debt
obligations and the related weighted-average interest rates by expected maturity
dates for the fixed rate debt. The interest rate on the variable rate debt as of
June 30, 1999 ranged from LIBOR plus 0.65 percent to LIBOR plus 0.90 percent.


JUNE 30, 1999
<TABLE>
<CAPTION>

LONG-TERM DEBT,                                                                                                               FAIR
INCLUDING CURRENT PORTION           1999        2000          2001      2002         2003     THEREAFTER         TOTAL       VALUE
-----------------------------       ----        ----          ----      ----         ----     ----------         -----       -----
<S>                      <C>       <C>      <C>          <C>       <C>          <C>          <C>          <C>
Fixed Rate                         $1,503      $8,755   $    7,794   $11,637     $211,151     $1,025,342    $1,266,182  $1,237,813
Average Interest Rate                7.65%       6.77%        7.27%     7.09%       7.31%          7.27%        7.30%

Variable Rate                      $8,000               $  148,600                            $   72,203    $  228,803  $  228,803
</TABLE>

                                       47
<PAGE>


                             MACK-CALI REALTY, L.P.


                          PART II -- OTHER INFORMATION



         Item 1.  LEGAL PROCEEDINGS

                  Reference is made to "Other" in Note 13 (Commitments and
                  Contingencies) to the Consolidated Financial Statements, which
                  is specifically incorporated by reference herein.

         Item 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

                  Not Applicable.

         Item 3.  DEFAULTS UPON SENIOR SECURITIES

                  Not Applicable.

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

                  Not Applicable.

         Item 5.  OTHER INFORMATION

                  Not Applicable.

                                       48
<PAGE>


                             MACK-CALI REALTY, L.P.

                    PART II -- OTHER INFORMATION (CONTINUED)

                                ITEM 6 - EXHIBITS


(a)  Exhibits.

     The following exhibits are filed herewith or are incorporated by reference
     to exhibits previously filed:

        Exhibit Number      Exhibit Title
        --------------      -------------

              3.1           Restated Charter of Mack-Cali Realty Corporation
                            dated June 10, 1999, together with Articles
                            Supplementary thereto (filed as Exhibit 3.1 to the
                            General Partner's Form 8-K dated June 10, 1999 as
                            Exhibit 4.2 to the Operating Partnership's Form 8-K
                            dated July 6, 1999 and each incorporated herein by
                            reference).

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

              3.3           Second Amended and Restated Agreement of Limited
                            Partnership dated December 11, 1997, for Mack-Cali
                            Realty, L.P. (filed as Exhibit 10.110 to the General
                            Partner's Form 8-K dated December 11, 1997 and
                            incorporated herein by reference).

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

              3.5           Second Amendment to the Second Amended and Restated
                            Agreement of Limited Partnership of Mack-Cali
                            Realty, L.P. (filed as Exhibit 10.2 to the Operating
                            Partnership's Form 8-K dated July 6, 1999 and
                            incorporated herein by reference).

              4.1           Shareholder Rights Agreement, dated as of July 6,
                            1999, between Mack-Cali Realty Corporation and
                            ChaseMellon Shareholder Services, LLC, as Rights
                            Agent (filed as Exhibit 4.1 to the Operating
                            Partnership's Form 8-K dated July 6, 1999 and
                            incorporated herein by reference).

              4.2           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).

              4.3           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).

              4.4           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.

              10.1          Note Purchase Agreement dated as of August 2, 1999
                            by and among Mack-Cali Realty, L.P. and Teachers
                            Insurance and Annuity Association of America.

                                       49
<PAGE>

        Exhibit Number      Exhibit Title
        --------------      -------------

              10.2          Amended and Restated Employment Agreement dated as
                            of July 1, 1999 between Mitchell E. Hersh and
                            Mack-Cali Realty Corporation.

              10.3          Second Amended and Restated Employment Agreement
                            dated as of July 1, 1999 between Timothy M. Jones
                            and Mack-Cali Realty Corporation.

              10.4          Amended and Restated Employment Agreement dated as
                            of July 1, 1999 between John R. Cali and Mack-Cali
                            Realty Corporation.

              10.5          Amended and Restated Employment Agreement dated as
                            of July 1, 1999 between Brant Cali and Mack-Cali
                            Realty Corporation.

              10.6          Second Amended and Restated Employment Agreement
                            dated as of July 1, 1999 between Barry Lefkowitz and
                            Mack-Cali Realty Corporation.

              10.7          Second Amended and Restated Employment Agreement
                            dated as of July 1, 1999 between Roger W. Thomas and
                            Mack-Cali Realty Corporation.

              10.8          Restricted Share Award Agreement dated as of July 1,
                            1999 between Mitchell E. Hersh and Mack-Cali Realty
                            Corporation.

              10.9          Restricted Share Award Agreement dated as of July 1,
                            1999 between Timothy M. Jones and Mack-Cali Realty
                            Corporation.

              10.10         Restricted Share Award Agreement dated as of July 1,
                            1999 between John R. Cali and Mack-Cali Realty
                            Corporation.

              10.11         Restricted Share Award Agreement dated as of July 1,
                            1999 between Brant Cali and Mack-Cali Realty
                            Corporation.

              10.12         Restricted Share Award Agreement dated as of July 1,
                            1999 between Barry Lefkowitz and Mack-Cali Realty
                            Corporation.

              10.13         Restricted Share Award Agreement dated as of July 1,
                            1999 between Roger W. Thomas and Mack-Cali Realty
                            Corporation.

              10.14         Purchase and Sale Agreement dated as of April 28,
                            1999 between AT&T Corp. and Mack-Cali Realty
                            Acquisition Corp.

              10.15         Purchase and Sale Agreement dated as of June 30,
                            1999 between The Equitable Life Assurance Society of
                            the United States and Mack-Cali Realty Acquisition
                            Corp.

              10.16         Credit Agreement, dated as of December 10, 1997, by
                            and among Cali Realty, L.P. and the other
                            signatories thereto (filed as Exhibit 10.122 to the
                            General Partner's Form 8-K dated December 11, 1997
                            and incorporated herein by reference).

              10.17         Amendment No. 1 to Revolving Credit Agreement dated
                            July 20, 1998, by and among Mack-Cali Realty, L.P.
                            and The Chase Manhattan Bank, Fleet National Bank
                            and Other Lenders Which May Become Parties Thereto
                            (filed as Exhibit 10.5 to the Operating
                            Partnership's Form 10-K dated December 31, 1998 and
                            incorporated herein by reference).

                                       50
<PAGE>

        Exhibit Number      Exhibit Title
        --------------      -------------

              10.18         Amendment No. 2 to Revolving Credit Agreement dated
                            December 30, 1998, by and among Mack-Cali Realty,
                            L.P. and The Chase Manhattan Bank, Fleet National
                            Bank and Other Lenders Which May Become Parties
                            Thereto (filed as Exhibit 10.6 to the Operating
                            Partnership's Form 10-K dated December 31, 1998 and
                            incorporated herein by reference).

              10.19         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 General Partner's
                            Form 8-K dated September 19, 1997 and incorporated
                            herein by reference).

              10.20         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 General Partner's Form 8-K
                            dated December 11, 1997 and incorporated herein by
                            reference).

              27            Financial Data Schedule

(b)  Reports on Form 8-K.

     During the quarter ended June 30, 1999, the Operating Partnership filed
     a Current Report on Form 8-K dated April 19, 1999.


                                       51
<PAGE>


                             MACK-CALI REALTY, L.P.


                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                       Mack-Cali Realty, L.P.
                                       -------------------------------------
                                       (Registrant)
                                       By:  Mack-Cali Realty Corporation,
                                            as its General Partner


Date: August 12, 1999                  /s/ Mitchell E. Hersh
                                       -------------------------------------
                                       Mitchell E. Hersh
                                       Chief Executive Officer


Date: August 12, 1999                  /s/ Barry Lefkowitz
                                       --------------------------------------
                                       Barry Lefkowitz
                                       Executive Vice President &
                                       Chief Financial Officer


                                       52