**UNITED STATES**

### **SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

 

**FORM 10-K**

 

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

 

**For the fiscal year ended December 31,2005**

 

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

 

## **Commission File Number:  333-57103**

## ** **

**MACK-CALI REALTY, L.P.**

(Exact Name of Registrant asspecified in its charter)

 
| **Delaware**                                 | ** ** | **22-3315804**       |
|----------------------------------------------|------------|----------------------|
| (State or  other jurisdiction of             |       | (IRS  Employer       |
| incorporation  or organization)              |       | Identification  No.) |
|                                         |       |                 |
| **11  Commerce Drive, Cranford, New Jersey** | ** ** | **07016-3599**       |
| (Address of  principal executive offices)    |       | (Zip code)           |

 

**(908) 272-8000**

(Registrant’s telephone number,including area code)

 

Securities registered pursuantto Section 12(b) of the Act:

**None**

 

Securitiesregistered pursuant to Section 12(g) of the Act:

**None**

 

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

 

Indicate by check mark if the registrant isnot required to file reports pursuant to Section 13 or Section 15(d) ofthe Exchange Act.  Yes oNo ý

 

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

 

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

 

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

 

Large accelerated filer ý            Acceleratedfiler o            Non-acceleratedfiler o

 

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

 

**LOCATION OF EXHIBIT INDEX:**  The index of exhibits is contained herein on page number127.

 

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

 

 

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**FORM 10-K**

 

**Table of Contents**

 
| **PART I**        | ** **                                                                                                         |
|------------------------|--------------------------------------------------------------------------------------------------------------------|
| Item 1                 | Business                                                                                                           |   |
| Item  1A               | Risk  Factors                                                                                                      |   |
| Item 1B                | Unresolved Staff Comments                                                                                          |   |
| Item  2                | Properties                                                                                                         |   |
| Item 3                 | Legal Proceedings                                                                                                  |   |
| Item 4                 | Submission of Matters to a Vote of Security  Holders                                                               |   |
|                   |                                                                                                               |   |
| **PART II**       | ** **                                                                                                         |
| Item 5                 | Market for Registrant’s Common Equity,  Related Stockholder Matters and Issuer Purchases of Equity Securities |   |
| Item 6                 | Selected Financial Data                                                                                            |   |
| Item 7                 | Management’s Discussion and Analysis of  Financial Condition and Results of Operations                        |   |
| Item 7A                | Quantitative and Qualitative Disclosures  About Market Risk                                                        |   |
| Item 8                 | Financial Statements and Supplementary Data                                                                        |   |
| Item 9                 | Changes in and Disagreements with  Accountants on Accounting and Financial Disclosure                              |   |
| Item 9A                | Controls and Procedures                                                                                            |   |
| Item 9B                | Other Information                                                                                                  |   |
|                   |                                                                                                               |   |
| **PART III**      |                                                                                                               |
| Item 10                | Directors and Executive Officers of the  Registrant                                                                |   |
| Item 11                | Executive Compensation                                                                                             |   |
| Item 12                | Security Ownership of Certain Beneficial  Owners and Management and Related Stockholder Matters                    |   |
| Item 13                | Certain Relationships and Related  Transactions                                                                    |   |
| Item 14                | Principal Accounting Fees and Services                                                                             |   |
|                   |                                                                                                               |   |
| **PART IV**       | ** **                                                                                                         |
| Item 15                | Exhibits, Financial Statement Schedules                                                                            |   |
|                   |                                                                                                               |   |
| **SIGNATURES**         |                                                                                                               |
|                   |                                                                                                               |   |
| **EXHIBIT INDEX** |                                                                                                               |

 

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**PART I**

** **

**ITEM 1.**     BUSINESS

** **

##### **GENERAL**

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

 

As of December 31, 2005, the Operating Partnership owned or hadinterests in 270 properties, aggregating approximately 30.0 million squarefeet, plus developable land (collectively, the “Properties”).  The Properties are comprised of: (a) 267wholly-owned or Operating Partnership-controlled properties consisting of 161office buildings and 96 office/flex buildings aggregating approximately 29.1million square feet, six industrial/warehouse buildings totaling approximately387,400 square feet, two stand-alone retail properties totaling approximately17,300 square feet, and two land leases (collectively, the “ConsolidatedProperties”); and (b) one office building and one office/flex buildingaggregating approximately 538,000 square feet, and a 350-room hotel, which areowned by unconsolidated joint ventures in which the Operating Partnership hasinvestment interests.  Unless otherwiseindicated, all references to square feet represent net rentable area.  As of December 31, 2005, the office,office/flex, industrial/warehouse and stand-alone retail properties included inthe Consolidated Properties were 91.0 percent leased to approximately 2,200tenants.  Percentage leased includes allleases in effect as of the period end date, some of which have commencementdates in the future (including, at December 31, 2005, leases withcommencement dates substantially in the future consisting of 15,125 square feetscheduled to commence in 2009 and 10,205 square feet scheduled to commence in2011), and leases that expire at the period end date.  Leases that expire as of the period end dateaggregate 311,623 square feet, or 1.1 percent of the net rentable squarefootage.  The Properties are located inseven states, primarily in the Northeast, and the District of Columbia.  See Item 2: Properties.

 

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

 

The OperatingPartnership’s strategy has been to focus its operations, acquisition anddevelopment of office properties in markets and sub-markets where it believesit is, or can become, a significant and preferred owner and operator.  The Operating Partnership plans to continuethis strategy by expanding through acquisitions and/or development in Northeastmarkets where it has, or can achieve, similar status.  The Operating Partnership believes that itsProperties have excellent locations and access and are well-maintained andprofessionally managed.  As a result, theOperating Partnership believes that its Properties attract high quality tenantsand achieve among the highest rental, occupancy and tenant retention rateswithin their markets.  The OperatingPartnership also believes that its extensive market knowledge provides it witha significant competitive advantage, which is further enhanced by its strongreputation for, and emphasis on, delivering highly responsive, professionalmanagement services.  See “BusinessStrategies.”

 

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

 

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**BUSINESS STRATEGIES**

**Operations**

*Reputation**:*******The Operating Partnership has established a reputationas a highly-regarded landlord with an emphasis on delivering quality tenantservices in buildings it owns and/or manages. The Operating Partnership believes that its continued success depends inpart on enhancing its reputation as an operator of choice, which willfacilitate the retention of current tenants and the attraction of newtenants.  The Operating Partnershipbelieves it provides a superior level of service to its tenants, which shouldin turn allow the Operating Partnership to outperform the market with respectto occupancy rates, as well as improve tenant retention.

 

*Communication with tenants:*The Operating Partnership emphasizes frequent communication with tenants toensure first-class service to the Properties. Property managers generally are located on site at the Properties toprovide convenient access to management and to ensure that the Properties arewell-maintained.  Property management’sprimary responsibility is to ensure that buildings are operated at peakefficiency in order to meet both the Operating Partnership’s and tenants’ needsand expectations.  Property managersadditionally budget and oversee capital improvements and building systemupgrades to enhance the Properties’ competitive advantages in their markets andto maintain the quality of the Operating Partnership’s properties.

 

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

 

**Growth**

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

 

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

 

*Acquisitions:*The Operating Partnership also believes that growth opportunities exist throughacquiring operating properties or properties for redevelopment with attractivereturns in its core Northeast sub-markets where, based on its expertise inleasing, managing and operating properties, it believes it is, or can become, asignificant and preferred owner and operator. The Operating Partnership intends to acquire, invest in or redevelopadditional properties that: (i) are expected to provide attractive initialyields with potential for growth in cash flow from operations; (ii) arewell-located, of high quality and competitive in their respective sub-markets; (iii) arelocated in its existing sub-markets or in sub-markets in which the OperatingPartnership can become a significant and preferred owner and operator; and (iv) itbelieves have been under-managed or are otherwise capable of improvedperformance through intensive management, capital improvements and/or leasingthat should result in increased effective rental and occupancy rates.

 

*Development:*TheOperating Partnership seeks to selectively develop additional properties whereit believes such development will result in a favorable risk-adjusted return oninvestment in coordination with the above operating strategies.  Such development primarily will occur: (i) whenleases have been executed prior to construction; (ii) in stable coreNortheast sub-markets where the demand for such space exceeds available supply;and (iii) where the Operating Partnership is, or can become, a significantand preferred owner and operator.

 

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

 

**Financial**

The Operating Partnership currently intends to maintain a ratio ofdebt-to-undepreciated assets (total debt of the Operating Partnership as apercentage of total undepreciated assets) of 50 percent or less.  As of December 31, 2005, the OperatingPartnership’s total debt constituted approximately 42.8 percent of totalundepreciated assets of the Operating Partnership.  The Operating Partnership has threeinvestment grade credit ratings. Standard & Poor’s Rating Services (“S&P”) and Fitch, Inc.(“Fitch”) have each assigned their BBB rating to existing and prospectivesenior unsecured debt of the Operating Partnership.  S&P and Fitch have also assigned theirBBB- rating to existing and prospective preferred stock offerings of theCorporation.  Moody’s Investors Service (“Moody’s”)has assigned its Baa2 rating to existing and prospective senior unsecured debtof the Operating Partnership and its Baa3 rating to existing and prospectivepreferred stock offerings of the Corporation. Although there is no limit in the Operating Partnership’s organizationaldocuments on the amount of indebtedness that the Operating Partnership mayincur or a requirement for the maintenance of investment grade credit ratings,the Operating Partnership has entered into certain financial agreements whichcontain covenants that limit the Operating Partnership’s ability to incurindebtedness under certain circumstances. The Operating Partnership intends to conduct its operations so as tobest be able to maintain its investment grade rated status.  The Operating Partnership intends to utilizethe most appropriate sources of capital for future acquisitions, development,capital improvements and other investments, which may include funds fromoperating activities, proceeds from property and land sales, short-term andlong-term borrowings (including draws on the Operating Partnership’s revolvingcredit facility), and the issuance of additional debt or equity securities bythe Operating Partnership or equity securities by the Corporation.

 

**EMPLOYEES**

 

As of December 31, 2005, the Operating Partnership had noemployees.  The Corporation hadapproximately 350 full-time employees.

 

**COMPETITION**

 

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

 

**REGULATIONS**

 

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

 

Under various lawsand regulations relating to the protection of the environment, an owner of realestate may be held liable for the costs of removal or remediation of certainhazardous or toxic substances located on or in the property.  These laws often impose liability withoutregard to whether the owner was responsible for, or even knew of, the presenceof such substances.  The presence of suchsubstances may adversely affect the owner’s ability to rent or sell theproperty or to borrow using such property as collateral and may expose it toliability resulting from any release of, or exposure to, such substances.  Persons who arrange for the disposal ortreatment of hazardous or toxic substances at another location may also beliable for the costs of removal or remediation of such substances at thedisposal or treatment facility, whether or not such facility is owned oroperated by such person.  Certainenvironmental laws impose liability for the release of asbestos-containingmaterials into the air, and third parties may also seek recovery from owners oroperators of real properties for personal injury associated with asbestos-containingmaterials and other hazardous or toxic substances.

 

In connection withthe ownership (direct or indirect), operation, management and development ofreal properties, the

 

5

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OperatingPartnership may be considered an owner or operator of such properties or ashaving arranged for the disposal or treatment of hazardous or toxic substancesand, therefore, potentially liable for removal or remediation costs, as well ascertain other related costs, including governmental penalties and injuries topersons and property.

 

There can be noassurance that (i) future laws, ordinances or regulations will not imposeany material environmental liability, (ii) the current environmentalcondition of the Properties will not be affected by tenants, by the condition ofland or operations in the vicinity of the Properties (such as the presence ofunderground storage tanks), or by third parties unrelated to the OperatingPartnership, or (iii) the Operating Partnership’s assessments reveal allenvironmental liabilities and that there are no material environmentalliabilities of which the Operating Partnership is aware.  If compliance with the various laws andregulations, now existing or hereafter adopted, exceeds the Operating Partnership’sbudgets for such items, the Operating Partnership’s ability to make expecteddistributions to security holders could be adversely affected.

 

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

 

**INDUSTRY SEGMENTS**

 

The Operating Partnership operates in only one industry segment – realestate.  The Operating Partnership doesnot have any foreign operations and its business is not seasonal.  Please see our financial statements attachedhereto and incorporated by reference herein for financial information relatingto our industry segment.

 

**RECENT DEVELOPMENTS**

 

As a result of the economic climate since 2001, substantiallyall of the real estate markets the Operating Partnership operates in materiallysoftened.  Demand for office spacedeclined significantly and vacancy rates increased in each of the OperatingPartnership’s core markets over the period. Through February 22, 2006, the Operating Partnership’s core marketscontinued to be weak.  The percentageleased in the Operating Partnership’s consolidated portfolio of stabilizedoperating properties decreased to 91.0 percent at December 31, 2005 ascompared to 91.2 percent at December 31, 2004 and 91.5 percent at December 31,2003.  Percentage leased includes allleases in effect as of the period end date, some of which have commencementdates in the future (including, at December 31, 2005, leases withcommencement dates substantially in the future consisting of 15,125 square feetscheduled to commence in 2009 and 10,205 square feet scheduled to commence in2011), and leases that expire at the period end date.  Leases that expire as of the period end dateaggregate 311,623 square feet, or 1.1 percent of the net rentable squarefootage.  Excluded from percentage leasedat December 31, 2004 was a non-strategic, non-core 318,224 square footproperty acquired through a deed in lieu of foreclosure, which was 12.7 percentleased at December 31, 2004 and subsequently sold on February 4,2005.  Market rental rates have declinedin most markets from peak levels in late 2000 and early 2001.  Rental rates on the Operating Partnership’sspace that was re-leased (based on first rents payable) during the year ended December 31,2005 decreased an average of 8.2 percent compared to rates that were in effectunder expiring leases, as compared to a 8.7 percent decrease in 2004 and a 7.8percent decrease in 2003.  The OperatingPartnership believes that vacancy rates may continue to increase in most of itsmarkets in 2006.  As a result, theOperating Partnership’s future earnings and cash flow may continue to benegatively impacted by current market conditions.

 

In 2005, the Operating Partnership:

•                                          acquiredsix office properties, aggregating 1,832,251 square feet, at a total cost ofapproximately $387.8 million and;

•                                          soldseven office properties, aggregating 1,081,389 square feet, for aggregate netsales proceeds of approximately $115.0 million.

 

Additionally, in2005, the Operating Partnership sold its interest in an unconsolidated jointventure which owned two office properties aggregating 298,000 square feet, foraggregate net sales proceeds of approximately $2.7 million.  See Note 4 to the Financial Statements forfurther information regarding joint venture activity.

 

6

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**Property Acquisitions**

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

 
| ** **                    | ** ** | ** **                    | ** ** | ** **                     | ** ** | ** ** | ** ** | ** **      | ** **   | **Investment by**  | ** **   |
|-------------------------------|------------|-------------------------------|------------|--------------------------------|------------|------------|------------|-----------------|--------------|--------------------|--------------|
| ** **                    | ** ** | ** **                    | ** ** | ** **                     | ** ** | ** ** | ** ** | ** **      | ** **   | **Operating**      | ** **   |
| **Acquisition**               | ** ** | ** **                    | ** ** | ** **                     | ** ** | **# of**   | ** ** | **Rentable**    | *** *** | **Partnership**    | *** *** |
| **Date**                      | ** ** | **Property/Address**          | ** ** | **Location**                   | ** ** | **Bldgs.** | ** ** | **Square Feet** | *** *** | **(in thousands)** | *** *** |
| ** **                    | ** ** | ** **                    | ** ** | ** **                     | ** ** | ** ** | ** ** | ** **      | *** *** | ** **         | *** *** |
| 03/02/05                      |       | 101 Hudson Street (a)         |       | Jersey City, Hudson County, NJ |       | 1          |       | 1,246,283       |         | $                  | 330,302      |   |
| 03/29/05                      |       | 23 Main Street (a) (b)   |       | Holmdel, Monmouth County, NJ   |       | 1          |       | 350,000         |         | 23,948             |         |
| 07/12/05                      |       | Monmouth Executive Center (c) |       | Freehold, Monmouth County, NJ  |       | 4          |       | 235,968         |         | 33,561             |         |
|                          |       |                          |       |                           |       |       |       |            |         |               |         |
| Total  Property Acquisitions: |       |                          |       | 6                              |       | 1,832,251  |       | $               | 387,811      |               |

 

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(a)   Transactionwas funded primarily through borrowing on the Operating Partnership’s revolvingcredit facility.

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

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

 

In November 2005, the Operating Partnership announced that itentered into a contract to acquire all the interests in Capital Office Park, aseven-building office complex totaling approximately 842,300 square feet inGreenbelt, Maryland for aggregate purchase consideration of approximately$161.7 million.  The purchaseconsideration for the acquisition, which is expected to close in the firstquarter of 2006, will consist of the issuance of approximately $97.9 million ofcommon units in the Operating Partnership and the assumption of approximately$63.8 million of mortgage debt.  Atclosing, the sellers may elect to receive approximately $27.9 million in cashin lieu of common operating partnership units.

 

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

 

Pursuant to the contemplated transactions, the Operating Partnership isexpected to:

 

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

•                  Acquiresubstantially all the ownership interests in 12 office properties, valued atapproximately $337 million and totaling 1.7 million square feet in Northern andCentral New Jersey; and

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

 

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

 

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

 

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**Property Sales**

 

TheOperating Partnership sold the following office properties during the yearended December 31, 2005:

 
| ** **                    | ** ** | ** **                                | ** ** | ** **                                | ** ** | ** ** | ** ** | ** **   | ** ** | **Net**            | ** ** | **Net**            | ** ** | **Realized**       | ** ** |
|-------------------------------|------------|-------------------------------------------|------------|-------------------------------------------|------------|------------|------------|--------------|------------|--------------------|------------|--------------------|------------|--------------------|------------|
| ** **                    | ** ** | ** **                                | ** ** | ** **                                | ** ** | ** ** | ** ** | **Rentable** | ** ** | **Sales**          | ** ** | **Book**           | ** ** | **Gain/**          | ** ** |
| **Sale**                      | ** ** | ** **                                | ** ** | ** **                                | ** ** | **# of**   | ** ** | **Square**   | ** ** | **Proceeds**       | ** ** | **Value**          | ** ** | **(Loss)**         | ** ** |
| **Date**                      | ** ** | **Property/Address**                      | ** ** | **Location**                              | ** ** | **Bldgs.** | ** ** | **Feet**     | ** ** | **(in thousands)** | ** ** | **(in thousands)** | ** ** | **(in thousands)** | ** ** |
| ** **                    | ** ** | ** **                                | ** ** | ** **                                | ** ** | ** ** | ** ** | ** **   | ** ** | ** **         | ** ** | ** **         | ** ** | ** **         | ** ** |
| 02/04/05                      |       | 210 South 16th Street                     |       | Omaha, Douglas County, Nebraska           |       | 1          |       | 318,224      |       | $                  | 8,464      |               | $          | 8,210              |       | $ | 254 |   |
| 02/11/05                      |       | 1122 Alma Road                            |       | Richardson, Dallas County, Texas          |       | 1          |       | 82,576       |       | 2,075              |       | 2,344              |       | (269               | )          |
| 02/15/05                      |       | 3 Skyline Drive                           |       | Hawthorne, Westchester County,  New York  |       | 1          |       | 75,668       |       | 9,587              |       | 8,856              |       | 731                |       |
| 05/11/05                      |       | 201 Willowbrook Blvd.                     |       | Wayne, Passaic County, New Jersey (a)     |       | 1          |       | 178,329      |       | 17,696             |       | 17,705             |       | (9                 | )          |
| 06/03/05                      |       | 600 Community Drive/  111 East Shore Road |       | North Hempstead, Nassau County,  New York |       | 2          |       | 292,849      |       | 71,593             |       | 59,609             |       | 11,984             |       |
| 12/29/05                      |       | 3600 South Yosemite                       |       | Denver, Denver County, Colorado           |       | 1          |       | 133,743      |       | 5,566              |       | 11,121             |       | (5,555             | )          |
|                          |       |                                      |       |                                      |       |       |       |         |       |               |       |               |       |               |       |
| Total Office  Property Sales: |       |                                      |       | 7                                         |       | 1,081,389  |       | $            | 114,981    |               | $          | 107,845            |       | $                  | 7,136      |   |

 

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

 

##### **Investments in MarketableSecurities**

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

 

**FINANCING ACTIVITY**

 

### **Senior Unsecured NotesTransactions**

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

 

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

 

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

 

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

 

**Revolving Credit Facility**

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

 

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

 

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

 

## **AVAILABLE INFORMATION**

## ** **

The Corporation’s internet website is www.mack-cali.com.  The Operating Partnership makes available freeof charge on or through the Corporation’s website its annual reports on Form 10-K,quarterly reports on Form 10-Q, current reports on Form 8-K andamendments to those reports filed or furnished pursuant to Section 13(a) ofthe Securities Exchange Act of 1934, as amended, as soon as reasonablypracticable after it electronically files or furnishes such materials to theSecurities and Exchange Commission.  Inaddition, the Corporation’s internet website includes other items related tocorporate governance matters, including, among other things, the Corporation’scorporate governance guidelines, charters of various committees of the Board ofDirectors of the Corporation, and the Corporation’s code of business conductand ethics applicable to all employees, officers and directors of theCorporation.  The Corporation intends todisclose on its internet website any amendments to or waivers from its code ofbusiness conduct and ethics as well as any amendments to its corporategovernance principles or the charters of various committees of the Board ofDirectors.  Copies of these documents maybe obtained, free of charge, from our internet website.  Any shareholder of the Corporation also mayobtain copies of these documents, free of charge, by sending a request in writingto: Mack-Cali Investor Relations Department, 11 Commerce Drive, Cranford, NJ07016-3501.

 

##### **DISCLOSURE REGARDINGFORWARD-LOOKING STATEMENTS**

##### ** **

We consider portions of this report, including the documentsincorporated by reference, to be forward-looking statements within the meaningof Section 21E of the Securities Exchange Act of 1934, as amended.  We intend such forward-looking statements tobe covered by the safe harbor provisions for forward-looking statementscontained in Section 21E of such act. Such forward-looking statements relate to, without limitation, ourfuture economic performance, plans and objectives for future operations andprojections of revenue and other financial items.  Forward-looking statements can be identifiedby the use of words such as “may,” “will,” “plan,” “should,” “expect,” “anticipate,”“estimate,” “continue” or comparable terminology.  Forward-looking statements are inherentlysubject to risks and uncertainties, many of which we cannot predict withaccuracy and some of which we might not even anticipate.  Although we believe that the expectationsreflected in such forward-looking statements are based upon reasonableassumptions at the time made, we can give no assurance that such expectationswill be achieved.  Future events andactual results, financial and otherwise, may differ materially from the resultsdiscussed in the forward-looking statements. Readers are cautioned not to placeundue reliance on these forward-looking statements.

 

Among the factors about which we have madeassumptions are:

 

•                  changesin the general economic climate and conditions, including those affectingindustries in which our principal tenants compete;

 

•                  theextent of any tenant bankruptcies or of any early lease terminations;

 

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

 

•                  changesin the supply of and demand for office, office/flex and industrial/warehouseproperties;

 

•                  changesin interest rate levels;

 

•                  changesin operating costs;

 

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

 

•                  theavailability of financing;

 

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•                  changesin governmental regulation, tax rates and similar matters; and

 

•                  otherrisks associated with the development and acquisition of properties, includingrisks that the development may not be completed on schedule, that the tenantswill not take occupancy or pay rent, or that development or operating costs maybe greater than anticipated.

 

For further information on factors whichcould impact us and the statements contained herein, see Item 1A: RiskFactors.  We assume no obligation toupdate and supplement forward-looking statements that become untrue because ofsubsequent events.

 

##### **ITEM 1A.**                    RISK FACTORS

##### ** **

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

 

**Declines in economic activities in theNortheastern office markets could adversely affect our operating results.**

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

 

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

 

**Our performance is subject to risksassociated with the real estate industry.**

*General*: Ourbusiness and our ability to make distributions or payments to our investorsdepend on the ability of our properties to generate funds in excess ofoperating expenses (including scheduled principal payments on debt and capitalexpenditure requirements).  Events or conditionsthat are beyond our control may adversely affect our operations and the valueof our properties.  Such events orconditions could include:

 

•                                          changesin the general economic climate;

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

•                                          decreasedattractiveness of our properties to tenants;

•                                          competitionfrom other office and office/flex properties;

•                                          ourinability to provide adequate maintenance;

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

•                                          changesin laws and regulations (including tax, environmental, zoning and buildingcodes, and housing laws and regulations) and agency or court interpretations ofsuch laws and regulations and the related costs of compliance;

•                                          changesin interest rate levels and the availability of financing;

•                                          theinability of a significant number of tenants to pay rent;

•                                          ourinability to rent office space on favorable terms; and

•                                          civilunrest, earthquakes, acts of terrorism and other natural disasters or acts ofGod that may result in uninsured losses.

 

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*Financially distressed tenants may be unableto pay rent*: If a tenant defaults, we mayexperience delays and incur substantial costs in enforcing our rights aslandlord and protecting our investments. If a tenant files for bankruptcy, a potential court judgment rejectingand terminating such tenant’s lease could adversely affect our ability to makedistributions or payments to our investors.

 

*Renewing leases or re-letting space could becostly*: If a tenant does not renew its lease uponexpiration or terminates its lease early, we may not be able to re-lease thespace.  If a tenant does renew its leaseor we re-lease the space, the terms of the renewal or new lease, including thecost of required renovations or concessions to the tenant, may be lessfavorable than the current lease terms which could adversely affect our abilityto make distributions or payments to our investors.

 

*Our insurance coverage on our properties may beinadequate**:*Wecurrently carry comprehensive insurance on all of our properties, includinginsurance for liability, fire and flood. We cannot guarantee that the limits of our current policies will besufficient in the event of a catastrophe to our properties.  We cannot guarantee that we will be able torenew or duplicate our current insurance coverage in adequate amounts or atreasonable prices.  In addition, whileour current insurance policies insure us against loss from terrorist acts andtoxic mold, in the future insurance companies may no longer offer coverage againstthese types of losses, or, if offered, these types of insurance may beprohibitively expensive. If any or all of the foregoing should occur, we maynot have insurance coverage against certain types of losses and/or there may bedecreases in the limits of insurance available. Should an uninsured loss or a loss in excess of our insured limitsoccur, we could lose all or a portion of the capital we have invested in aproperty or properties, as well as the anticipated future revenue from theproperty or properties.  Nevertheless, wemight remain obligated for any mortgage debt or other financial obligationsrelated to the property or properties. We cannot guarantee that material losses in excess of insurance proceedswill not occur in the future.  If any ofour properties were to experience a catastrophic loss, it could seriouslydisrupt our operations, delay revenue and result in large expenses to repair orrebuild the property.  Such events couldadversely affect our ability to make distributions or payments to ourinvestors.

 

*Illiquidity of real estate limits our abilityto act quickly*: Real estate investments arerelatively illiquid.  Such illiquiditymay limit our ability to react quickly in response to changes in economic andother conditions.  If we want to sell aninvestment, we might not be able to dispose of that investment in the timeperiod we desire, and the sales price of that investment might not recoup orexceed the amount of our investment.  Theprohibition in the Internal Revenue Code of 1986, as amended, and relatedregulations on a real estate investment trust holding property for sale alsomay restrict our ability to sell property. In addition, we acquired a significant number of our properties fromindividuals to whom we issued limited partnership units as part of the purchaseprice.  In connection with theacquisition of these properties, in order to preserve such individual’s taxdeferral, we contractually agreed not to sell or otherwise transfer theproperties for a specified period of time, except in a manner which does notresult in recognition of any built-in-gain (which may result in an income taxliability) or which reimburses the appropriate individuals for the taxconsequences of the recognition of such built-in-gains.  As of December 31, 2005, 56 of ourproperties, with an aggregate net book value of approximately $1.3 billion,were subject to these restrictions, which expire periodically through2010.  For those properties where suchrestrictions have lapsed, we are generally required to use commerciallyreasonable efforts to prevent any sale, transfer or other disposition of thesubject properties from resulting in the recognition of built-in gain to theappropriate individuals.  74 of ourproperties, with an aggregate net book value of approximately $667.7 million,have lapsed restrictions and are subject to these conditions.  The above limitations on our ability to sellour investments could adversely affect our ability to make distributions orpayments to our investors.

 

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

 

*Environmental problems are possible and maybe costly:* Various federal, state and local lawsand regulations subject property owners or operators to liability for the costsof removal or remediation of certain hazardous or toxic substances located onor in the property.  These laws oftenimpose liability without regard to whether the owner or operator was

 

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responsible for or even knew of the presence of such substances.  The presence of or failure to properlyremediate hazardous or toxic substances (such as toxic mold) may adverselyaffect our ability to rent, sell or borrow against contaminated property andmay impose liability upon us for personal injury to persons exposed to suchsubstances.  Various laws and regulationsalso impose liability on persons who arrange for the disposal or treatment ofhazardous or toxic substances at another location for the costs of removal orremediation of such substances at the disposal or treatment facility.  These laws often impose liability whether ornot the person arranging for such disposal ever owned or operated the disposalfacility.  Certain other environmentallaws and regulations impose liability on owners or operators of property forinjuries relating to the release of asbestos-containing or other materials intothe air, water or otherwise into the environment.  As owners and operators of property and aspotential arrangers for hazardous substance disposal, we may be liable undersuch laws and regulations for removal or remediation costs, governmentalpenalties, property damage, personal injuries and related expenses.  Payment of such costs and expenses couldadversely affect our ability to make distributions or payments to ourinvestors.

 

*Competition for acquisitions may result inincreased prices for properties:* We plan toacquire additional properties in New Jersey, New York and Pennsylvania and inthe Northeast generally.  We may becompeting for investment opportunities with entities that have greaterfinancial resources.  Several officebuilding developers and real estate companies may compete with us in seekingproperties for acquisition, land for development and prospective tenants. Suchcompetition may adversely affect our ability to make distributions or paymentsto our investors by:

 

•                                          reducingthe number of suitable investment opportunities offered to us;

•                                          increasingthe bargaining power of property owners;

•                                          interferingwith our ability to attract and retain tenants;

•                                          increasingvacancies which lowers market rental rates and limits our ability to negotiaterental rates; and/or

•                                          adverselyaffecting our ability to minimize expenses of operation.

 

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

 

•                                          financingfor development projects may not be available on favorable terms;

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

•                                          failureto complete construction on schedule or within budget may increase debtservice expense and construction costs.

 

*Property ownership through joint ventures couldsubject us to the contrary business objectives of our co-venturers*:We, from time to time, invest in joint ventures or partnerships in which we donot hold a controlling interest.  Theseinvestments involve risks that do not exist with properties in which we own acontrolling interest, including the possibility that our co-venturers orpartners may, at any time, have business, economic or other objectives that areinconsistent with our objectives. Because we lack a controlling interest, our co-venturers or partners maybe in a position to take action contrary to our instructions or requests orcontrary to our policies or objectives. While we seek protective rights against such contrary actions, there canbe no assurance that we will be successful in procuring any such protectiverights, or if procured, that the rights will be sufficient to fully protect usagainst contrary actions.  Ourorganizational documents do not limit the amount of available funds that we mayinvest in joint ventures or partnerships. If the objectives of our co-venturers or partners are inconsistent withours, it may adversely affect our ability to make distributions or payments toour investors.

 

**Debt financing could adversely affect oureconomic performance.**

*Scheduled debt payments and refinancing couldadversely affect our financial condition:*We aresubject to the risks normally associated with debt financing.  These risks, including the following, mayadversely affect our ability to make distributions or payments to ourinvestors:

 

•                                          ourcash flow may be insufficient to meet required payments of principal andinterest;

•                                          paymentsof principal and interest on borrowings may leave us with insufficient cashresources to pay 

 

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operating expenses;

•                                          wemay not be able to refinance****indebtednesson our properties at maturity; and

•                                          ifrefinanced, the terms of refinancing may not be as favorable as the originalterms of the related indebtedness.

 

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

 

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

 

•                                          wemay need to dispose of one or more of our properties upon disadvantageousterms;

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

•                                          ifwe mortgage property to secure payment of indebtedness and are unable to meetmortgage payments, the mortgagee could foreclose upon such property or appointa receiver to receive an assignment of our rents and leases; and

•                                          foreclosuresupon mortgaged property could create taxable income without accompanying cashproceeds and, therefore, hinder our ability to meet the real estate investmenttrust distribution requirements of the Internal Revenue Code.

 

*We are obligated to comply with financialcovenants in our indebtedness that could restrict our range of operatingactivities*: The mortgages on our propertiescontain customary negative covenants, including limitations on our ability,without the prior consent of the lender, to further mortgage the property, toenter into new leases outside of stipulated guidelines or to materially modifyexisting leases.  In addition, our creditfacility contains customary requirements, including restrictions and otherlimitations on our ability to incur debt, debt to assets ratios, secured debtto total assets ratios, interest coverage ratios and minimum ratios ofunencumbered assets to unsecured debt. The indentures under which our senior unsecured debt have been issuedcontain financial and operating covenants including coverage ratios andlimitations on our ability to incur secured and unsecured debt.  These covenants limit our flexibility inconducting our operations and create a risk of default on our indebtedness ifwe cannot continue to satisfy them.

 

*Rising interest rates may adversely affectour cash flow*: As of December 31, 2005,outstanding borrowings of approximately $227 million under our revolving creditfacility bear interest at variable rates. We may incur additional indebtedness in the future that also bearsinterest at variable rates.  Variablerate debt creates higher debt service requirements if market interest ratesincrease. Higher debt service requirements could adversely affect our abilityto make distributions or payments to our investors and/or cause us to defaultunder certain debt covenants.

 

*Our degree of leverage could adversely affectour cash flow*: We fund acquisition opportunitiesand development partially through short-term borrowings (including ourrevolving credit facility), as well as from proceeds from property sales and undistributedcash.  We expect to refinance projectspurchased with short-term debt either with long-term indebtedness or equityfinancing depending upon the economic conditions at the time ofrefinancing.  The Board of Directors ofMack-Cali Realty Corporation, our general partner, has a general policy oflimiting the ratio of our indebtedness to total undepreciated assets (totaldebt as a percentage of total undepreciated assets) to 50 percent or less,although there is no limit in Mack-Cali Realty Corporation’s or ourorganizational documents on the amount of indebtedness that we may incur.  However, we have entered into certainfinancial agreements which contain financial and operating covenants that limitour ability under certain circumstances to incur additional secured andunsecured indebtedness.  The Board ofDirectors of Mack-Cali Realty Corporation could alter or eliminate its currentpolicy on borrowing at any time at its discretion.  If this policy were changed, we could becomemore highly leveraged, resulting in an increase in debt service that couldadversely affect our cash flow and our ability to make distributions orpayments to our investors and/or could cause an increased risk of default onour obligations.

 

*We are dependent on external sources ofcapital for future growth*: To qualify as a realestate investment trust, Mack-Cali

 

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

 

**Competition for skilled personnel couldincrease our labor costs.**

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

 

**We are dependent on our key personnel whosecontinued service is not guaranteed.**

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

 

**Certain provisions of Maryland law and thecharter, bylaws and stockholder rights plan of Mack-Cali Realty Corporationcould hinder, delay or prevent changes in control.**

Certain provisionsof Maryland law, the charter, bylaws, and stockholder rights plan of Mack-CaliRealty Corporation have the effect of discouraging, delaying or preventingtransactions that involve an actual or threatened change in control. Theseprovisions include the following:

 

*Classified Board of Directors:*The Board of Directors of Mack-Cali Realty Corporation is divided into threeclasses with staggered terms of office of three years each.  The classification and staggered terms ofoffice of the directors make it more difficult for a third party to gaincontrol of the board of directors.  Atleast two annual meetings of Mack-Cali Realty Corporation stockholders, insteadof one, generally would be required to affect a change in a majority of theboard of directors.

 

*Removal of Directors:*Under Mack-Cali Realty Corporation’s charter, subject to the rights of one ormore classes or series of preferred stock to elect one or more directors, adirector may be removed only for cause and only by the affirmative vote of atleast two-thirds of all votes entitled to be cast by Mack-Cali RealtyCorporation’s stockholders generally in the election of directors.  Neither the Maryland General Corporation Lawnor Mack-Cali Realty Corporation’s charter define the term “cause.”  As a result, removal for “cause” is subjectto Maryland common law and to judicial interpretation and review in the contextof the facts and circumstances of any particular situation.

 

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

 

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

 

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*Advance Notice Provisions for StockholderNominations and Proposals*: Mack-Cali RealtyCorporation’s bylaws require advance written notice for stockholders tonominate persons for election as directors at, or to bring other businessbefore, any meeting of stockholders. This bylaw provision limits the ability of stockholders to makenominations of persons for election as directors or to introduce otherproposals unless Mack-Cali Realty Corporation is notified in a timely mannerprior to the meeting.

 

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

 

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

 

*Duties of Directors with Respect toUnsolicited Takeovers*: Maryland law providesprotection for Maryland corporations against unsolicited takeovers by limiting,among other things, the duties of the directors in unsolicited takeoversituations. The duties of directors of Maryland corporations do not requirethem to (a) accept, recommend or respond to any proposal by a personseeking to acquire control of the corporation, (b) authorize thecorporation to redeem any rights under, or modify or render inapplicable, anystockholders rights plan, (c) make a determination under the MarylandBusiness Combination Act or the Maryland Control Share Acquisition Act, or (d) actor fail to act solely because of the effect of the act or failure to act mayhave on an acquisition or potential acquisition of control of the corporationor the amount or type of consideration that may be offered or paid to thestockholders in an acquisition. Moreover, under Maryland law the act of a director of a Marylandcorporation relating to or affecting an acquisition or potential acquisition ofcontrol is not subject to any higher duty or greater scrutiny than is appliedto any other act of a director. Maryland law also contains a statutorypresumption that an act of a director of a Maryland corporation satisfies theapplicable standards of conduct for directors under Maryland law.

 

*Ownership Limit*:In order to preserve Mack-Cali Realty Corporation’s status as a real estateinvestment trust under the Code, Mack-Cali Realty Corporation’s chartergenerally prohibits any single stockholder, or any group of affiliatedstockholders, from beneficially owning more than 9.8 percent of our outstandingcapital stock unless the Board of Directors waives or modifies this ownershiplimit.

 

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

 

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

 

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

 

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

 

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

 

**Consequences of failure of Mack-Cali RealtyCorporation to qualify as a real estate investment trust could adversely affectour financial condition.**  *Failure to maintainownership limits could cause Mack-Cali Realty Corporation to lose itsqualification as a real estate investment trust*: In order forMack-Cali Realty Corporation to maintain its qualification as a real estateinvestment trust, not more than 50 percent in value of its outstanding stockmay be actually and/or constructively owned by five or fewer individuals (asdefined in the Internal Revenue Code to include certain entities).  Mack-Cali Realty Corporation has limited theownership of its outstanding shares of its common stock by any singlestockholder to 9.8 percent of the outstanding shares of its common stock.  The Board of Directors of Mack-Cali RealtyCorporation could waive this restriction if they were satisfied, based upon theadvice of tax counsel or otherwise, that such action would be in the bestinterests of Mack-Cali Realty Corporation and would not affect itsqualifications as a real estate investment trust.  Common stock of Mack-Cali Realty Corporationacquired or transferred in breach of the limitation may be redeemed byMack-Cali Realty Corporation for the lesser of the price paid and the averageclosing price for the 10 trading days immediately preceding redemption or soldat the direction of us.  Mack-Cali RealtyCorporation may elect to redeem such shares of common stock for limitedpartnership units, which are nontransferable except in very limitedcircumstances.  Any transfer of shares ofcommon stock which, as a result of such transfer, causes Mack-Cali RealtyCorporation to be in violation of any ownership limit will be deemed void.  Although Mack-Cali Realty Corporationcurrently intends to continue to operate in a manner which will enable it tocontinue to qualify as a real estate investment trust, it is possible thatfuture economic, market, legal, tax or other considerations may cause Mack-CaliRealty Corporation’s Board of Directors to revoke the election for it to qualifyas a real estate investment trust.  UnderMack-Cali Realty Corporation’s organizational documents, its Board of Directorscan make such revocation without the consent of Mack-Cali Realty Corporation’sstockholders.

 

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

 

*Tax liabilities as a consequence of failureof Mack-Cali Realty Corporation to qualify as a real estate investment trust*:Mack-Cali Realty Corporation has elected to be treated and has operated so asto qualify as a real estate investment trust for federal income tax purposessince its taxable year ended December 31, 1994.  Although Mack-Cali Realty Corporationbelieves it will continue to operate in such manner, it cannot guarantee thatit will do so.  Qualification as a realestate investment trust involves the satisfaction of various requirements (someon an annual and some on a quarterly basis) established under highly technicaland complex tax provisions of the Internal Revenue Code.  Because few judicial or administrativeinterpretations of such provisions exist and qualification determinations arefact sensitive, Mack-Cali Realty Corporation cannot assure you that it willqualify as a real estate investment trust for any taxable year.

 

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

 

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

•                                          itwill be subject to federal income tax at regular corporate rates, including anyalternative minimum tax, if applicable; and

 

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•                                          unlessit is entitled to relief under certain statutory provisions, it will not bepermitted to qualify as a real estate investment trust for the four taxableyears following the year during which it was disqualified.

 

A loss ofMack-Cali Realty Corporation’s status as a real estate investment trust couldhave an adverse effect on us.  Failure toqualify as a real estate investment trust also would eliminate the requirementthat Mack-Cali Realty Corporation pay dividends to its stockholders.

 

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

 

*Risk of changes in the tax law applicable toreal estate investment trusts:*Since the InternalRevenue Service, the United States Treasury Department and Congress frequentlyreview federal income tax legislation, we cannot predict whether, when or towhat extent new federal tax laws, regulations, interpretations or rulings willbe adopted.  Any of such legislativeaction may prospectively or retroactively modify our and Mack-Cali RealtyCorporation’s tax treatment and, therefore, may adversely affect taxation ofus, Mack-Cali Realty Corporation, and/or our investors.

 

**ITEM 1B.****                    UNRESOLVEDSTAFF COMMENTS**

 

None.

 

17

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##### **ITEM 2.**                             PROPERTIES

##### ** **

**PROPERTY LIST**

 

As of December 31, 2005, the Operating Partnership’s ConsolidatedProperties consisted of 263 in-service office, office/flex andindustrial/warehouse properties, as well as two stand-alone retail propertiesand two land leases.  The ConsolidatedProperties are located primarily in the Northeast.  The Consolidated Properties are easily accessiblefrom major thoroughfares and are in close proximity to numerous amenities.  The Consolidated Properties contain a totalof approximately 29.5 million square feet, with the individual propertiesranging from 6,216 to 1,246,283 square feet. The Consolidated Properties, managed by on-site employees, generallyhave attractively landscaped sites and atriums in addition to quality designand construction.  The OperatingPartnership’s tenants include many service sector employers, including a largenumber of professional firms and national and international businesses.  The Operating Partnership believes that allof its properties are well-maintained and do not require significant capitalimprovements.

 

18

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**Office Properties**

 
| ** **                | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | **2005**             | ** ** |
|---------------------------|------------|------------|------------|---------------|------------|----------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|----------------------|------------|----------------------|------------|
| ** **                | ** ** | ** ** | ** ** | ** **    | ** ** | **Percentage** | ** ** | **2005**          | ** ** | **2005**          | ** ** | ** **        | ** ** | **2005**             | ** ** | **Average**          | ** ** |
| ** **                | ** ** | ** ** | ** ** | **Net**       | ** ** | **Leased**     | ** ** | **Base**          | ** ** | **Effective**     | ** ** | ** **        | ** ** | **Average**          | ** ** | **Effective**        | ** ** |
| ** **                | ** ** | ** ** | ** ** | **Rentable**  | ** ** | **as of**      | ** ** | **Rent**          | ** ** | **Rent**          | ** ** | **Percentage**    | ** ** | **Base Rent**        | ** ** | **Rent**             | ** ** |
| ** **                | ** ** | **Year**   | ** ** | **Area**      | ** ** | **12/31/05**   | ** ** | **($000’s)** | ** ** | **($000’s)** | ** ** | **of Total 2005** | ** ** | **Per Sq. Ft.**      | ** ** | **Per Sq. Ft.**      | ** ** |
| **Property Location**     | ** ** | **Built**  | ** ** | **(Sq. Ft.)** | ** ** | **(%) (a)**    | ** ** | **(b) (c)**  | ** ** | **(c) (d)**  | ** ** | **Base Rent (%)** | ** ** | **($) (c) (e)** | ** ** | **($) (c) (f)** | ** ** |
|                      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **NEW JERSEY**            |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
|                      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Atlantic County**       |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Egg Harbor***          |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 100 Decadon Drive         |       | 1987       |       | 40,422        |       | 100.0          |       | 951               |       | 857               |       | 0.18              |       | 23.53                |       | 21.20                |       |
| 200 Decadon Drive         |       | 1991       |       | 39,922        |       | 100.0          |       | 923               |       | 801               |       | 0.17              |       | 23.12                |       | 20.06                |       |
|                      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Bergen County**         |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Fair Lawn***           |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 17-17 Route 208 North     |       | 1987       |       | 143,000       |       | 100.0          |       | 3,449             |       | 2,945             |       | 0.64              |       | 24.12                |       | 20.59                |       |
| ***Fort Lee***            |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| One Bridge Plaza          |       | 1981       |       | 200,000       |       | 92.2           |       | 4,778             |       | 4,384             |       | 0.88              |       | 25.91                |       | 23.77                |       |
| 2115 Linwood Avenue       |       | 1981       |       | 68,000        |       | 82.6           |       | 1,297             |       | 954               |       | 0.24              |       | 23.09                |       | 16.98                |       |
| ***Little Ferry***        |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 200 Riser Road            |       | 1974       |       | 286,628       |       | 100.0          |       | 1,907             |       | 1,742             |       | 0.35              |       | 6.65                 |       | 6.08                 |       |
| ***Montvale***            |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 95 Chestnut Ridge Road    |       | 1975       |       | 47,700        |       | 100.0          |       | 796               |       | 729               |       | 0.15              |       | 16.69                |       | 15.28                |       |
| 135 Chestnut Ridge Road   |       | 1981       |       | 66,150        |       | 92.1           |       | 1,535             |       | 1,242             |       | 0.28              |       | 25.20                |       | 20.39                |       |
| ***Paramus***             |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 15 East Midland Avenue    |       | 1988       |       | 259,823       |       | 100.0          |       | 6,201             |       | 6,122             |       | 1.14              |       | 23.87                |       | 23.56                |       |
| 140 East Ridgewood Avenue |       | 1981       |       | 239,680       |       | 90.4           |       | 4,625             |       | 3,923             |       | 0.85              |       | 21.35                |       | 18.11                |       |
| 461 From Road             |       | 1988       |       | 253,554       |       | 98.6           |       | 6,064             |       | 6,045             |       | 1.12              |       | 24.26                |       | 24.18                |       |
| 650 From Road             |       | 1978       |       | 348,510       |       | 99.1           |       | 8,114             |       | 7,182             |       | 1.50              |       | 23.49                |       | 20.79                |       |
| 61 South Paramus Avenue   |       | 1985       |       | 269,191       |       | 93.3           |       | 6,609             |       | 5,998             |       | 1.22              |       | 26.31                |       | 23.88                |       |
| ***Rochelle Park***       |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 120 Passaic Street        |       | 1972       |       | 52,000        |       | 99.6           |       | 1,398             |       | 1,318             |       | 0.26              |       | 26.99                |       | 25.45                |       |
| 365 West Passaic Street   |       | 1976       |       | 212,578       |       | 94.5           |       | 4,062             |       | 3,531             |       | 0.75              |       | 20.22                |       | 17.58                |       |
| ***Upper Saddle River***  |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 1 Lake Street             |       | 1973/94    |       | 474,801       |       | 100.0          |       | 7,465             |       | 7,465             |       | 1.38              |       | 15.72                |       | 15.72                |       |
| 10 Mountainview Road      |       | 1986       |       | 192,000       |       | 100.0          |       | 4,032             |       | 3,758             |       | 0.74              |       | 21.00                |       | 19.57                |       |
| ***Woodcliff Lake***      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 400 Chestnut Ridge Road   |       | 1982       |       | 89,200        |       | 100.0          |       | 1,950             |       | 1,456             |       | 0.36              |       | 21.86                |       | 16.32                |       |
| 470 Chestnut Ridge Road   |       | 1987       |       | 52,500        |       | 100.0          |       | 1,192             |       | 1,192             |       | 0.22              |       | 22.70                |       | 22.70                |       |
| 530 Chestnut Ridge Road   |       | 1986       |       | 57,204        |       | 100.0          |       | 1,166             |       | 1,166             |       | 0.22              |       | 20.38                |       | 20.38                |       |
| 50 Tice Boulevard         |       | 1984       |       | 235,000       |       | 100.0          |       | 6,041             |       | 5,432             |       | 1.12              |       | 25.71                |       | 23.11                |       |
| 300 Tice Boulevard        |       | 1991       |       | 230,000       |       | 100.0          |       | 6,099             |       | 5,343             |       | 1.13              |       | 26.52                |       | 23.23                |       |
|                      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Burlington County**     |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Moorestown***          |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 224 Strawbridge Drive     |       | 1984       |       | 74,000        |       | 85.4           |       | 1,371             |       | 1,252             |       | 0.25              |       | 21.69                |       | 19.81                |       |
| 228 Strawbridge Drive     |       | 1984       |       | 74,000        |       | 100.0          |       | 1,043             |       | 896               |       | 0.19              |       | 14.09                |       | 12.11                |       |
| 232 Strawbridge Drive     |       | 1986       |       | 74,258        |       | 98.8           |       | 1,131             |       | 1,127             |       | 0.21              |       | 15.42                |       | 15.36                |       |
|                      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Essex County**          |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Millburn***            |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 150 J.F. Kennedy Parkway  |       | 1980       |       | 247,476       |       | 100.0          |       | 7,009             |       | 6,079             |       | 1.29              |       | 28.32                |       | 24.56                |       |

 

19

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| ** **                            | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | **2005**             | ** ** |
|---------------------------------------|------------|------------|------------|---------------|------------|----------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|----------------------|------------|----------------------|------------|
| ** **                            | ** ** | ** ** | ** ** | ** **    | ** ** | **Percentage** | ** ** | **2005**          | ** ** | **2005**          | ** ** | ** **        | ** ** | **2005**             | ** ** | **Average**          | ** ** |
| ** **                            | ** ** | ** ** | ** ** | **Net**       | ** ** | **Leased**     | ** ** | **Base**          | ** ** | **Effective**     | ** ** | ** **        | ** ** | **Average**          | ** ** | **Effective**        | ** ** |
| ** **                            | ** ** | ** ** | ** ** | **Rentable**  | ** ** | **as of**      | ** ** | **Rent**          | ** ** | **Rent**          | ** ** | **Percentage**    | ** ** | **Base Rent**        | ** ** | **Rent**             | ** ** |
| ** **                            | ** ** | **Year**   | ** ** | **Area**      | ** ** | **12/31/05**   | ** ** | **($000’s)** | ** ** | **($000’s)** | ** ** | **of Total 2005** | ** ** | **Per Sq. Ft.**      | ** ** | **Per Sq. Ft.**      | ** ** |
| **Property Location**                 | ** ** | **Built**  | ** ** | **(Sq. Ft.)** | ** ** | **(%) (a)**    | ** ** | **(b) (c)**  | ** ** | **(c) (d)**  | ** ** | **Base Rent (%)** | ** ** | **($) (c) (e)** | ** ** | **($) (c) (f)** | ** ** |
|                                  |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| *Roseland*                            |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 101 Eisenhower Parkway                |       | 1980       |       | 237,000       |       | 94.8           |       | 5,395             |       | 4,953             |       | 1.00              |       | 24.01                |       | 22.05                |       |
| 103 Eisenhower Parkway                |       | 1985       |       | 151,545       |       | 82.2           |       | 3,054             |       | 2,608             |       | 0.56              |       | 24.52                |       | 20.94                |       |
| 105 Eisenhower Parkway                |       | 2001       |       | 220,000       |       | 71.6           |       | 3,848             |       | 2,927             |       | 0.71              |       | 24.43                |       | 18.58                |       |
|                                  |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Hudson County**                     |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Jersey City***                     |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| Harborside Financial Center Plaza 1   |       | 1983       |       | 400,000       |       | 44.8           |       | 2,609             |       | 2,403             |       | 0.48              |       | 14.56                |       | 13.41                |       |
| Harborside Financial Center Plaza 2   |       | 1990       |       | 761,200       |       | 100.0          |       | 18,577            |       | 17,518            |       | 3.43              |       | 24.40                |       | 23.01                |       |
| Harborside Financial Center Plaza 3   |       | 1990       |       | 725,600       |       | 100.0          |       | 17,045            |       | 16,035            |       | 3.15              |       | 23.49                |       | 22.10                |       |
| Harborside Financial Center Plaza 4-A |       | 2000       |       | 207,670       |       | 97.5           |       | 6,659             |       | 5,834             |       | 1.23              |       | 32.89                |       | 28.81                |       |
| Harborside Financial Center Plaza 5   |       | 2002       |       | 977,225       |       | 94.7           |       | 30,183            |       | 25,832            |       | 5.58              |       | 32.62                |       | 27.91                |       |
| 101 Hudson Street (g)                 |       | 1992       |       | 1,246,283     |       | 99.5           |       | 23,254            |       | 20,084            |       | 4.29              |       | 22.44                |       | 19.38                |       |
|                                  |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Mercer County**                     |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Hamilton Township***               |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 600 Horizon Drive                     |       | 2002       |       | 95,000        |       | 100.0          |       | 1,373             |       | 1,373             |       | 0.25              |       | 14.45                |       | 14.45                |       |
| ***Princeton***                       |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 103 Carnegie Center                   |       | 1984       |       | 96,000        |       | 100.0          |       | 1,983             |       | 1,818             |       | 0.37              |       | 20.66                |       | 18.94                |       |
| 100 Overlook Center                   |       | 1988       |       | 149,600       |       | 100.0          |       | 4,102             |       | 3,607             |       | 0.76              |       | 27.42                |       | 24.11                |       |
| 5 Vaughn Drive                        |       | 1987       |       | 98,500        |       | 94.0           |       | 2,339             |       | 2,080             |       | 0.43              |       | 25.26                |       | 22.46                |       |
| ** **                            | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| **Middlesex County**                  | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| ***East Brunswick***                  |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 377 Summerhill Road                   |       | 1977       |       | 40,000        |       | 100.0          |       | 363               |       | 357               |       | 0.07              |       | 9.08                 |       | 8.93                 |       |
| ***Piscataway***                      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 30 Knightsbridge Road, Bldg 3         |       | 1977       |       | 160,000       |       | 100.0          |       | 2,464             |       | 2,464             |       | 0.45              |       | 15.40                |       | 15.40                |       |
| 30 Knightsbridge Road, Bldg 4         |       | 1977       |       | 115,000       |       | 100.0          |       | 1,771             |       | 1,771             |       | 0.33              |       | 15.40                |       | 15.40                |       |
| 30 Knightsbridge Road, Bldg 5         |       | 1977       |       | 332,607       |       | 43.6           |       | 169               |       | 166               |       | 0.03              |       | 1.17                 |       | 1.14                 |       |
| 30 Knightsbridge Road, Bldg 6         |       | 1977       |       | 72,743        |       | 47.2           |       | 30                |       | 30                |       | 0.01              |       | 0.87                 |       | 0.87                 |       |
| ***Plainsboro***                      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 500 College Road East                 |       | 1984       |       | 158,235       |       | 100.0          |       | 4,365             |       | 4,187             |       | 0.81              |       | 27.59                |       | 26.46                |       |
| ***South Brunswick***                 |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 3 Independence Way                    |       | 1983       |       | 111,300       |       | 38.8           |       | 414               |       | 377               |       | 0.08              |       | 9.59                 |       | 8.73                 |       |
| ***Woodbridge***                      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 581 Main Street                       |       | 1991       |       | 200,000       |       | 100.0          |       | 4,924             |       | 4,667             |       | 0.91              |       | 24.62                |       | 23.34                |       |
|                                  |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Monmouth County**                   |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Freehold***                        | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| 2 Paragon Way (g)                     |       | 1989       |       | 44,524        |       | 86.9           |       | 336               |       | 263               |       | 0.06              |       | 18.32                |       | 14.34                |       |
| 3 Paragon Way (g)                     |       | 1991       |       | 66,898        |       | 69.3           |       | 288               |       | 258               |       | 0.05              |       | 13.11                |       | 11.74                |       |
| 4 Paragon Way (g)                     |       | 2002       |       | 63,989        |       | 100.0          |       | 545               |       | 411               |       | 0.10              |       | 17.97                |       | 13.55                |       |
| 100 Willbowbrook (g)                  |       | 1988       |       | 60,557        |       | 73.6           |       | 390               |       | 345               |       | 0.07              |       | 18.46                |       | 16.33                |       |
| ***Holmdel***                         | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| 23 Main Street (g)                    |       | 1977       |       | 350,000       |       | 100.0          |       | 3,782             |       | 3,610             |       | 0.70              |       | 14.19                |       | 13.54                |       |
| ***Middletown***                      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| One River Center Bldg 1               |       | 1983       |       | 122,594       |       | 89.2           |       | 2,099             |       | 1,950             |       | 0.39              |       | 19.19                |       | 17.83                |       |
| One River Center Bldg 2               |       | 1983       |       | 120,360       |       | 100.0          |       | 2,769             |       | 2,736             |       | 0.51              |       | 23.01                |       | 22.73                |       |
| One River Center Bldg 3               |       | 1984       |       | 214,518       |       | 94.7           |       | 4,362             |       | 4,311             |       | 0.81              |       | 21.47                |       | 21.22                |       |
| ***Neptune***                         |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 3600 Route 66                         |       | 1989       |       | 180,000       |       | 100.0          |       | 2,400             |       | 2,171             |       | 0.44              |       | 13.33                |       | 12.06                |       |
| ***Wall Township***                   |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 1305 Campus Parkway                   |       | 1988       |       | 23,350        |       | 92.4           |       | 361               |       | 337               |       | 0.07              |       | 16.73                |       | 15.62                |       |
| 1350 Campus Parkway                   |       | 1990       |       | 79,747        |       | 99.9           |       | 1,599             |       | 1,454             |       | 0.30              |       | 20.07                |       | 18.25                |       |

 

20

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| ** **            | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | **2005**             | ** ** |
|-----------------------|------------|------------|------------|---------------|------------|----------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|----------------------|------------|----------------------|------------|
| ** **            | ** ** | ** ** | ** ** | ** **    | ** ** | **Percentage** | ** ** | **2005**          | ** ** | **2005**          | ** ** | ** **        | ** ** | **2005**             | ** ** | **Average**          | ** ** |
| ** **            | ** ** | ** ** | ** ** | **Net**       | ** ** | **Leased**     | ** ** | **Base**          | ** ** | **Effective**     | ** ** | ** **        | ** ** | **Average**          | ** ** | **Effective**        | ** ** |
| ** **            | ** ** | ** ** | ** ** | **Rentable**  | ** ** | **as of**      | ** ** | **Rent**          | ** ** | **Rent**          | ** ** | **Percentage**    | ** ** | **Base Rent**        | ** ** | **Rent**             | ** ** |
| ** **            | ** ** | **Year**   | ** ** | **Area**      | ** ** | **12/31/05**   | ** ** | **($000’s)** | ** ** | **($000’s)** | ** ** | **of Total 2005** | ** ** | **Per Sq. Ft.**      | ** ** | **Per Sq. Ft.**      | ** ** |
| **Property Location** | ** ** | **Built**  | ** ** | **(Sq. Ft.)** | ** ** | **(%) (a)**    | ** ** | **(b) (c)**  | ** ** | **(c) (d)**  | ** ** | **Base Rent (%)** | ** ** | **($) (c) (e)** | ** ** | **($) (c) (f)** | ** ** |
|                  |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Morris County**     |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Florham Park***    |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 325 Columbia Turnpike |       | 1987       |       | 168,144       |       | 99.4           |       | 3,972             |       | 3,634             |       | 0.73              |       | 23.77                |       | 21.74                |       |
| ***Morris Plains***   |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 250 Johnson Road      |       | 1977       |       | 75,000        |       | 100.0          |       | 1,587             |       | 1,473             |       | 0.29              |       | 21.16                |       | 19.64                |       |
| 201 Littleton Road    |       | 1979       |       | 88,369        |       | 88.9           |       | 1,783             |       | 1,582             |       | 0.33              |       | 22.70                |       | 20.14                |       |
| ***Morris Township*** |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 412 Mt. Kemble Avenue |       | 1986       |       | 475,100       |       | —         |       | 2,984             |       | 2,984             |       | 0.55              |       | —               |       | —               |       |
| ***Parsippany***      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 4 Campus Drive        |       | 1983       |       | 147,475       |       | 91.1           |       | 3,482             |       | 3,282             |       | 0.64              |       | 25.92                |       | 24.43                |       |
| 6 Campus Drive        |       | 1983       |       | 148,291       |       | 67.9           |       | 2,038             |       | 1,696             |       | 0.38              |       | 20.24                |       | 16.84                |       |
| 7 Campus Drive        |       | 1982       |       | 154,395       |       | 100.0          |       | 2,037             |       | 1,924             |       | 0.38              |       | 13.19                |       | 12.46                |       |
| 8 Campus Drive        |       | 1987       |       | 215,265       |       | 100.0          |       | 6,282             |       | 5,588             |       | 1.16              |       | 29.18                |       | 25.96                |       |
| 9 Campus Drive        |       | 1983       |       | 156,495       |       | 92.5           |       | 3,659             |       | 3,142             |       | 0.68              |       | 25.28                |       | 21.71                |       |
| 4 Century Drive       |       | 1981       |       | 100,036       |       | 68.2           |       | 1,163             |       | 1,163             |       | 0.21              |       | 17.05                |       | 17.05                |       |
| 5 Century Drive       |       | 1981       |       | 79,739        |       | 97.3           |       | 2,073             |       | 2,073             |       | 0.38              |       | 26.72                |       | 26.72                |       |
| 6 Century Drive       |       | 1981       |       | 100,036       |       | 3.0            |       | 125               |       | 125               |       | 0.02              |       | 41.65                |       | 41.65                |       |
| 2 Dryden Way          |       | 1990       |       | 6,216         |       | 100.0          |       | 108               |       | 108               |       | 0.02              |       | 17.37                |       | 17.37                |       |
| 4 Gatehall Drive      |       | 1988       |       | 248,480       |       | 78.8           |       | 4,895             |       | 4,416             |       | 0.90              |       | 25.00                |       | 22.55                |       |
| 2 Hilton Court        |       | 1991       |       | 181,592       |       | 100.0          |       | 5,019             |       | 4,518             |       | 0.93              |       | 27.64                |       | 24.88                |       |
| 1633 Littleton Road   |       | 1978       |       | 57,722        |       | 100.0          |       | 1,131             |       | 1,131             |       | 0.21              |       | 19.59                |       | 19.59                |       |
| 600 Parsippany Road   |       | 1978       |       | 96,000        |       | 65.7           |       | 1,179             |       | 982               |       | 0.22              |       | 18.69                |       | 15.57                |       |
| 1 Sylvan Way          |       | 1989       |       | 150,557       |       | 100.0          |       | 3,502             |       | 3,106             |       | 0.65              |       | 23.26                |       | 20.63                |       |
| 5 Sylvan Way          |       | 1989       |       | 151,383       |       | 98.0           |       | 3,683             |       | 3,403             |       | 0.68              |       | 24.83                |       | 22.94                |       |
| 7 Sylvan Way          |       | 1987       |       | 145,983       |       | 100.0          |       | 2,927             |       | 2,509             |       | 0.54              |       | 20.05                |       | 17.19                |       |
| 5 Wood Hollow Road    |       | 1979       |       | 317,040       |       | 88.1           |       | 4,274             |       | 4,167             |       | 0.79              |       | 15.30                |       | 14.92                |       |
|                  |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Passaic County**    |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Clifton***         |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 777 Passaic Avenue    |       | 1983       |       | 75,000        |       | 100.0          |       | 1,532             |       | 1,338             |       | 0.28              |       | 20.43                |       | 17.84                |       |
| ***Totowa***          |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 999 Riverview Drive   |       | 1988       |       | 56,066        |       | 100.0          |       | 880               |       | 797               |       | 0.16              |       | 15.70                |       | 14.22                |       |
|                  |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Somerset County**   |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Basking Ridge***   |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 222 Mt. Airy Road     |       | 1986       |       | 49,000        |       | 60.7           |       | 597               |       | 466               |       | 0.11              |       | 20.07                |       | 15.67                |       |
| 233 Mt. Airy Road     |       | 1987       |       | 66,000        |       | 100.0          |       | 1,315             |       | 1,103             |       | 0.24              |       | 19.92                |       | 16.71                |       |
| ***Bernards***        |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 106 Allen Road        |       | 2000       |       | 132,010       |       | 93.2           |       | 2,714             |       | 2,066             |       | 0.50              |       | 22.06                |       | 16.79                |       |
| ***Bridgewater***     |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 721 Route 202/206     |       | 1989       |       | 192,741       |       | 87.8           |       | 3,923             |       | 3,792             |       | 0.72              |       | 23.18                |       | 22.41                |       |
|                  |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Union County**      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Clark***           |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 100 Walnut Avenue     |       | 1985       |       | 182,555       |       | 99.5           |       | 4,551             |       | 3,996             |       | 0.84              |       | 25.05                |       | 22.00                |       |

 

21

----

 
| ** **                        | ** ** | ** ** | ** ** | ** **     | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | **2005**             | ** ** |
|-----------------------------------|------------|------------|------------|----------------|------------|----------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|----------------------|------------|----------------------|------------|
| ** **                        | ** ** | ** ** | ** ** | ** **     | ** ** | **Percentage** | ** ** | **2005**          | ** ** | **2005**          | ** ** | ** **        | ** ** | **2005**             | ** ** | **Average**          | ** ** |
| ** **                        | ** ** | ** ** | ** ** | **Net**        | ** ** | **Leased**     | ** ** | **Base**          | ** ** | **Effective**     | ** ** | ** **        | ** ** | **Average**          | ** ** | **Effective**        | ** ** |
| ** **                        | ** ** | ** ** | ** ** | **Rentable**   | ** ** | **as of**      | ** ** | **Rent**          | ** ** | **Rent**          | ** ** | **Percentage**    | ** ** | **Base Rent**        | ** ** | **Rent**             | ** ** |
| ** **                        | ** ** | **Year**   | ** ** | **Area**       | ** ** | **12/31/05**   | ** ** | **($000’s)** | ** ** | **($000’s)** | ** ** | **of Total 2005** | ** ** | **Per Sq. Ft.**      | ** ** | **Per Sq. Ft.**      | ** ** |
| **Property Location**             | ** ** | **Built**  | ** ** | **(Sq. Ft.)**  | ** ** | **(%) (a)**    | ** ** | **(b) (c)**  | ** ** | **(c) (d)**  | ** ** | **Base Rent (%)** | ** ** | **($) (c) (e)** | ** ** | **($) (c) (f)** | ** ** |
|                              |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Cranford***                    |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 6 Commerce Drive                  |       | 1973       |       | 56,000         |       | 100.0          |       | 1,234             |       | 1,116             |       | 0.23              |       | 22.04                |       | 19.93                |       |
| 11 Commerce Drive (c)             |       | 1981       |       | 90,000         |       | 97.1           |       | 1,242             |       | 1,068             |       | 0.23              |       | 14.21                |       | 12.22                |       |
| 12 Commerce Drive                 |       | 1967       |       | 72,260         |       | 95.1           |       | 873               |       | 700               |       | 0.16              |       | 12.70                |       | 10.19                |       |
| 14 Commerce Drive                 |       | 1971       |       | 67,189         |       | 100.0          |       | 1,341             |       | 1,335             |       | 0.25              |       | 19.96                |       | 19.87                |       |
| 20 Commerce Drive                 |       | 1990       |       | 176,600        |       | 98.4           |       | 3,522             |       | 3,191             |       | 0.65              |       | 20.27                |       | 18.36                |       |
| 25 Commerce Drive                 |       | 1971       |       | 67,749         |       | 100.0          |       | 1,395             |       | 1,319             |       | 0.26              |       | 20.59                |       | 19.47                |       |
| 65 Jackson Drive                  |       | 1984       |       | 82,778         |       | 100.0          |       | 1,948             |       | 1,729             |       | 0.36              |       | 23.53                |       | 20.89                |       |
| ***New Providence***              |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 890 Mountain Avenue               |       | 1977       |       | 80,000         |       | 89.6           |       | 1,830             |       | 1,721             |       | 0.34              |       | 25.53                |       | 24.01                |       |
|                              |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Total  New Jersey Office**      | ** ** | ** ** | ** ** | **16,918,908** | ** ** | **89.7**       | ** ** | **331,860**       | ** ** | **300,619**       | ** ** | **61.29**         | ** ** | **22.36**            | ** ** | **20.24**            | ** ** |
| ** **                        |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **NEW YORK**                      |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
|                              |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Dutchess County**               |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Fishkill***                    |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 300 Westage Business Center Drive |       | 1987       |       | 118,727        |       | 82.1           |       | 2,134             |       | 1,822             |       | 0.39              |       | 21.89                |       | 18.69                |       |
|                              |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Rockland County**               |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Suffern***                     |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 400 Rella Boulevard               |       | 1988       |       | 180,000        |       | 100.0          |       | 4,209             |       | 3,656             |       | 0.78              |       | 23.38                |       | 20.31                |       |
|                              |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Westchester County**            |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Elmsford***                    |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 100 Clearbrook Road (c)           |       | 1975       |       | 60,000         |       | 99.5           |       | 1,135             |       | 1,046             |       | 0.21              |       | 19.01                |       | 17.52                |       |
| 101 Executive Boulevard           |       | 1971       |       | 50,000         |       | 45.3           |       | 678               |       | 611               |       | 0.13              |       | 29.93                |       | 26.98                |       |
| 555 Taxter Road                   |       | 1986       |       | 170,554        |       | 100.0          |       | 3,897             |       | 3,321             |       | 0.72              |       | 22.85                |       | 19.47                |       |
| 565 Taxter Road                   |       | 1988       |       | 170,554        |       | 92.8           |       | 3,836             |       | 3,491             |       | 0.71              |       | 24.24                |       | 22.06                |       |
| 570 Taxter Road                   |       | 1972       |       | 75,000         |       | 100.0          |       | 1,800             |       | 1,635             |       | 0.33              |       | 24.00                |       | 21.80                |       |
| ***Hawthorne***                   |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 1 Skyline Drive                   |       | 1980       |       | 20,400         |       | 99.0           |       | 392               |       | 369               |       | 0.07              |       | 19.41                |       | 18.27                |       |
| 2 Skyline Drive                   |       | 1987       |       | 30,000         |       | 87.9           |       | 424               |       | 364               |       | 0.08              |       | 16.08                |       | 13.80                |       |
| 7 Skyline Drive                   |       | 1987       |       | 109,000        |       | 100.0          |       | 2,421             |       | 2,239             |       | 0.45              |       | 22.21                |       | 20.54                |       |
| 17 Skyline Drive                  |       | 1989       |       | 85,000         |       | 100.0          |       | 1,360             |       | 1,335             |       | 0.25              |       | 16.00                |       | 15.71                |       |
| 19 Skyline Drive                  |       | 1982       |       | 248,400        |       | 100.0          |       | 4,471             |       | 4,174             |       | 0.83              |       | 18.00                |       | 16.80                |       |

 

22

----

 
| ** **                       | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | **2005**             | ** ** |
|----------------------------------|------------|------------|------------|---------------|------------|----------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|----------------------|------------|----------------------|------------|
| ** **                       | ** ** | ** ** | ** ** | ** **    | ** ** | **Percentage** | ** ** | **2005**          | ** ** | **2005**          | ** ** | ** **        | ** ** | **2005**             | ** ** | **Average**          | ** ** |
| ** **                       | ** ** | ** ** | ** ** | **Net**       | ** ** | **Leased**     | ** ** | **Base**          | ** ** | **Effective**     | ** ** | ** **        | ** ** | **Average**          | ** ** | **Effective**        | ** ** |
| ** **                       | ** ** | ** ** | ** ** | **Rentable**  | ** ** | **as of**      | ** ** | **Rent**          | ** ** | **Rent**          | ** ** | **Percentage**    | ** ** | **Base Rent**        | ** ** | **Rent**             | ** ** |
| ** **                       | ** ** | **Year**   | ** ** | **Area**      | ** ** | **12/31/05**   | ** ** | **($000’s)** | ** ** | **($000’s)** | ** ** | **of Total 2005** | ** ** | **Per Sq. Ft.**      | ** ** | **Per Sq. Ft.**      | ** ** |
| **Property Location**            | ** ** | **Built**  | ** ** | **(Sq. Ft.)** | ** ** | **(%) (a)**    | ** ** | **(b) (c)**  | ** ** | **(c) (d)**  | ** ** | **Base Rent (%)** | ** ** | **($) (c) (e)** | ** ** | **($) (c) (f)** | ** ** |
| ** **                       | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| ***Tarrytown***                  |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 200 White Plains Road            |       | 1982       |       | 89,000        |       | 94.7           |       | 1,935             |       | 1,770             |       | 0.36              |       | 22.96                |       | 21.00                |       |
| 220 White Plains Road            |       | 1984       |       | 89,000        |       | 88.0           |       | 1,929             |       | 1,774             |       | 0.36              |       | 24.63                |       | 22.65                |       |
| ***White Plains***               |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 1 Barker Avenue                  |       | 1975       |       | 68,000        |       | 97.3           |       | 1,773             |       | 1,650             |       | 0.33              |       | 26.80                |       | 24.94                |       |
| 3 Barker Avenue                  |       | 1983       |       | 65,300        |       | 100.0          |       | 1,747             |       | 1,583             |       | 0.32              |       | 26.75                |       | 24.24                |       |
| 50 Main Street                   |       | 1985       |       | 309,000       |       | 99.5           |       | 8,999             |       | 7,926             |       | 1.67              |       | 29.27                |       | 25.78                |       |
| 11 Martine Avenue                |       | 1987       |       | 180,000       |       | 95.9           |       | 4,822             |       | 4,260             |       | 0.89              |       | 27.93                |       | 24.68                |       |
| 1 Water Street                   |       | 1979       |       | 45,700        |       | 86.0           |       | 1,025             |       | 911               |       | 0.19              |       | 26.08                |       | 23.18                |       |
| ***Yonkers***                    |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 1 Executive Boulevard            |       | 1982       |       | 112,000       |       | 98.0           |       | 2,776             |       | 2,479             |       | 0.51              |       | 25.29                |       | 22.59                |       |
| 3 Executive Plaza                |       | 1987       |       | 58,000        |       | 100.0          |       | 1,460             |       | 1,269             |       | 0.27              |       | 25.17                |       | 21.88                |       |
|                             |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Total  New York Office**       |       | ** ** | ** ** | **2,333,635** | ** ** | **95.7**       | ** ** | **53,223**        | ** ** | **47,685**        | ** ** | **9.85**          | ** ** | **23.83**            | ** ** | **21.35**            | ** ** |
|                             |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **PENNSYLVANIA**                 |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
|                             |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Chester County**               |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Berwyn***                     |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 1000 Westlakes Drive             |       | 1989       |       | 60,696        |       | 95.7           |       | 1,563             |       | 1,496             |       | 0.29              |       | 26.91                |       | 25.75                |       |
| 1055 Westlakes Drive             |       | 1990       |       | 118,487       |       | 96.8           |       | 2,741             |       | 2,264             |       | 0.51              |       | 23.90                |       | 19.74                |       |
| 1205 Westlakes Drive             |       | 1988       |       | 130,265       |       | 58.8           |       | 2,804             |       | 2,573             |       | 0.52              |       | 36.61                |       | 33.59                |       |
| 1235 Westlakes Drive             |       | 1986       |       | 134,902       |       | 91.3           |       | 2,648             |       | 2,341             |       | 0.49              |       | 21.50                |       | 19.01                |       |
|                             |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Delaware County**              |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Lester***                     |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 100 Stevens Drive                |       | 1986       |       | 95,000        |       | 100.0          |       | 2,551             |       | 2,356             |       | 0.47              |       | 26.85                |       | 24.80                |       |
| 200 Stevens Drive                |       | 1987       |       | 208,000       |       | 100.0          |       | 5,598             |       | 5,251             |       | 1.03              |       | 26.91                |       | 25.25                |       |
| 300 Stevens Drive                |       | 1992       |       | 68,000        |       | 100.0          |       | 1,087             |       | 915               |       | 0.20              |       | 15.99                |       | 13.46                |       |
| ***Media***                      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 1400 Providence Road - Center I  |       | 1986       |       | 100,000       |       | 84.8           |       | 1,911             |       | 1,723             |       | 0.35              |       | 22.54                |       | 20.32                |       |
| 1400 Providence Road - Center II |       | 1990       |       | 160,000       |       | 97.6           |       | 3,488             |       | 3,072             |       | 0.64              |       | 22.34                |       | 19.67                |       |
|                             |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Montgomery County**            |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Bala Cynwyd***                |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 150 Monument Road                |       | 1981       |       | 125,783       |       | 70.0           |       | 2,118             |       | 2,110             |       | 0.39              |       | 24.06                |       | 23.96                |       |
| ***Blue Bell***                  |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 4 Sentry Parkway                 |       | 1982       |       | 63,930        |       | 94.1           |       | 1,373             |       | 1,370             |       | 0.25              |       | 22.82                |       | 22.77                |       |
| 16 Sentry Parkway                |       | 1988       |       | 93,093        |       | 100.0          |       | 2,408             |       | 2,347             |       | 0.44              |       | 25.87                |       | 25.21                |       |
| 18 Sentry Parkway                |       | 1988       |       | 95,010        |       | 97.6           |       | 2,176             |       | 2,121             |       | 0.40              |       | 23.47                |       | 22.87                |       |
| ***King of Prussia***            |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 2200 Renaissance Boulevard       |       | 1985       |       | 174,124       |       | 91.1           |       | 3,501             |       | 3,252             |       | 0.65              |       | 22.07                |       | 20.50                |       |
| ***Lower Providence***           |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 1000 Madison Avenue              |       | 1990       |       | 100,700       |       | 36.0           |       | 698               |       | 580               |       | 0.13              |       | 19.25                |       | 16.00                |       |
| ***Plymouth Meeting***           |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 1150 Plymouth Meeting Mall       |       | 1970       |       | 167,748       |       | 100.0          |       | 2,960             |       | 2,514             |       | 0.55              |       | 17.65                |       | 14.99                |       |

 

23

----

 
| ** **                             | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | **2005**             | ** ** |
|----------------------------------------|------------|------------|------------|---------------|------------|----------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|----------------------|------------|----------------------|------------|
| ** **                             | ** ** | ** ** | ** ** | ** **    | ** ** | **Percentage** | ** ** | **2005**          | ** ** | **2005**          | ** ** | ** **        | ** ** | **2005**             | ** ** | **Average**          | ** ** |
| ** **                             | ** ** | ** ** | ** ** | **Net**       | ** ** | **Leased**     | ** ** | **Base**          | ** ** | **Effective**     | ** ** | ** **        | ** ** | **Average**          | ** ** | **Effective**        | ** ** |
| ** **                             | ** ** | ** ** | ** ** | **Rentable**  | ** ** | **as of**      | ** ** | **Rent**          | ** ** | **Rent**          | ** ** | **Percentage**    | ** ** | **Base Rent**        | ** ** | **Rent**             | ** ** |
| ** **                             | ** ** | **Year**   | ** ** | **Area**      | ** ** | **12/31/05**   | ** ** | **($000’s)** | ** ** | **($000’s)** | ** ** | **of Total 2005** | ** ** | **Per Sq. Ft.**      | ** ** | **Per Sq. Ft.**      | ** ** |
| **Property Location**                  | ** ** | **Built**  | ** ** | **(Sq. Ft.)** | ** ** | **(%) (a)**    | ** ** | **(b) (c)**  | ** ** | **(c) (d)**  | ** ** | **Base Rent (%)** | ** ** | **($) (c) (e)** | ** ** | **($) (c) (f)** | ** ** |
| ** **                             | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| Five Sentry Parkway East               |       | 1984       |       | 91,600        |       | 100.0          |       | 1,952             |       | 1,896             |       | 0.36              |       | 21.31                |       | 20.70                |       |
| Five Sentry Parkway West               |       | 1984       |       | 38,400        |       | 69.8           |       | 709               |       | 691               |       | 0.13              |       | 26.45                |       | 25.78                |       |
|                                   |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Total  Pennsylvania Office**         | ** ** | ** ** | ** ** | **2,025,738** | ** ** | **88.8**       | ** ** | **42,286**        | ** ** | **38,872**        | ** ** | **7.80**          | ** ** | **23.50**            | ** ** | **21.60**            | ** ** |
|                                   |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **CONNECTICUT**                        |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
|                                   |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Fairfield County**                   |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Greenwich***                        |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 500 West Putnam Avenue                 |       | 1973       |       | 121,250       |       | 99.1           |       | 3,347             |       | 3,125             |       | 0.62              |       | 27.85                |       | 26.01                |       |
| ***Norwalk***                          |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 40 Richards Avenue                     |       | 1985       |       | 145,487       |       | 69.9           |       | 2,429             |       | 2,107             |       | 0.45              |       | 23.89                |       | 20.72                |       |
| ***Shelton***                          |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 1000 Bridgeport Avenue                 |       | 1986       |       | 133,000       |       | 88.1           |       | 2,069             |       | 1,681             |       | 0.38              |       | 17.66                |       | 14.35                |       |
| ***Stamford***                         | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| 1266 East Main Street                  |       | 1984       |       | 179,260       |       | 70.3           |       | 3,752             |       | 3,622             |       | 0.69              |       | 29.77                |       | 28.74                |       |
|                                   |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Total  Connecticut Office**          | ** ** | ** ** | ** ** | **578,997**   | ** ** | **80.3**       | ** ** | **11,597**        | ** ** | **10,535**        | ** ** | **2.14**          | ** ** | **24.94**            | ** ** | **22.65**            | ** ** |
|                                   |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **DISTRICT OF COLUMBIA**               | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| ** **                             | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| **Washington**                         | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| 1201 Connecticut Avenue, NW            |       | 1940       |       | 169,549       |       | 86.2           |       | 5,219             |       | 4,930             |       | 0.96              |       | 35.71                |       | 33.73                |       |
| 1400 L Street, NW                      |       | 1987       |       | 159,000       |       | 87.3           |       | 3,347             |       | 3,182             |       | 0.62              |       | 24.11                |       | 22.92                |       |
| ** **                             | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| **Total  District of Columbia Office** | ** ** | ** ** | ** ** | **328,549**   | ** ** | **86.7**       | ** ** | **8,566**         | ** ** | **8,112**         | ** ** | **1.58**          | ** ** | **30.06**            | ** ** | **28.47**            | ** ** |
|                                   |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **MARYLAND**                           | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| ** **                             | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| **Prince George’s County**        | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| ***Lanham***                           |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 4200 Parliament Place                  |       | 1989       |       | 122,000       |       | 93.7           |       | 2,767             |       | 2,562             |       | 0.51              |       | 24.21                |       | 22.41                |       |
|                                   |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Total  Maryland Office**             | ** ** | ** ** | ** ** | **122,000**   | ** ** | **93.7**       | ** ** | **2,767**         | ** ** | **2,562**         | ** ** | **0.51**          | ** ** | **24.21**            | ** ** | **22.41**            | ** ** |
|                                   |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **COLORADO**                           |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
|                                   |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Arapahoe County**                    |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Denver***                           |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 400 South Colorado Boulevard           |       | 1983       |       | 125,415       |       | 87.9           |       | 1,710             |       | 1,379             |       | 0.32              |       | 15.51                |       | 12.51                |       |

 

24

----

 
| ** **                   | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | **2005**             | ** ** |
|------------------------------|------------|------------|------------|---------------|------------|----------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|----------------------|------------|----------------------|------------|
| ** **                   | ** ** | ** ** | ** ** | ** **    | ** ** | **Percentage** | ** ** | **2005**          | ** ** | **2005**          | ** ** | ** **        | ** ** | **2005**             | ** ** | **Average**          | ** ** |
| ** **                   | ** ** | ** ** | ** ** | **Net**       | ** ** | **Leased**     | ** ** | **Base**          | ** ** | **Effective**     | ** ** | ** **        | ** ** | **Average**          | ** ** | **Effective**        | ** ** |
| ** **                   | ** ** | ** ** | ** ** | **Rentable**  | ** ** | **as of**      | ** ** | **Rent**          | ** ** | **Rent**          | ** ** | **Percentage**    | ** ** | **Base Rent**        | ** ** | **Rent**             | ** ** |
| ** **                   | ** ** | **Year**   | ** ** | **Area**      | ** ** | **12/31/05**   | ** ** | **($000’s)** | ** ** | **($000’s)** | ** ** | **of Total 2005** | ** ** | **Per Sq. Ft.**      | ** ** | **Per Sq. Ft.**      | ** ** |
| **Property Location**        | ** ** | **Built**  | ** ** | **(Sq. Ft.)** | ** ** | **(%) (a)**    | ** ** | **(b) (c)**  | ** ** | **(c) (d)**  | ** ** | **Base Rent (%)** | ** ** | **($) (c) (e)** | ** ** | **($) (c) (f)** | ** ** |
| ** **                   | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| ***Englewood***              |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 9359 East Nichols Avenue     |       | 1997       |       | 72,610        |       | 100.0          |       | 779               |       | 642               |       | 0.14              |       | 10.73                |       | 8.84                 |       |
| 5350 South Roslyn Street     |       | 1982       |       | 63,754        |       | 100.0          |       | 1,036             |       | 864               |       | 0.19              |       | 16.25                |       | 13.55                |       |
|                         |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Boulder County**           |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Broomfield***             |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 105 South Technology Drive   |       | 1997       |       | 37,574        |       | 81.1           |       | 202               |       | 82                |       | 0.04              |       | 6.63                 |       | 2.69                 |       |
| 303 South Technology Drive-A |       | 1997       |       | 34,454        |       | 100.0          |       | 270               |       | 193               |       | 0.05              |       | 7.84                 |       | 5.60                 |       |
| 303 South Technology Drive-B |       | 1997       |       | 40,416        |       | 100.0          |       | 316               |       | 225               |       | 0.06              |       | 7.82                 |       | 5.57                 |       |
| ***Louisville***             |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 248 Centennial Parkway       |       | 1996       |       | 39,266        |       | 100.0          |       | 305               |       | 168               |       | 0.06              |       | 7.77                 |       | 4.28                 |       |
| 1172 Century Drive           |       | 1996       |       | 49,566        |       | 100.0          |       | 384               |       | 211               |       | 0.07              |       | 7.75                 |       | 4.26                 |       |
| 285 Century Place            |       | 1997       |       | 69,145        |       | 100.0          |       | 761               |       | 711               |       | 0.14              |       | 11.01                |       | 10.28                |       |
|                         |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Denver County**            |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Denver***                 |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 8181 East Tufts Avenue       |       | 2001       |       | 185,254       |       | 98.6           |       | 4,256             |       | 3,592             |       | 0.79              |       | 23.30                |       | 19.66                |       |
|                         |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Douglas County**           |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Centennial***             |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 5975 South Quebec Street (c) |       | 1996       |       | 102,877       |       | 94.7           |       | 1,271             |       | 855               |       | 0.23              |       | 13.05                |       | 8.78                 |       |
| ***Englewood***              |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 67 Inverness Drive East      |       | 1996       |       | 54,280        |       | 100.0          |       | 338               |       | 200               |       | 0.06              |       | 6.23                 |       | 3.68                 |       |
| 384 Inverness Parkway        |       | 1985       |       | 51,523        |       | 97.5           |       | 694               |       | 597               |       | 0.13              |       | 13.82                |       | 11.88                |       |
| 400 Inverness Parkway        |       | 1997       |       | 111,608       |       | 98.3           |       | 1,631             |       | 1,299             |       | 0.30              |       | 14.87                |       | 11.84                |       |
| 9777 Pyramid Court           |       | 1995       |       | 120,281       |       | 95.1           |       | 1,489             |       | 1,149             |       | 0.27              |       | 13.02                |       | 10.04                |       |
|                         |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **El Paso County**           |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Colorado Springs***       |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 8415 Explorer                |       | 1998       |       | 47,368        |       | 97.1           |       | 547               |       | 511               |       | 0.10              |       | 11.89                |       | 11.11                |       |
| 1975 Research Parkway        |       | 1997       |       | 115,250       |       | 98.7           |       | 1,151             |       | 760               |       | 0.21              |       | 10.12                |       | 6.68                 |       |
| 2375 Telstar Drive           |       | 1998       |       | 47,369        |       | 100.0          |       | 548               |       | 510               |       | 0.10              |       | 11.57                |       | 10.77                |       |
|                         |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Jefferson County**         |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Lakewood***               |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 141 Union Boulevard          |       | 1985       |       | 63,600        |       | 96.3           |       | 1,155             |       | 998               |       | 0.21              |       | 18.86                |       | 16.29                |       |
|                         |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Total  Colorado Office**   | ** ** | ** ** | ** ** | **1,431,610** | ** ** | **96.9**       | ** ** | **18,843**        | ** ** | **14,946**        | ** ** | **3.47**          | ** ** | **13.59**            | ** ** | **10.78**            | ** ** |

 

25

----

 
| ** **                   | ** ** | ** ** | ** ** | ** **     | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | **2005**             | ** ** |
|------------------------------|------------|------------|------------|----------------|------------|----------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|----------------------|------------|----------------------|------------|
| ** **                   | ** ** | ** ** | ** ** | ** **     | ** ** | **Percentage** | ** ** | **2005**          | ** ** | **2005**          | ** ** | ** **        | ** ** | **2005**             | ** ** | **Average**          | ** ** |
| ** **                   | ** ** | ** ** | ** ** | **Net**        | ** ** | **Leased**     | ** ** | **Base**          | ** ** | **Effective**     | ** ** | ** **        | ** ** | **Average**          | ** ** | **Effective**        | ** ** |
| ** **                   | ** ** | ** ** | ** ** | **Rentable**   | ** ** | **as of**      | ** ** | **Rent**          | ** ** | **Rent**          | ** ** | **Percentage**    | ** ** | **Base Rent**        | ** ** | **Rent**             | ** ** |
| ** **                   | ** ** | **Year**   | ** ** | **Area**       | ** ** | **12/31/05**   | ** ** | **($000’s)** | ** ** | **($000’s)** | ** ** | **of Total 2005** | ** ** | **Per Sq. Ft.**      | ** ** | **Per Sq. Ft.**      | ** ** |
| **Property Location**        | ** ** | **Built**  | ** ** | **(Sq. Ft.)**  | ** ** | **(%) (a)**    | ** ** | **(b) (c)**  | ** ** | **(c) (d)**  | ** ** | **Base Rent (%)** | ** ** | **($) (c) (e)** | ** ** | **($) (c) (f)** | ** ** |
| ** **                   | ** ** | ** ** | ** ** | ** **     | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| **CALIFORNIA**               |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
|                         |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **San Francisco County**     |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***San Francisco***          |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 795 Folsom Street            |       | 1977       |       | 183,445        |       | 85.3           |       | 4,358             |       | 3,455             |       | 0.80              |       | 27.85                |       | 22.08                |       |
| 760 Market Street            |       | 1908       |       | 267,446        |       | 78.5           |       | 7,397             |       | 6,936             |       | 1.37              |       | 35.23                |       | 33.04                |       |
|                         |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Total  California Office** | ** ** | ** ** | ** ** | **450,891**    | ** ** | **81.3**       | ** ** | **11,755**        | ** ** | **10,391**        | ** ** | **2.17**          | ** ** | **32.08**            | ** ** | **28.36**            | ** ** |
| ** **                   | ** ** | ** ** | ** ** | ** **     | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| **TOTAL  OFFICE PROPERTIES** | ** ** | ** ** | ** ** | **24,190,328** | ** ** | **90.2**       | ** ** | **480,897**       | ** ** | **433,722**       | ** ** | **88.81**         | ** ** | **22.38**            | ** ** | **20.17**            | ** ** |

 

26

----

 

Office/Flex Properties

 
| ** **                   | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | **2005**             | ** ** |
|------------------------------|------------|------------|------------|---------------|------------|----------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|----------------------|------------|----------------------|------------|
| ** **                   | ** ** | ** ** | ** ** | ** **    | ** ** | **Percentage** | ** ** | **2005**          | ** ** | **2005**          | ** ** | ** **        | ** ** | **2005**             | ** ** | **Average**          | ** ** |
| ** **                   | ** ** | ** ** | ** ** | **Net**       | ** ** | **Leased**     | ** ** | **Base**          | ** ** | **Effective**     | ** ** | ** **        | ** ** | **Average**          | ** ** | **Effective**        | ** ** |
| ** **                   | ** ** | ** ** | ** ** | **Rentable**  | ** ** | **as of**      | ** ** | **Rent**          | ** ** | **Rent**          | ** ** | **Percentage**    | ** ** | **Base Rent**        | ** ** | **Rent**             | ** ** |
| ** **                   | ** ** | **Year**   | ** ** | **Area**      | ** ** | **12/31/05**   | ** ** | **($000’s)** | ** ** | **($000’s)** | ** ** | **of Total 2005** | ** ** | **Per Sq. Ft.**      | ** ** | **Per Sq. Ft.**      | ** ** |
| **Property Location**        | ** ** | **Built**  | ** ** | **(Sq. Ft.)** | ** ** | **(%) (a)**    | ** ** | **(b) (c)**  | ** ** | **(c) (d)**  | ** ** | **Base Rent (%)** | ** ** | **($) (c) (e)** | ** ** | **($) (c) (f)** | ** ** |
| ** **                   | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| **NEW JERSEY**               |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
|                         |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Burlington County**        |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Burlington***             |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 3 Terri Lane                 |       | 1991       |       | 64,500        |       | 82.5           |       | 459               |       | 374               |       | 0.08              |       | 8.63                 |       | 7.03                 |       |
| 5 Terri Lane                 |       | 1992       |       | 74,555        |       | 91.7           |       | 598               |       | 418               |       | 0.11              |       | 8.75                 |       | 6.11                 |       |
| ***Moorestown***             |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 2 Commerce Drive             |       | 1986       |       | 49,000        |       | 76.3           |       | 256               |       | 231               |       | 0.05              |       | 6.85                 |       | 6.18                 |       |
| 101 Commerce Drive           |       | 1988       |       | 64,700        |       | 100.0          |       | 275               |       | 249               |       | 0.05              |       | 4.25                 |       | 3.85                 |       |
| 102 Commerce Drive           |       | 1987       |       | 38,400        |       | 87.5           |       | 175               |       | 146               |       | 0.03              |       | 5.21                 |       | 4.35                 |       |
| 201 Commerce Drive           |       | 1986       |       | 38,400        |       | 75.0           |       | 157               |       | 107               |       | 0.03              |       | 5.45                 |       | 3.72                 |       |
| 202 Commerce Drive           |       | 1988       |       | 51,200        |       | 100.0          |       | 303               |       | 233               |       | 0.06              |       | 5.92                 |       | 4.55                 |       |
| 1 Executive Drive            |       | 1989       |       | 20,570        |       | 81.1           |       | 156               |       | 100               |       | 0.03              |       | 9.35                 |       | 5.99                 |       |
| 2 Executive Drive            |       | 1988       |       | 60,800        |       | 73.3           |       | 339               |       | 290               |       | 0.06              |       | 7.61                 |       | 6.51                 |       |
| 101 Executive Drive          |       | 1990       |       | 29,355        |       | 90.5           |       | 269               |       | 251               |       | 0.05              |       | 10.13                |       | 9.45                 |       |
| 102 Executive Drive          |       | 1990       |       | 64,000        |       | 100.0          |       | 399               |       | 358               |       | 0.07              |       | 6.23                 |       | 5.59                 |       |
| 225 Executive Drive          |       | 1990       |       | 50,600        |       | 100.0          |       | 378               |       | 330               |       | 0.07              |       | 7.47                 |       | 6.52                 |       |
| 97 Foster Road               |       | 1982       |       | 43,200        |       | 75.5           |       | 199               |       | 182               |       | 0.04              |       | 6.10                 |       | 5.58                 |       |
| 1507 Lancer Drive            |       | 1995       |       | 32,700        |       | 100.0          |       | 55                |       | 52                |       | 0.01              |       | 1.68                 |       | 1.59                 |       |
| 1510 Lancer Drive            |       | 1998       |       | 88,000        |       | 100.0          |       | 413               |       | 413               |       | 0.08              |       | 4.69                 |       | 4.69                 |       |
| 1245 North Church Street     |       | 1998       |       | 52,810        |       | 100.0          |       | 397               |       | 383               |       | 0.07              |       | 7.52                 |       | 7.25                 |       |
| 1247 North Church Street     |       | 1998       |       | 52,790        |       | 100.0          |       | 350               |       | 337               |       | 0.06              |       | 6.63                 |       | 6.38                 |       |
| 1256 North Church Street     |       | 1984       |       | 63,495        |       | 100.0          |       | 415               |       | 357               |       | 0.08              |       | 6.54                 |       | 5.62                 |       |
| 840 North Lenola Road        |       | 1995       |       | 38,300        |       | 100.0          |       | 326               |       | 270               |       | 0.06              |       | 8.51                 |       | 7.05                 |       |
| 844 North Lenola Road        |       | 1995       |       | 28,670        |       | 100.0          |       | 143               |       | 95                |       | 0.03              |       | 4.99                 |       | 3.31                 |       |
| 915 North Lenola Road        |       | 1998       |       | 52,488        |       | 100.0          |       | 296               |       | 224               |       | 0.05              |       | 5.64                 |       | 4.27                 |       |
| 2 Twosome Drive              |       | 2000       |       | 48,600        |       | 100.0          |       | 391               |       | 391               |       | 0.07              |       | 8.05                 |       | 8.05                 |       |
| 30 Twosome Drive             |       | 1997       |       | 39,675        |       | 75.8           |       | 191               |       | 173               |       | 0.04              |       | 6.35                 |       | 5.75                 |       |
| 31 Twosome Drive             |       | 1998       |       | 84,200        |       | 100.0          |       | 452               |       | 452               |       | 0.08              |       | 5.37                 |       | 5.37                 |       |
| 40 Twosome Drive             |       | 1996       |       | 40,265        |       | 86.1           |       | 261               |       | 207               |       | 0.05              |       | 7.53                 |       | 5.97                 |       |
| 41 Twosome Drive             |       | 1998       |       | 43,050        |       | 91.6           |       | 218               |       | 214               |       | 0.04              |       | 5.53                 |       | 5.43                 |       |
| 50 Twosome Drive             |       | 1997       |       | 34,075        |       | 100.0          |       | 265               |       | 249               |       | 0.05              |       | 7.78                 |       | 7.31                 |       |
|                         |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Gloucester County**        |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***West Deptford***          |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 1451 Metropolitan Drive      |       | 1996       |       | 21,600        |       | 100.0          |       | 148               |       | 148               |       | 0.03              |       | 6.85                 |       | 6.85                 |       |
|                         |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Mercer County**            |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Hamilton Township***      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 100 Horizon Center Boulevard |       | 1989       |       | 13,275        |       | 100.0          |       | 188               |       | 150               |       | 0.03              |       | 14.16                |       | 11.30                |       |
| 200 Horizon Drive            |       | 1991       |       | 45,770        |       | 100.0          |       | 591               |       | 537               |       | 0.11              |       | 12.91                |       | 11.73                |       |
| 300 Horizon Drive            |       | 1989       |       | 69,780        |       | 95.7           |       | 1,116             |       | 981               |       | 0.21              |       | 16.71                |       | 14.69                |       |
| 500 Horizon Drive            |       | 1990       |       | 41,205        |       | 100.0          |       | 610               |       | 577               |       | 0.11              |       | 14.80                |       | 14.00                |       |

 

27

----

 
| ** **                        | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | **2005**             | ** ** |
|-----------------------------------|------------|------------|------------|---------------|------------|----------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|----------------------|------------|----------------------|------------|
| ** **                        | ** ** | ** ** | ** ** | ** **    | ** ** | **Percentage** | ** ** | **2005**          | ** ** | **2005**          | ** ** | ** **        | ** ** | **2005**             | ** ** | **Average**          | ** ** |
| ** **                        | ** ** | ** ** | ** ** | **Net**       | ** ** | **Leased**     | ** ** | **Base**          | ** ** | **Effective**     | ** ** | ** **        | ** ** | **Average**          | ** ** | **Effective**        | ** ** |
| ** **                        | ** ** | ** ** | ** ** | **Rentable**  | ** ** | **as of**      | ** ** | **Rent**          | ** ** | **Rent**          | ** ** | **Percentage**    | ** ** | **Base Rent**        | ** ** | **Rent**             | ** ** |
| ** **                        | ** ** | **Year**   | ** ** | **Area**      | ** ** | **12/31/05**   | ** ** | **($000’s)** | ** ** | **($000’s)** | ** ** | **of Total 2005** | ** ** | **Per Sq. Ft.**      | ** ** | **Per Sq. Ft.**      | ** ** |
| **Property Location**             | ** ** | **Built**  | ** ** | **(Sq. Ft.)** | ** ** | **(%) (a)**    | ** ** | **(b) (c)**  | ** ** | **(c) (d)**  | ** ** | **Base Rent (%)** | ** ** | **($) (c) (e)** | ** ** | **($) (c) (f)** | ** ** |
| ** **                        | ** ** | ** ** | ** ** | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| **Monmouth County**               |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Wall Township***               |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 1325 Campus Parkway               |       | 1988       |       | 35,000        |       | 100.0          |       | 495               |       | 256               |       | 0.09              |       | 14.14                |       | 7.31                 |       |
| 1340 Campus Parkway               |       | 1992       |       | 72,502        |       | 100.0          |       | 613               |       | 484               |       | 0.11              |       | 8.45                 |       | 6.68                 |       |
| 1345 Campus Parkway               |       | 1995       |       | 76,300        |       | 100.0          |       | 825               |       | 633               |       | 0.15              |       | 10.81                |       | 8.30                 |       |
| 1433 Highway 34                   |       | 1985       |       | 69,020        |       | 59.3           |       | 578               |       | 499               |       | 0.11              |       | 14.12                |       | 12.19                |       |
| 1320 Wyckoff Avenue               |       | 1986       |       | 20,336        |       | 100.0          |       | 178               |       | 168               |       | 0.03              |       | 8.75                 |       | 8.26                 |       |
| 1324 Wyckoff Avenue               |       | 1987       |       | 21,168        |       | 100.0          |       | 221               |       | 191               |       | 0.04              |       | 10.44                |       | 9.02                 |       |
|                              |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Passaic County**                |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Totowa***                      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 1 Center Court                    |       | 1999       |       | 38,961        |       | 100.0          |       | 534               |       | 415               |       | 0.10              |       | 13.71                |       | 10.65                |       |
| 2 Center Court                    |       | 1998       |       | 30,600        |       | 55.5           |       | 267               |       | 220               |       | 0.05              |       | 15.72                |       | 12.95                |       |
| 11 Commerce Way                   |       | 1989       |       | 47,025        |       | 100.0          |       | 547               |       | 487               |       | 0.10              |       | 11.63                |       | 10.36                |       |
| 20 Commerce Way                   |       | 1992       |       | 42,540        |       | 85.9           |       | 473               |       | 460               |       | 0.09              |       | 12.94                |       | 12.59                |       |
| 29 Commerce Way                   |       | 1990       |       | 48,930        |       | 100.0          |       | 659               |       | 535               |       | 0.12              |       | 13.47                |       | 10.93                |       |
| 40 Commerce Way                   |       | 1987       |       | 50,576        |       | 100.0          |       | 684               |       | 640               |       | 0.13              |       | 13.52                |       | 12.65                |       |
| 45 Commerce Way                   |       | 1992       |       | 51,207        |       | 64.5           |       | 302               |       | 252               |       | 0.06              |       | 9.14                 |       | 7.63                 |       |
| 60 Commerce Way                   |       | 1988       |       | 50,333        |       | 100.0          |       | 645               |       | 562               |       | 0.12              |       | 12.81                |       | 11.17                |       |
| 80 Commerce Way                   |       | 1996       |       | 22,500        |       | 88.7           |       | 303               |       | 268               |       | 0.06              |       | 15.18                |       | 13.43                |       |
| 100 Commerce Way                  |       | 1996       |       | 24,600        |       | 100.0          |       | 331               |       | 293               |       | 0.06              |       | 13.46                |       | 11.91                |       |
| 120 Commerce Way                  |       | 1994       |       | 9,024         |       | 100.0          |       | 109               |       | 103               |       | 0.02              |       | 12.08                |       | 11.41                |       |
| 140 Commerce Way                  |       | 1994       |       | 26,881        |       | 99.5           |       | 324               |       | 307               |       | 0.06              |       | 12.11                |       | 11.48                |       |
|                              |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Total  New Jersey Office/Flex** | ** ** | ** ** | ** ** | **2,277,531** | ** ** | **92.7**       | ** ** | **18,877**        | ** ** | **16,252**        | ** ** | **3.49**          | ** ** | **8.95**             | ** ** | **7.70**             | ** ** |
|                              |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **NEW YORK**                      |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
|                              |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Westchester County**            |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Elmsford***                    |       |       |       |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 11 Clearbrook Road                |       | 1974       |       | 31,800        |       | 100.0          |       | 441               |       | 420               |       | 0.08              |       | 13.87                |       | 13.21                |       |
| 75 Clearbrook Road                |       | 1990       |       | 32,720        |       | 100.0          |       | 730               |       | 730               |       | 0.13              |       | 22.31                |       | 22.31                |       |
| 125 Clearbrook Road               |       | 2002       |       | 33,000        |       | 100.0          |       | 712               |       | 592               |       | 0.13              |       | 21.58                |       | 17.94                |       |
| 150 Clearbrook Road               |       | 1975       |       | 74,900        |       | 84.9           |       | 893               |       | 829               |       | 0.16              |       | 14.04                |       | 13.04                |       |
| 175 Clearbrook Road               |       | 1973       |       | 98,900        |       | 100.0          |       | 1,559             |       | 1,425             |       | 0.29              |       | 15.76                |       | 14.41                |       |
| 200 Clearbrook Road               |       | 1974       |       | 94,000        |       | 99.8           |       | 1,221             |       | 1,120             |       | 0.23              |       | 13.02                |       | 11.94                |       |
| 250 Clearbrook Road               |       | 1973       |       | 155,000       |       | 97.3           |       | 1,380             |       | 1,250             |       | 0.25              |       | 9.15                 |       | 8.29                 |       |
| 50 Executive Boulevard            |       | 1969       |       | 45,200        |       | 95.2           |       | 405               |       | 389               |       | 0.07              |       | 9.41                 |       | 9.04                 |       |
| 77 Executive Boulevard            |       | 1977       |       | 13,000        |       | 100.0          |       | 220               |       | 208               |       | 0.04              |       | 16.92                |       | 16.00                |       |
| 85 Executive Boulevard            |       | 1968       |       | 31,000        |       | 50.4           |       | 243               |       | 230               |       | 0.04              |       | 15.55                |       | 14.72                |       |
| 300 Executive Boulevard           |       | 1970       |       | 60,000        |       | 100.0          |       | 581               |       | 550               |       | 0.11              |       | 9.68                 |       | 9.17                 |       |
| 350 Executive Boulevard           |       | 1970       |       | 15,400        |       | 98.8           |       | 296               |       | 272               |       | 0.05              |       | 19.45                |       | 17.88                |       |
| 399 Executive Boulevard           |       | 1962       |       | 80,000        |       | 100.0          |       | 1,024             |       | 997               |       | 0.19              |       | 12.80                |       | 12.46                |       |
| 400 Executive Boulevard           |       | 1970       |       | 42,200        |       | 100.0          |       | 771               |       | 688               |       | 0.14              |       | 18.27                |       | 16.30                |       |
| 500 Executive Boulevard           |       | 1970       |       | 41,600        |       | 100.0          |       | 684               |       | 622               |       | 0.13              |       | 16.44                |       | 14.95                |       |

 

28

----

 
| ** **                         | ** ** | ** ** | ** **    | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | **2005**             | ** ** |
|------------------------------------|------------|------------|---------------|---------------|------------|----------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|----------------------|------------|----------------------|------------|
| ** **                         | ** ** | ** ** | ** **    | ** **    | ** ** | **Percentage** | ** ** | **2005**          | ** ** | **2005**          | ** ** | ** **        | ** ** | **2005**             | ** ** | **Average**          | ** ** |
| ** **                         | ** ** | ** ** | ** **    | **Net**       | ** ** | **Leased**     | ** ** | **Base**          | ** ** | **Effective**     | ** ** | ** **        | ** ** | **Average**          | ** ** | **Effective**        | ** ** |
| ** **                         | ** ** | ** ** | ** **    | **Rentable**  | ** ** | **as of**      | ** ** | **Rent**          | ** ** | **Rent**          | ** ** | **Percentage**    | ** ** | **Base Rent**        | ** ** | **Rent**             | ** ** |
| ** **                         | ** ** | **Year**   | ** **    | **Area**      | ** ** | **12/31/05**   | ** ** | **($000’s)** | ** ** | **($000’s)** | ** ** | **of Total 2005** | ** ** | **Per Sq. Ft.**      | ** ** | **Per Sq. Ft.**      | ** ** |
| **Property Location**              | ** ** | **Built**  | ** **    | **(Sq. Ft.)** | ** ** | **(%) (a)**    | ** ** | **(b) (c)**  | ** ** | **(c) (d)**  | ** ** | **Base Rent (%)** | ** ** | **($) (c) (e)** | ** ** | **($) (c) (f)** | ** ** |
| ** **                         | ** ** | ** ** | ** **    | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| 525 Executive Boulevard            |       | 1972       |          | 61,700        |       | 83.6           |       | 811               |       | 722               |       | 0.15              |       | 15.72                |       | 14.00                |       |
| 1 Westchester Plaza                |       | 1967       |          | 25,000        |       | 100.0          |       | 327               |       | 312               |       | 0.06              |       | 13.08                |       | 12.48                |       |
| 2 Westchester Plaza                |       | 1968       |          | 25,000        |       | 100.0          |       | 492               |       | 483               |       | 0.09              |       | 19.68                |       | 19.32                |       |
| 3 Westchester Plaza                |       | 1969       |          | 93,500        |       | 100.0          |       | 730               |       | 636               |       | 0.13              |       | 7.81                 |       | 6.80                 |       |
| 4 Westchester Plaza                |       | 1969       |          | 44,700        |       | 99.8           |       | 643               |       | 597               |       | 0.12              |       | 14.41                |       | 13.38                |       |
| 5 Westchester Plaza                |       | 1969       |          | 20,000        |       | 100.0          |       | 327               |       | 289               |       | 0.06              |       | 16.35                |       | 14.45                |       |
| 6 Westchester Plaza                |       | 1968       |          | 20,000        |       | 100.0          |       | 326               |       | 304               |       | 0.06              |       | 16.30                |       | 15.20                |       |
| 7 Westchester Plaza                |       | 1972       |          | 46,200        |       | 100.0          |       | 721               |       | 708               |       | 0.13              |       | 15.61                |       | 15.32                |       |
| 8 Westchester Plaza                |       | 1971       |          | 67,200        |       | 100.0          |       | 904               |       | 815               |       | 0.17              |       | 13.45                |       | 12.13                |       |
| ***Hawthorne***                    |       |       |          |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 200 Saw Mill River Road            |       | 1965       |          | 51,100        |       | 88.8           |       | 607               |       | 553               |       | 0.11              |       | 13.38                |       | 12.19                |       |
| 4 Skyline Drive                    |       | 1987       |          | 80,600        |       | 92.2           |       | 1,378             |       | 1,245             |       | 0.25              |       | 18.54                |       | 16.75                |       |
| 5 Skyline Drive                    |       | 1980       |          | 124,022       |       | 100.0          |       | 1,580             |       | 1,531             |       | 0.30              |       | 12.74                |       | 12.34                |       |
| 6 Skyline Drive                    |       | 1980       |          | 44,155        |       | 100.0          |       | 394               |       | 394               |       | 0.07              |       | 8.92                 |       | 8.92                 |       |
| 8 Skyline Drive                    |       | 1985       |          | 50,000        |       | 98.7           |       | 897               |       | 349               |       | 0.17              |       | 18.18                |       | 7.07                 |       |
| 10 Skyline Drive                   |       | 1985       |          | 20,000        |       | 49.4           |       | 164               |       | 157               |       | 0.03              |       | 16.60                |       | 15.89                |       |
| 11 Skyline Drive                   |       | 1989       |          | 45,000        |       | 100.0          |       | 803               |       | 760               |       | 0.15              |       | 17.84                |       | 16.89                |       |
| 12 Skyline Drive                   |       | 1999       |          | 46,850        |       | 85.1           |       | 600               |       | 371               |       | 0.11              |       | 15.05                |       | 9.31                 |       |
| 15 Skyline Drive                   |       | 1989       |          | 55,000        |       | 54.7           |       | 862               |       | 806               |       | 0.16              |       | 28.65                |       | 26.79                |       |
| ***Yonkers***                      |       |       |          |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 100 Corporate Boulevard            |       | 1987       |          | 78,000        |       | 98.2           |       | 1,493             |       | 1,405             |       | 0.28              |       | 19.49                |       | 18.34                |       |
| 200 Corporate Boulevard South      |       | 1990       |          | 84,000        |       | 99.8           |       | 1,370             |       | 1,340             |       | 0.25              |       | 16.34                |       | 15.98                |       |
| 4 Executive Plaza                  |       | 1986       |          | 80,000        |       | 99.0           |       | 1,036             |       | 861               |       | 0.19              |       | 13.08                |       | 10.87                |       |
| 6 Executive Plaza                  |       | 1987       |          | 80,000        |       | 98.0           |       | 1,174             |       | 1,118             |       | 0.22              |       | 14.97                |       | 14.26                |       |
| 1 Odell Plaza                      |       | 1980       |          | 106,000       |       | 99.9           |       | 1,470             |       | 1,378             |       | 0.27              |       | 13.88                |       | 13.01                |       |
| 3 Odell Plaza                      |       | 1984       |          | 71,065        |       | 100.0          |       | 1,597             |       | 1,481             |       | 0.29              |       | 22.47                |       | 20.84                |       |
| 5 Odell Plaza                      |       | 1983       |          | 38,400        |       | 99.6           |       | 656               |       | 609               |       | 0.12              |       | 17.15                |       | 15.92                |       |
| 7 Odell Plaza                      |       | 1984       |          | 42,600        |       | 99.6           |       | 714               |       | 686               |       | 0.13              |       | 16.83                |       | 16.17                |       |
|                               |       |       |          |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Total  New York Office/Flex**    | ** ** | ** ** | ** **    | **2,348,812** | ** ** | **95.6**       | ** ** | **33,236**        | ** ** | **30,232**        | ** ** | **6.11**          | ** ** | **14.80**            | ** ** | **13.46**            | ** ** |
|                               |       |       |          |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **CONNECTICUT**                    |       |       |          |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
|                               |       |       |          |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Fairfield County**               |       |       |          |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Stamford***                     |       |       |          |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 419 West Avenue                    |       | 1986       |          | 88,000        |       | 100.0          |       | 1,161             |       | 992               |       | 0.21              |       | 13.19                |       | 11.27                |       |
| 500 West Avenue                    |       | 1988       |          | 25,000        |       | 100.0          |       | 463               |       | 419               |       | 0.09              |       | 18.52                |       | 16.76                |       |
| 550 West Avenue                    |       | 1990       |          | 54,000        |       | 100.0          |       | 884               |       | 879               |       | 0.16              |       | 16.37                |       | 16.28                |       |
| 600 West Avenue                    |       | 1999       |          | 66,000        |       | 100.0          |       | 804               |       | 767               |       | 0.15              |       | 12.18                |       | 11.62                |       |
| 650 West Avenue                    |       | 1998       |          | 40,000        |       | 100.0          |       | 555               |       | 424               |       | 0.10              |       | 13.88                |       | 10.60                |       |
|                               |       |       |          |          |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Total  Connecticut Office/Flex** | ** ** | ** ** | ** **    | **273,000**   | ** ** | **100.0**      | ** ** | **3,867**         | ** ** | **3,481**         | ** ** | **0.71**          | ** ** | **14.16**            | ** ** | **12.75**            | ** ** |
| ** **                         | ** ** | ** ** | ** **    | ** **    | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| **TOTAL  OFFICE/FLEX PROPERTIES**  | ** ** | ** ** | **4,899,343** | ** **    | **94.5**   | ** **     | **55,980** | ** **        | **49,965** | ** **        | **10.31**  | ** **        | **12.09**  | ** **           | **10.79**  | ** **           |

 

29

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**Industrial/Warehouse, Retail and Land LeaseProperties**

 
| ** **                                 | ** ** | ** ** | ** ** | ** **     | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | **2005**             | ** ** |
|--------------------------------------------|------------|------------|------------|----------------|------------|----------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|----------------------|------------|----------------------|------------|
| ** **                                 | ** ** | ** ** | ** ** | ** **     | ** ** | **Percentage** | ** ** | **2005**          | ** ** | **2005**          | ** ** | ** **        | ** ** | **2005**             | ** ** | **Average**          | ** ** |
| ** **                                 | ** ** | ** ** | ** ** | **Net**        | ** ** | **Leased**     | ** ** | **Base**          | ** ** | **Effective**     | ** ** | ** **        | ** ** | **Average**          | ** ** | **Effective**        | ** ** |
| ** **                                 | ** ** | ** ** | ** ** | **Rentable**   | ** ** | **as of**      | ** ** | **Rent**          | ** ** | **Rent**          | ** ** | **Percentage**    | ** ** | **Base Rent**        | ** ** | **Rent**             | ** ** |
| ** **                                 | ** ** | **Year**   | ** ** | **Area**       | ** ** | **12/31/05**   | ** ** | **($000’s)** | ** ** | **($000’s)** | ** ** | **of Total 2005** | ** ** | **Per Sq. Ft.**      | ** ** | **Per Sq. Ft.**      | ** ** |
| **Property Location**                      | ** ** | **Built**  | ** ** | **(Sq. Ft.)**  | ** ** | **(%) (a)**    | ** ** | **(b) (c)**  | ** ** | **(c) (d)**  | ** ** | **Base Rent (%)** | ** ** | **($) (c) (e)** | ** ** | **($) (c) (f)** | ** ** |
| ** **                                 | ** ** | ** ** | ** ** | ** **     | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| **NEW YORK**                               |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
|                                       |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Westchester County**                     |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Elmsford***                             |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 1 Warehouse Lane                           |       | 1957       |       | 6,600          |       | 100.0          |       | 81                |       | 79                |       | 0.01              |       | 12.27                |       | 11.97                |       |
| 2 Warehouse Lane                           |       | 1957       |       | 10,900         |       | 100.0          |       | 166               |       | 138               |       | 0.03              |       | 15.23                |       | 12.66                |       |
| 3 Warehouse Lane                           |       | 1957       |       | 77,200         |       | 100.0          |       | 324               |       | 293               |       | 0.06              |       | 4.20                 |       | 3.80                 |       |
| 4 Warehouse Lane                           |       | 1957       |       | 195,500        |       | 96.7           |       | 2,166             |       | 1,963             |       | 0.40              |       | 11.46                |       | 10.38                |       |
| 5 Warehouse Lane                           |       | 1957       |       | 75,100         |       | 97.1           |       | 989               |       | 887               |       | 0.18              |       | 13.56                |       | 12.16                |       |
| 6 Warehouse Lane                           |       | 1982       |       | 22,100         |       | 100.0          |       | 512               |       | 508               |       | 0.09              |       | 23.17                |       | 22.99                |       |
|                                       |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Total  Industrial/Warehouse Properties** | ** ** | ** ** | ** ** | **387,400**    | ** ** | **97.8**       | ** ** | **4,238**         | ** ** | **3,868**         | ** ** | **0.77**          | ** ** | **11.19**            | ** ** | **10.21**            | ** ** |
|                                       |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Westchester County**                     |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Tarrytown***                            |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 230 White Plains Road                      |       | 1984       |       | 9,300          |       | 100.0          |       | 195               |       | 183               |       | 0.04              |       | 20.97                |       | 19.68                |       |
| ***Yonkers***                              |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 2 Executive Boulevard                      |       | 1986       |       | 8,000          |       | 100.0          |       | 108               |       | 108               |       | 0.02              |       | 13.50                |       | 13.50                |       |
|                                       |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Total  Retail Properties**               | ** ** | ** ** | ** ** | **17,300**     | ** ** | **100.0**      | ** ** | **303**           | ** ** | **291**           | ** ** | **0.06**          | ** ** | **17.51**            | ** ** | **16.82**            | ** ** |
|                                       |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Westchester County**                     |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| ***Elmsford***                             |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 700 Executive Boulevard                    |       | —     |       | —         |       | —         |       | 114               |       | 114               |       | 0.02              |       | —               |       | —               |       |
| ***Yonkers***                              |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| 1 Enterprise Boulevard                     |       | —     |       | —         |       | —         |       | 170               |       | 169               |       | 0.03              |       | —               |       | —               |       |
|                                       |       |       |       |           |       |           |       |              |       |              |       |              |       |                 |       |                 |       |
| **Total Land Leases**                      | ** ** | ** ** | ** ** | **—**     | ** ** | **—**     | ** ** | **284**           | ** ** | **283**           | ** ** | **0.05**          | ** ** | **—**           | ** ** | **—**           | ** ** |
| ** **                                 | ** ** | ** ** | ** ** | ** **     | ** ** | ** **     | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **           | ** ** | ** **           | ** ** |
| **TOTAL  PROPERTIES**                      | ** ** | ** ** | ** ** | **29,494,371** | ** ** | **91.0**       | ** ** | **541,702**       | ** ** | **488,129**       | ** ** | **100.00**        | ** ** | **20.45**            | ** ** | **18.40**            | ** ** |

 

----

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

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

(c)          Excludes space leased bythe Operating Partnership.

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

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

(f)            Effective rent for2005 divided by net rentable square feet leased at December 31, 2005. Forthose properties acquired during 2005, amounts are annualized, as described inNote g.

(g)         As this property wasacquired by the Operating Partnership during 2005, the amounts represented in2005 base rent and 2005 effective rent reflect only that portion of the yearduring which the Operating Partnership owned the property. Accordingly, theseamounts may not be indicative of the property’s full year results. Forcomparison purposes, the amounts represented in 2005 average base rent per sq.ft. and 2005 average effective rent per sq. ft. for this property have beencalculated by taking 2005 base rent and 2005 effective rent for such propertyand annualizing these partial-year results, dividing such annualized amounts bythe net rentable square feet leased at December 31, 2005. These annualizedper square foot amounts may not be indicative of the property’s resultshad the Operating Partnership owned the property for the entirety of 2005.

 

30

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**PERCENTAGE LEASED**

 

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

 
| ** **            | ** ** | **Percentage of**                             | ** ** |
|-----------------------|------------|----------------------------------------------------|------------|
| **December 31,** | ** ** | **Square Feet Leased (%) (a)** | ** ** |
| 2005                  |       | 91.0                                               |       |
|                  |       |                                               |       |
| 2004 (b)              |       | 91.2                                               |       |
|                  |       |                                               |       |
| 2003                  |       | 91.5                                               |       |
|                  |       |                                               |       |
| 2002                  |       | 92.3                                               |       |
|                  |       |                                               |       |
| 2001                  |       | 94.6                                               |       |

 

----

(a)          Percentage ofsquare-feet leased includes all leases in effect as of the period end date,some of which have commencement dates in the future (including, at December 31,2005, leases with commencement dates substantially in the future consisting of15,125 square feet scheduled to commence in 2009 and 10,205 square feetscheduled to commence in 2011), and leases that expire at the period end date.

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

 

31

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**SIGNIFICANT TENANTS**

 

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

 
| ** **                                         | ** ** | ** **         | ** ** | ** **                          | ** ** | **Percentage of**           | ** ** | ** **    | ** ** | ** **                            | ** ** | ** **       | ** ** |
|----------------------------------------------------|------------|--------------------|------------|-------------------------------------|------------|----------------------------------|------------|---------------|------------|---------------------------------------|------------|------------------|------------|
| ** **                                         | ** ** | ** **         | ** ** | ** **                          | ** ** | **Operating**                    | ** ** | ** **    | ** ** | **Percentage**                        | ** ** | ** **       | ** ** |
| ** **                                         | ** ** | ** **         | ** ** | **Annualized**                      | ** ** | **Partnership**                  | ** ** | **Square**    | ** ** | **Total Operating**              | ** ** | **Year of** | ** ** |
| ** **                                         | ** ** | **Number of** | ** ** | **Base Rental**                | ** ** | **Annualized Base**         | ** ** | **Feet**      | ** ** | **Partnership**                       | ** ** | **Lease**        | ** ** |
| ** **                                         | ** ** | **Properties**     | ** ** | **Revenue ($ ) (a)** | ** ** | **Rental Revenue (%)** | ** ** | **Leased**    | ** ** | **Leased Sq. Ft. (%)** | ** ** | **Expiration**   | ** ** |
| New Cingular Wireless PCS, LLC                     |       | 3                  |       | 11,274,462                          |       | 1.9                              |       | 456,190       |       | 1.8                                   |       | 2014             | (b)        |
| Morgan Stanley D.W., Inc.                     |       | 5                  |       | 9,375,915                           |       | 1.6                              |       | 381,576       |       | 1.5                                   |       | 2013             | (c)        |
| Credit Suisse First Boston                         |       | 1                  |       | 9,196,912                           |       | 1.5                              |       | 271,953       |       | 1.0                                   |       | 2012             | (d)        |
| Merrill Lynch                                      |       | 1                  |       | 8,327,484                           |       | 1.5                              |       | 489,564       |       | 1.9                                   |       | 2012             | (e)        |
| Keystone Mercy Health Plan                         |       | 2                  |       | 7,790,929                           |       | 1.4                              |       | 303,149       |       | 1.1                                   |       | 2015             |       |
| National Union Fire Insurance                      |       | 1                  |       | 7,711,023                           |       | 1.4                              |       | 317,799       |       | 1.2                                   |       | 2012             |       |
| Prentice-Hall, Inc.                           |       | 1                  |       | 7,694,097                           |       | 1.4                              |       | 474,801       |       | 1.8                                   |       | 2014             |       |
| Forest Laboratories Inc.                           |       | 2                  |       | 6,961,107                           |       | 1.2                              |       | 202,857       |       | 0.8                                   |       | 2017             | (f)        |
| Cendant Operations Inc.                            |       | 2                  |       | 6,839,418                           |       | 1.2                              |       | 296,934       |       | 1.1                                   |       | 2011             | (g)        |
| Allstate Insurance Company                         |       | 10                 |       | 6,076,187                           |       | 1.1                              |       | 264,550       |       | 1.0                                   |       | 2010             | (h)        |
| Toys ‘R’ Us – NJ, Inc.         |       | 1                  |       | 6,072,651                           |       | 1.1                              |       | 242,518       |       | 0.9                                   |       | 2012             |       |
| American Institute of Certified Public Accountants |       | 1                  |       | 5,817,181                           |       | 1.0                              |       | 249,768       |       | 0.9                                   |       | 2012             |       |
| TD Waterhouse Investor Services, Inc.         |       | 1                  |       | 5,572,716                           |       | 1.0                              |       | 184,222       |       | 0.7                                   |       | 2015             |       |
| IBM Corporation                                    |       | 3                  |       | 5,529,841                           |       | 1.0                              |       | 310,263       |       | 1.2                                   |       | 2012             | (i)        |
| Garban LLC                                         |       | 1                  |       | 5,495,470                           |       | 1.0                              |       | 148,025       |       | 0.6                                   |       | 2017             |       |
| United States of America-GSA                       |       | 7                  |       | 5,384,893                           |       | 1.0                              |       | 170,920       |       | 0.6                                   |       | 2015             | (j)        |
| KPMG, LLP                                          |       | 3                  |       | 4,784,243                           |       | 0.9                              |       | 181,025       |       | 0.7                                   |       | 2012             | (k)        |
| AT&T Corp.                                     |       | 3                  |       | 4,691,911                           |       | 0.8                              |       | 311,967       |       | 1.2                                   |       | 2014             | (l)        |
| National Financial Services                        |       | 1                  |       | 4,346,765                           |       | 0.8                              |       | 112,964       |       | 0.4                                   |       | 2012             |       |
| Bank of Tokyo-Mitsubishi Ltd.                      |       | 1                  |       | 4,228,795                           |       | 0.8                              |       | 137,076       |       | 0.5                                   |       | 2009             |       |
| Vonage America, Inc.                          |       | 1                  |       | 3,830,750                           |       | 0.7                              |       | 350,000       |       | 1.3                                   |       | 2017             |       |
| Citigroup Global Markets, Inc.                |       | 5                  |       | 3,455,193                           |       | 0.6                              |       | 132,475       |       | 0.5                                   |       | 2016             | (m)        |
| Lehman Brothers Holdings, Inc.                |       | 1                  |       | 3,420,667                           |       | 0.6                              |       | 207,300       |       | 0.8                                   |       | 2010             |       |
| SSB Realty, LLC                                    |       | 1                  |       | 3,321,051                           |       | 0.6                              |       | 114,519       |       | 0.4                                   |       | 2009             |       |
| URS Greiner Woodward-Clyde                         |       | 1                  |       | 3,252,691                           |       | 0.6                              |       | 120,550       |       | 0.5                                   |       | 2011             |       |
| Dow Jones & Company Inc.                  |       | 3                  |       | 3,168,843                           |       | 0.6                              |       | 96,873        |       | 0.4                                   |       | 2012             | (n)        |
| Montefiore Medical Center                          |       | 5                  |       | 3,155,950                           |       | 0.6                              |       | 147,457       |       | 0.6                                   |       | 2019             | (o)        |
| Sankyo Pharma Inc.                                 |       | 2                  |       | 2,843,876                           |       | 0.5                              |       | 90,366        |       | 0.3                                   |       | 2012             | (p)        |
| SunAmerica Asset Management                        |       | 1                  |       | 2,680,409                           |       | 0.5                              |       | 69,621        |       | 0.3                                   |       | 2018             |       |
| American Home Assurance Co.                        |       | 2                  |       | 2,679,704                           |       | 0.5                              |       | 131,174       |       | 0.5                                   |       | 2019             | (q)        |
| Regus Business Centre Corp.                        |       | 3                  |       | 2,650,376                           |       | 0.5                              |       | 107,608       |       | 0.4                                   |       | 2011             |       |
| Sumitomo Mitsui Banking Corp.                      |       | 2                  |       | 2,580,155                           |       | 0.5                              |       | 71,153        |       | 0.3                                   |       | 2016             |       |
| United States Life Insurance Co.                   |       | 1                  |       | 2,520,000                           |       | 0.5                              |       | 180,000       |       | 0.7                                   |       | 2013             |       |
| New Jersey Turnpike Authority                      |       | 1                  |       | 2,455,463                           |       | 0.4                              |       | 100,223       |       | 0.4                                   |       | 2016             |       |
| Barr Laboratories Inc.                             |       | 2                  |       | 2,450,087                           |       | 0.4                              |       | 109,510       |       | 0.4                                   |       | 2015             | (r)        |
| BT Harborside                                      |       | 1                  |       | 2,354,850                           |       | 0.4                              |       | 90,000        |       | 0.3                                   |       | 2007             |       |
| Moody’s Investors Service                     |       | 1                  |       | 2,290,374                           |       | 0.4                              |       | 79,537        |       | 0.3                                   |       | 2010             | (s)        |
| Merck & Company Inc.                      |       | 3                  |       | 2,289,288                           |       | 0.4                              |       | 100,146       |       | 0.4                                   |       | 2008             | (t)        |
| Movado Group, Inc.                            |       | 1                  |       | 2,275,175                           |       | 0.4                              |       | 90,050        |       | 0.3                                   |       | 2013             |       |
| Lonza, Inc.                                   |       | 1                  |       | 2,236,200                           |       | 0.4                              |       | 89,448        |       | 0.3                                   |       | 2007             |       |
| Computer Sciences Corporation                      |       | 3                  |       | 2,180,913                           |       | 0.4                              |       | 109,825       |       | 0.4                                   |       | 2007             | (u)        |
| Deloitte & Touche USA LLP                 |       | 1                  |       | 2,171,275                           |       | 0.4                              |       | 86,851        |       | 0.3                                   |       | 2007             |       |
| High Point Safety & Insurance             |       | 1                  |       | 2,095,629                           |       | 0.4                              |       | 88,237        |       | 0.3                                   |       | 2015             |       |
| Nextel of New York Inc.                            |       | 2                  |       | 2,093,440                           |       | 0.4                              |       | 97,436        |       | 0.4                                   |       | 2014             | (v)        |
| Pfizer, Inc.                                  |       | 1                  |       | 2,072,046                           |       | 0.4                              |       | 89,912        |       | 0.3                                   |       | 2007             |       |
| Xerox Corporation                                  |       | 4                  |       | 2,057,047                           |       | 0.4                              |       | 83,789        |       | 0.3                                   |       | 2010             | (w)        |
| UBS Financial Services, Inc.                  |       | 4                  |       | 2,057,007                           |       | 0.4                              |       | 76,915        |       | 0.3                                   |       | 2016             | (x)        |
| Mellon HR Solutions LLC                            |       | 1                  |       | 2,044,590                           |       | 0.4                              |       | 68,153        |       | 0.3                                   |       | 2006             |       |
| GAB Robins North America, Inc.                |       | 2                  |       | 2,028,512                           |       | 0.4                              |       | 84,649        |       | 0.3                                   |       | 2009             | (y)        |
| PR Newswire Association, Inc.                 |       | 1                  |       | 1,912,908                           |       | 0.3                              |       | 56,262        |       | 0.2                                   |       | 2010             |       |
|                                               |       |               |       |                                |       |                             |       |          |       |                                  |       |             |       |
| **Totals**                                         | ** ** | ** **         | ** ** | **209,796,469**                     | ** ** | **37.6**                         | ** ** | **8,828,160** | ** ** | **33.4**                              | ** ** | ** **       | ** ** |

 

*See footnotes on subsequent page.*

 

32

----

 

----

Significant Tenants Footnotes

 

(a)          Annualized base rental revenue is basedon actual December 2005 billings times 12. For leases whose rent commencesafter January 1, 2006, annualized base rental revenue is based on thefirst full month’s billing times 12. As annualized base rental revenue is notderived from historical GAAP results, historical results may differ fromthose set forth above.

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

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

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

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

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

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

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

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

(j)             6,610 square feetexpire in 2006; 4,950 square feet expire in 2007; 19,702 square feet expire in2008; 4,879 square feet expire in 2014; 134,779 square feet expire in 2015.

(k)          57,204 square feetexpire in 2007; 46,440 square feet expire in 2009; 77,381 square feet expire in2012.

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

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

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

(o)         19,000 square feet expirein 2007; 48,542 square feet expire in 2009; 5,850 square feet expire in2014;  3,000 square feet expire in 2016;71,065 square feet expire in 2019.

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

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

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

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

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

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

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

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

(x)           3,665 square feetexpire in 2006; 21,554 square feet expire in 2010; 17,383 square feet expire in2013; 34,313 square feet expire in 2016.

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

 

33

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**SCHEDULE OF LEASE EXPIRATIONS: ALLCONSOLIDATED PROPERTIES**

 

The following table sets forth a schedule oflease expirations for the total of the Operating Partnership’s office,office/flex, industrial/warehouse and stand-alone retail properties included inthe Consolidated Properties beginning January 1, 2006, assuming that noneof the tenants exercise renewal or termination options:

 
| ** **                   | ** ** | ** **         | ** ** | ** **            | ** ** | ** **             | ** ** | ** **             | ** ** | **Average**                | ** ** | ** **             | ** ** |
|------------------------------|------------|--------------------|------------|-----------------------|------------|------------------------|------------|------------------------|------------|----------------------------|------------|------------------------|------------|
| ** **                   | ** ** | ** **         | ** ** | ** **            | ** ** | ** **             | ** ** | ** **             | ** ** | **Annual**                 | ** ** | ** **             | ** ** |
| ** **                   | ** ** | ** **         | ** ** | ** **            | ** ** | **Percentage Of** | ** ** | ** **             | ** ** | **Rent Per Net** | ** ** | ** **             | ** ** |
| ** **                   | ** ** | ** **         | ** ** | **Net Rentable** | ** ** | **Total Leased**  | ** ** | **Annualized**         | ** ** | **Rentable**               | ** ** | **Percentage Of** | ** ** |
| ** **                   | ** ** | ** **         | ** ** | **Area Subject** | ** ** | **Square Feet**   | ** ** | **Base Rental**   | ** ** | **Square Foot**       | ** ** | **Annual Base**   | ** ** |
| ** **                   | ** ** | **Number Of** | ** ** | **To Expiring**  | ** ** | **Represented**        | ** ** | **Revenue Under** | ** ** | **Represented**            | ** ** | **Rent Under**    | ** ** |
| **Year Of**             | ** ** | **Leases**         | ** ** | **Leases**            | ** ** | **By Expiring**   | ** ** | **Expiring**           | ** ** | **By Expiring**       | ** ** | **Expiring**           | ** ** |
| **Expiration**               | ** ** | **Expiring (a)**   | ** ** | **(Sq. Ft.)**         | ** ** | **Leases (%)**         | ** ** | **Leases ($) (b)**     | ** ** | **Leases ($)**             | ** ** | **Leases (%)**         | ** ** |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2006 (c)                     |       | 400                |       | 2,005,042             |       | 7.6                    |       | 44,391,023             |       | 22.14                      |       | 7.9                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2007                         |       | 391                |       | 2,603,375             |       | 9.9                    |       | 52,885,133             |       | 20.31                      |       | 9.5                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2008                         |       | 417                |       | 3,058,780             |       | 11.6                   |       | 58,917,395             |       | 19.26                      |       | 10.5                   |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2009                         |       | 347                |       | 2,385,673             |       | 9.0                    |       | 51,050,483             |       | 21.40                      |       | 9.2                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2010                         |       | 337                |       | 2,811,274             |       | 10.6                   |       | 55,703,986             |       | 19.81                      |       | 10.0                   |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2011                         |       | 256                |       | 3,063,930             |       | 11.6                   |       | 66,227,673             |       | 21.62                      |       | 11.9                   |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2012                         |       | 146                |       | 2,250,372             |       | 8.5                    |       | 50,700,147             |       | 22.53                      |       | 9.1                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2013                         |       | 105                |       | 2,245,910             |       | 8.5                    |       | 49,011,976             |       | 21.82                      |       | 8.8                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2014                         |       | 53                 |       | 1,279,798             |       | 4.8                    |       | 28,744,046             |       | 22.46                      |       | 5.2                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2015                         |       | 56                 |       | 2,338,945             |       | 8.9                    |       | 48,649,113             |       | 20.80                      |       | 8.7                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2016                         |       | 34                 |       | 719,206               |       | 2.7                    |       | 13,992,211             |       | 19.46                      |       | 2.5                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2017 and  thereafter         |       | 44                 |       | 1,659,844             |       | 6.3                    |       | 37,142,228             |       | 22.38                      |       | 6.7                    |       |
| **Totals/Weighted  Average** | ** ** | **2,586**          | ** ** | **26,422,149**        | **(d)**    | **100.0**              | ** ** | **557,415,414**        | ** ** | **21.10**                  | ** ** | **100.0**              | ** ** |

 

----

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

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

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

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

 
| ** **                                                                                                                                                               | ** ** | **Square Feet** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------|------------|
| Square  footage leased to commercial tenants                                                                                                                             |       | 26,422,149           |       |
| Square  footage used for corporate offices, management offices, building use, retail  tenants, food services, other ancillary service tenants and occupancy  adjustments |       | 427,109              |       |
| Square  footage unleased                                                                                                                                                 |       | 2,645,113            |       |
| Total net  rentable square footage (does not include land leases)                                                                                                        |       | 29,494,371           |       |

 

34

----

 

**SCHEDULE OF LEASE EXPIRATIONS: OFFICEPROPERTIES**

 

The followingtable sets forth a schedule of lease expirations for the office propertiesbeginning January 1, 2006, assuming that none of the tenants exerciserenewal or termination options:

 
| ** **                   | ** ** | ** **         | ** ** | ** **            | ** ** | ** **             | ** ** | ** **             | ** ** | **Average**                | ** ** | ** **             | ** ** |
|------------------------------|------------|--------------------|------------|-----------------------|------------|------------------------|------------|------------------------|------------|----------------------------|------------|------------------------|------------|
| ** **                   | ** ** | ** **         | ** ** | ** **            | ** ** | ** **             | ** ** | ** **             | ** ** | **Annual**                 | ** ** | ** **             | ** ** |
| ** **                   | ** ** | ** **         | ** ** | ** **            | ** ** | **Percentage Of** | ** ** | ** **             | ** ** | **Rent Per Net** | ** ** | ** **             | ** ** |
| ** **                   | ** ** | ** **         | ** ** | **Net Rentable** | ** ** | **Total Leased**  | ** ** | **Annualized**         | ** ** | **Rentable**               | ** ** | **Percentage Of** | ** ** |
| ** **                   | ** ** | ** **         | ** ** | **Area Subject** | ** ** | **Square Feet**   | ** ** | **Base Rental**   | ** ** | **Square Foot**       | ** ** | **Annual Base**   | ** ** |
| ** **                   | ** ** | **Number Of** | ** ** | **To Expiring**  | ** ** | **Represented****By**  | ** ** | **Revenue Under** | ** ** | **Represented By**         | ** ** | **Rent Under**    | ** ** |
| **Year Of**             | ** ** | **Leases**         | ** ** | **Leases**            | ** ** | **Expiring**           | ** ** | **Expiring**           | ** ** | **Expiring**               | ** ** | **Expiring**           | ** ** |
| **Expiration**               | ** ** | **Expiring (a)**   | ** ** | **(Sq. Ft.)**         | ** ** | **Leases (%)**         | ** ** | **Leases ($) (b)**     | ** ** | **Leases ($)**             | ** ** | **Leases (%)**         | ** ** |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2006 (c)                     |       | 341                |       | 1,663,997             |       | 7.7                    |       | 39,787,414             |       | 23.91                      |       | 8.1                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2007                         |       | 316                |       | 1,936,407             |       | 9.0                    |       | 44,519,145             |       | 22.99                      |       | 9.0                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2008                         |       | 331                |       | 2,182,701             |       | 10.2                   |       | 50,027,179             |       | 22.92                      |       | 10.1                   |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2009                         |       | 285                |       | 1,854,119             |       | 8.7                    |       | 44,043,432             |       | 23.75                      |       | 8.9                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2010                         |       | 262                |       | 1,992,300             |       | 9.3                    |       | 44,611,712             |       | 22.39                      |       | 9.0                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2011                         |       | 210                |       | 2,547,985             |       | 11.9                   |       | 60,496,453             |       | 23.74                      |       | 12.2                   |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2012                         |       | 111                |       | 1,902,057             |       | 8.9                    |       | 45,889,698             |       | 24.13                      |       | 9.3                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2013                         |       | 82                 |       | 1,971,356             |       | 9.2                    |       | 44,958,470             |       | 22.81                      |       | 9.1                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2014                         |       | 43                 |       | 1,170,339             |       | 5.5                    |       | 27,046,621             |       | 23.11                      |       | 5.5                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2015                         |       | 43                 |       | 2,176,794             |       | 10.2                   |       | 46,681,350             |       | 21.45                      |       | 9.4                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2016                         |       | 25                 |       | 507,107               |       | 2.4                    |       | 11,441,170             |       | 22.56                      |       | 2.3                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2017 and  thereafter         |       | 37                 |       | 1,503,779             |       | 7.0                    |       | 35,035,878             |       | 23.30                      |       | 7.1                    |       |
| **Totals/Weighted  Average** | ** ** | **2,086**          | ** ** | **21,408,941**        | ** ** | **100.0**              | ** ** | **494,538,522**        | ** ** | **23.10**                  | ** ** | **100.0**              | ** ** |

 

----

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

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

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

 

35

----

 

**SCHEDULE OF LEASE EXPIRATIONS:OFFICE/FLEX PROPERTIES**

 

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

 
| ** **                   | ** ** | ** **         | ** ** | ** **            | ** ** | ** **             | ** ** | ** **             | ** ** | **Average**                | ** ** | ** **             | ** ** |
|------------------------------|------------|--------------------|------------|-----------------------|------------|------------------------|------------|------------------------|------------|----------------------------|------------|------------------------|------------|
| ** **                   | ** ** | ** **         | ** ** | ** **            | ** ** | ** **             | ** ** | ** **             | ** ** | **Annual**                 | ** ** | ** **             | ** ** |
| ** **                   | ** ** | ** **         | ** ** | ** **            | ** ** | **Percentage Of** | ** ** | ** **             | ** ** | **Rent Per Net** | ** ** | ** **             | ** ** |
| ** **                   | ** ** | ** **         | ** ** | **Net Rentable** | ** ** | **Total Leased**  | ** ** | **Annualized**         | ** ** | **Rentable**               | ** ** | **Percentage Of** | ** ** |
| ** **                   | ** ** | ** **         | ** ** | **Area Subject** | ** ** | **Square Feet**   | ** ** | **Base Rental**   | ** ** | **Square Foot**       | ** ** | **Annual Base**   | ** ** |
| ** **                   | ** ** | **Number Of** | ** ** | **To Expiring**  | ** ** | **Represented****By**  | ** ** | **Revenue Under** | ** ** | **Represented**            | ** ** | **Rent Under**    | ** ** |
| **Year Of**             | ** ** | **Leases**         | ** ** | **Leases**            | ** ** | **Expiring**           | ** ** | **Expiring**           | ** ** | **By Expiring**       | ** ** | **Expiring**           | ** ** |
| **Expiration**               | ** ** | **Expiring (a)**   | ** ** | **(Sq. Ft.)**         | ** ** | **Leases (%)**         | ** ** | **Leases ($) (b)**     | ** ** | **Leases ($)**             | ** ** | **Leases (%)**         | ** ** |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2006 (c)                     |       | 59                 |       | 341,045               |       | 7.3                    |       | 4,603,609              |       | 13.50                      |       | 7.9                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2007                         |       | 72                 |       | 654,318               |       | 14.2                   |       | 8,147,033              |       | 12.45                      |       | 13.9                   |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2008                         |       | 83                 |       | 784,710               |       | 17.0                   |       | 8,417,367              |       | 10.73                      |       | 14.4                   |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2009                         |       | 56                 |       | 473,271               |       | 10.3                   |       | 6,023,326              |       | 12.73                      |       | 10.3                   |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2010                         |       | 74                 |       | 790,974               |       | 17.1                   |       | 10,798,274             |       | 13.65                      |       | 18.5                   |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2011                         |       | 45                 |       | 508,345               |       | 11.0                   |       | 5,640,020              |       | 11.09                      |       | 9.6                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2012                         |       | 35                 |       | 348,315               |       | 7.5                    |       | 4,810,449              |       | 13.81                      |       | 8.2                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2013                         |       | 16                 |       | 219,318               |       | 4.8                    |       | 3,366,333              |       | 15.35                      |       | 5.8                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2014                         |       | 10                 |       | 109,459               |       | 2.4                    |       | 1,697,425              |       | 15.51                      |       | 2.9                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2015                         |       | 13                 |       | 162,151               |       | 3.5                    |       | 1,967,763              |       | 12.14                      |       | 3.4                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2016                         |       | 7                  |       | 77,017                |       | 1.7                    |       | 1,132,680              |       | 14.71                      |       | 1.9                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2017 and  thereafter         |       | 6                  |       | 148,065               |       | 3.2                    |       | 1,881,350              |       | 12.71                      |       | 3.2                    |       |
| **Totals/Weighted  Average** | ** ** | **476**            | ** ** | **4,616,988**         | ** ** | **100.0**              | ** ** | **58,485,629**         | ** ** | **12.67**                  | ** ** | **100.0**              | ** ** |

 

----

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

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

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

 

36

----

 

**SCHEDULE OF LEASE EXPIRATIONS:INDUSTRIAL/WAREHOUSE PROPERTIES**

 

The followingtable sets forth a schedule of lease expirations for theindustrial/warehouse properties beginning January 1, 2006, assuming thatnone of the tenants exercise renewal or termination options:

 
| ** **                   | ** ** | ** **         | ** ** | ** **            | ** ** | ** **             | ** ** | ** **             | ** ** | **Average**                | ** ** | ** **             | ** ** |
|------------------------------|------------|--------------------|------------|-----------------------|------------|------------------------|------------|------------------------|------------|----------------------------|------------|------------------------|------------|
| ** **                   | ** ** | ** **         | ** ** | ** **            | ** ** | ** **             | ** ** | ** **             | ** ** | **Annual**                 | ** ** | ** **             | ** ** |
| ** **                   | ** ** | ** **         | ** ** | ** **            | ** ** | **Percentage Of** | ** ** | ** **             | ** ** | **Rent Per Net** | ** ** | ** **             | ** ** |
| ** **                   | ** ** | ** **         | ** ** | **Net Rentable** | ** ** | **Total Leased**  | ** ** | **Annualized**         | ** ** | **Rentable**               | ** ** | **Percentage Of** | ** ** |
| ** **                   | ** ** | ** **         | ** ** | **Area Subject** | ** ** | **Square Feet**   | ** ** | **Base Rental**   | ** ** | **Square Foot**       | ** ** | **Annual Base**   | ** ** |
| ** **                   | ** ** | **Number Of** | ** ** | **To Expiring**  | ** ** | **Represented****By**  | ** ** | **Revenue Under** | ** ** | **Represented**            | ** ** | **Rent Under**    | ** ** |
| **Year Of**             | ** ** | **Leases**         | ** ** | **Leases**            | ** ** | **Expiring**           | ** ** | **Expiring**           | ** ** | **By Expiring**       | ** ** | **Expiring**           | ** ** |
| **Expiration**               | ** ** | **Expiring (a)**   | ** ** | **(Sq. Ft.)**         | ** ** | **Leases (%)**         | ** ** | **Leases ($) (b)**     | ** ** | **Leases ($)**             | ** ** | **Leases (%)**         | ** ** |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2007                         |       | 3                  |       | 12,650                |       | 3.3                    |       | 218,955                |       | 17.31                      |       | 5.5                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2008                         |       | 3                  |       | 91,369                |       | 24.1                   |       | 472,849                |       | 5.18                       |       | 11.9                   |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2009                         |       | 5                  |       | 48,983                |       | 12.9                   |       | 788,725                |       | 16.10                      |       | 19.9                   |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2010                         |       | 1                  |       | 28,000                |       | 7.4                    |       | 294,000                |       | 10.50                      |       | 7.4                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2011                         |       | 1                  |       | 7,600                 |       | 2.0                    |       | 91,200                 |       | 12.00                      |       | 2.3                    |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2013                         |       | 7                  |       | 55,236                |       | 14.6                   |       | 687,173                |       | 12.44                      |       | 17.3                   |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2016                         |       | 2                  |       | 135,082               |       | 35.7                   |       | 1,418,361              |       | 10.50                      |       | 35.7                   |       |
| **Totals/Weighted  Average** | ** ** | **22**             | ** ** | **378,920**           | ** ** | **100.0**              | ** ** | **3,971,263**          | ** ** | **10.48**                  | ** ** | **100.0**              | ** ** |

 

----

(a)          Includesindustrial/warehouse tenants only. Excludes leases for amenity, retail, parkingand month-to-month industrial/warehouse tenants. Some tenants have multipleleases.

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

 

**SCHEDULE OF LEASE EXPIRATIONS:STAND-ALONE RETAIL PROPERTIES**

 

The following table sets forth a schedule of lease expirations forthe stand-alone retail properties beginning January 1, 2006, assuming thatnone of the tenants exercise renewal or termination options:

 
| ** **                   | ** ** | ** **         | ** ** | ** **            | ** ** | ** **             | ** ** | ** **             | ** ** | **Average**                | ** ** | ** **             | ** ** |
|------------------------------|------------|--------------------|------------|-----------------------|------------|------------------------|------------|------------------------|------------|----------------------------|------------|------------------------|------------|
| ** **                   | ** ** | ** **         | ** ** | ** **            | ** ** | ** **             | ** ** | ** **             | ** ** | **Annual**                 | ** ** | ** **             | ** ** |
| ** **                   | ** ** | ** **         | ** ** | ** **            | ** ** | **Percentage Of** | ** ** | ** **             | ** ** | **Rent Per Net** | ** ** | ** **             | ** ** |
| ** **                   | ** ** | ** **         | ** ** | **Net Rentable** | ** ** | **Total Leased**  | ** ** | **Annualized**         | ** ** | **Rentable**               | ** ** | **Percentage Of** | ** ** |
| ** **                   | ** ** | ** **         | ** ** | **Area Subject** | ** ** | **Square Feet**   | ** ** | **Base Rental**   | ** ** | **Square Foot**       | ** ** | **Annual Base**   | ** ** |
| ** **                   | ** ** | **Number Of** | ** ** | **To Expiring**  | ** ** | **Represented****By**  | ** ** | **Revenue Under** | ** ** | **Represented**            | ** ** | **Rent Under**    | ** ** |
| **Year Of**             | ** ** | **Leases**         | ** ** | **Leases**            | ** ** | **Expiring**           | ** ** | **Expiring**           | ** ** | **By Expiring**       | ** ** | **Expiring**           | ** ** |
| **Expiration**               | ** ** | **Expiring (a)**   | ** ** | **(Sq. Ft.)**         | ** ** | **Leases (%)**         | ** ** | **Leases ($) (b)**     | ** ** | **Leases ($)**             | ** ** | **Leases (%)**         | ** ** |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2009                         |       | 1                  |       | 9,300                 |       | 53.8                   |       | 195,000                |       | 20.97                      |       | 46.4                   |       |
|                         |       |               |       |                  |       |                   |       |                   |       |                       |       |                   |       |
| 2017 and  thereafter         |       | 1                  |       | 8,000                 |       | 46.2                   |       | 225,000                |       | 28.13                      |       | 53.6                   |       |
| **Totals/Weighted  Average** | ** ** | **2**              | ** ** | **17,300**            | ** ** | **100.0**              | ** ** | **420,000**            | ** ** | **24.28**                  | ** ** | **100.0**              | ** ** |

 

----

(a)          Includes stand-aloneretail property tenants only.

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

 

37

----

 

### **INDUSTRY DIVERSIFICATION**

 

The followingtable lists the Operating Partnership’s 30 largest industry classificationsbased on annualized contractual base rent of the Consolidated Properties:

 
| **Industry  Classification (a)**                         | ** ** | **Annualized  Base Rental  Revenue  ($) (b) (c) (d)** | ** ** | **Percentage of  Operating  Partnership  Annualized Base  Rental Revenue (%)** | ** ** | **Square  Feet  Leased (d)** | ** ** | **Percentage of  Total Operating  Partnership  Leased  Sq. Ft. (%)** | ** ** |
|----------------------------------------------------------|------------|-------------------------------------------------------|------------|--------------------------------------------------------------------------------|------------|------------------------------|------------|----------------------------------------------------------------------|------------|
| Securities, Commodity Contracts & Other  Financial   |       | 98,372,782                                            |       | 17.6                                                                           |       | 3,772,027                    |       | 14.3                                                                 |       |
| Manufacturing                                            |       | 50,950,692                                            |       | 9.1                                                                            |       | 2,592,720                    |       | 9.8                                                                  |       |
| Insurance Carriers & Related Activities              |       | 44,139,749                                            |       | 7.9                                                                            |       | 2,026,110                    |       | 7.7                                                                  |       |
| Telecommunications                                       |       | 28,433,504                                            |       | 5.1                                                                            |       | 1,369,986                    |       | 5.2                                                                  |       |
| Computer System Design Svcs.                             |       | 27,608,346                                            |       | 5.0                                                                            |       | 1,344,921                    |       | 5.1                                                                  |       |
| Health Care & Social Assistance                      |       | 26,245,100                                            |       | 4.7                                                                            |       | 1,376,719                    |       | 5.2                                                                  |       |
| Legal Services                                           |       | 22,942,652                                            |       | 4.1                                                                            |       | 933,071                      |       | 3.5                                                                  |       |
| Credit Intermediation & Related  Activities          |       | 22,930,882                                            |       | 4.1                                                                            |       | 971,011                      |       | 3.7                                                                  |       |
| Wholesale Trade                                          |       | 22,670,061                                            |       | 4.1                                                                            |       | 1,459,230                    |       | 5.5                                                                  |       |
| Scientific Research/Development                          |       | 19,660,248                                            |       | 3.5                                                                            |       | 922,943                      |       | 3.5                                                                  |       |
| Accounting/Tax Prep.                                     |       | 18,788,958                                            |       | 3.4                                                                            |       | 799,421                      |       | 3.0                                                                  |       |
| Retail Trade                                             |       | 16,160,001                                            |       | 2.9                                                                            |       | 960,653                      |       | 3.6                                                                  |       |
| Advertising/Related Services                             |       | 13,373,820                                            |       | 2.4                                                                            |       | 579,199                      |       | 2.2                                                                  |       |
| Other Professional                                       |       | 13,318,926                                            |       | 2.4                                                                            |       | 563,405                      |       | 2.1                                                                  |       |
| Public Administration                                    |       | 12,159,567                                            |       | 2.2                                                                            |       | 474,866                      |       | 1.8                                                                  |       |
| Information Services                                     |       | 11,979,116                                            |       | 2.1                                                                            |       | 579,968                      |       | 2.2                                                                  |       |
| Architectural/Engineering                                |       | 11,259,351                                            |       | 2.0                                                                            |       | 489,609                      |       | 1.9                                                                  |       |
| Other Services (except Public  Administration)           |       | 11,064,687                                            |       | 2.0                                                                            |       | 653,181                      |       | 2.5                                                                  |       |
| Arts, Entertainment & Recreation                     |       | 10,647,111                                            |       | 1.9                                                                            |       | 666,991                      |       | 2.5                                                                  |       |
| Real Estate & Rental & Leasing                   |       | 9,829,809                                             |       | 1.8                                                                            |       | 551,307                      |       | 2.1                                                                  |       |
| Broadcasting                                             |       | 6,829,985                                             |       | 1.2                                                                            |       | 457,600                      |       | 1.7                                                                  |       |
| Utilities                                                |       | 6,457,926                                             |       | 1.2                                                                            |       | 320,522                      |       | 1.2                                                                  |       |
| Publishing Industries                                    |       | 5,752,461                                             |       | 1.0                                                                            |       | 255,973                      |       | 1.0                                                                  |       |
| Data Processing Services                                 |       | 5,657,322                                             |       | 1.0                                                                            |       | 253,808                      |       | 1.0                                                                  |       |
| Transportation                                           |       | 5,652,997                                             |       | 1.0                                                                            |       | 321,717                      |       | 1.2                                                                  |       |
| Construction                                             |       | 5,605,538                                             |       | 1.0                                                                            |       | 285,170                      |       | 1.1                                                                  |       |
| Educational Services                                     |       | 4,624,838                                             |       | 0.8                                                                            |       | 245,133                      |       | 0.9                                                                  |       |
| Management of Companies & Finance                    |       | 4,448,341                                             |       | 0.8                                                                            |       | 191,135                      |       | 0.7                                                                  |       |
| Admin & Support, Waste Mgt. &  Remediation Svcs. |       | 3,331,989                                             |       | 0.6                                                                            |       | 221,867                      |       | 0.8                                                                  |       |
| Specialized Design Services                              |       | 3,223,136                                             |       | 0.6                                                                            |       | 153,661                      |       | 0.6                                                                  |       |
| Other                                                    |       | 13,295,519                                            |       | 2.5                                                                            |       | 628,225                      |       | 2.4                                                                  |       |
|                                                     |       |                                                  |       |                                                                           |       |                         |       |                                                                 |       |
| **Totals**                                               | ** ** | **557,415,414**                                       | ** ** | **100.0**                                                                      | ** ** | **26,422,149**               | ** ** | **100.0**                                                            | ** ** |

 

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(a)          TheOperating Partnership’s tenants are classified according to the U.S. Government’sNorth American Industrial Classification System (NAICS) which has replaced theStandard Industrial Code (SIC) system.

(b)         Annualizedbase rental revenue is based on actual December, 2005 billings times 12.  For leases whose rent commences after January1, 2006, annualized base rental revenue is based on the first full month’sbilling times 12.  As annualized baserental revenue is not derived from historical GAAP results, historical resultsmay differ from those set forth above.

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

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

 

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##### **MARKET DIVERSIFICATION**

 

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

 
| **Market  (MSA)**                             | ** ** | **Annualized Base  Rental Revenue  ($) (a) (b) (c)** | ** ** | **Percentage Of  Operating  Partnership  Annualized  Base Rental  Revenue (%)** | ** ** | **Total Property  Size Rentable  Area (b) (c)** | ** ** | **Percentage Of  Rentable Area (%)** | ** ** |
|-----------------------------------------------|------------|------------------------------------------------------|------------|---------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|--------------------------------------|------------|
| Jersey City, NJ                               |       | 103,376,501                                          |       | 18.6                                                                            |       | 4,317,978                                       |       | 14.7                                 |       |
| Newark, NJ  (Essex-Morris-Union Counties)     |       | 102,277,027                                          |       | 18.3                                                                            |       | 5,674,820                                       |       | 19.2                                 |       |
| New York, NY  (Westchester-Rockland Counties) |       | 91,165,468                                           |       | 16.4                                                                            |       | 4,968,420                                       |       | 16.8                                 |       |
| Bergen-Passaic, NJ                            |       | 89,493,867                                           |       | 16.1                                                                            |       | 4,351,762                                       |       | 14.8                                 |       |
| Philadelphia, PA-NJ                           |       | 55,169,038                                           |       | 9.9                                                                             |       | 3,617,994                                       |       | 12.3                                 |       |
| Monmouth-Ocean, NJ                            |       | 25,164,573                                           |       | 4.5                                                                             |       | 1,620,863                                       |       | 5.5                                  |       |
| Trenton, NJ (Mercer County)                   |       | 17,227,825                                           |       | 3.1                                                                             |       | 767,365                                         |       | 2.6                                  |       |
| Middlesex-Somerset-Hunterdon, NJ              |       | 15,170,097                                           |       | 2.7                                                                             |       | 791,051                                         |       | 2.7                                  |       |
| Denver, CO                                    |       | 14,652,941                                           |       | 2.6                                                                             |       | 951,202                                         |       | 3.2                                  |       |
| Stamford-Norwalk, CT                          |       | 12,813,911                                           |       | 2.3                                                                             |       | 706,510                                         |       | 2.4                                  |       |
| Washington, DC-MD-VA-WV                       |       | 11,625,066                                           |       | 2.1                                                                             |       | 450,549                                         |       | 1.5                                  |       |
| San Francisco, CA                             |       | 8,268,000                                            |       | 1.5                                                                             |       | 450,891                                         |       | 1.5                                  |       |
| Bridgeport, CT                                |       | 2,412,796                                            |       | 0.4                                                                             |       | 145,487                                         |       | 0.5                                  |       |
| Boulder-Longmont, CO                          |       | 2,323,387                                            |       | 0.4                                                                             |       | 270,421                                         |       | 0.9                                  |       |
| Colorado Springs, CO                          |       | 2,288,040                                            |       | 0.4                                                                             |       | 209,987                                         |       | 0.7                                  |       |
| Dutchess County, NY                           |       | 2,062,226                                            |       | 0.4                                                                             |       | 118,727                                         |       | 0.4                                  |       |
| Atlantic-Cape May, NJ                         |       | 1,924,651                                            |       | 0.3                                                                             |       | 80,344                                          |       | 0.3                                  |       |
|                                          |       |                                                 |       |                                                                            |       |                                            |       |                                 |       |
| **Totals**                                    | ** ** | **557,415,414**                                      | ** ** | **100.0**                                                                       | ** ** | **29,494,371**                                  | ** ** | **100.0**                            | ** ** |

 

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(a)          Annualizedbase rental revenue is based on actual December 2005 billings times 12.  For leases whose rent commences after January1, 2006, annualized base rental revenue is based on the first full month’sbilling times 12.  As annualized baserental revenue is not derived from historical GAAP results, historical resultsmay differ from those set forth above.

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

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

 

39

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**ITEM 3.          LEGALPROCEEDINGS**

 

On February 12, 2003, the NJSEA selected The MillsCorporation and the Operating Partnership to redevelop the Continental AirlinesArena site (“Arena Site”) for mixed uses, including retail.  In March 2003, Hartz MountainIndustries, Inc., (“Hartz”), filed a lawsuit in the Superior Court of NewJersey, Law Division, for Bergen County, seeking to enjoin NJSEA from enteringinto a contract with the Meadowlands venture for the redevelopment of theContinental Airlines Arena site.  In May2003, the court denied Hartz’s request for an injunction and dismissed its suitfor failure to exhaust administrative remedies. In June 2003, the NJSEA held hearings on Hartz’s protest, and on aparallel protest filed by another rejected developer, Westfield, Inc. (“Westfield”).  On September 10, 2003, the NJSEA ruled againstHartz’s and Westfield’s protests, Hartz and Westfield, as well as Elliot Brahaand three other taxpayers (collectively “Braha”), thereafter filed appeals fromthe NJSEA’s final decision.  By decisiondated May 14, 2004, the Appellate Division of the Superior Court of New Jerseyrejected the appellants’ contention that the NJSEA lacks statutory authority toallow retail development of its property. The Appellate Division also remanded Hart’s claim under the Open PublicRecords Acts, seeking disclosure of additional documents from NJSEA, to the LawDivision for further proceedings. The Supreme Court of New Jersey declined toreview the Appellate Division’s decision. On August 19, 2004, the Law Division issued a decision resolving Hartz’sOpen Public Records Act claim and ordered NJSEA to disclose some, but not all,of the documents Hartz was seeking.  TheAppellate Division, in a decision rendered on November 24, 2004, upheld thefindings of the Law Division in the remand proceeding.  The Supreme Court of New Jersey declined toreview the Appellate Division’s decision. At Hartz’s request, the NJSEA thereafter held further hearings onDecember 15 and 16, 2004, to review certain additional facts in support ofHartz’s and Westfield’s bid protest. Braha, as a taxpayer, did not have standing to participate in thesupplemental protest hearing.  On March4, 2005, the Hearing Officer rendered his Supplemental Report andRecommendation to the NJSEA, finding no merit in the protests presented byHartz and Westfield.  The NJSEA acceptedthe Hearing Officer’s Supplemental Report and Recommendation on March 30, 2005and Hartz and Braha have appealed that decision to the Appellate Division.

 

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

 

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

 

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

 

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

 

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

Some of these appeals challenge NJDEP’s issuance of a streamencroachment permit, waterfront development permit, and coastal zoneconsistency determination for Meadowlands Xanadu.  Other of these appeals are from NJDEP’s andNJMC’s issuance of reports in connection with a consultation process the NJSEAwas statutorily required to undertake in connection with any NJSEA-developmentproject.

 

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

 

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

 

40

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with one of its officers as an individual named plaintiff) and theBorough of Carlstadt.  The Sierra Clubalso filed a motion for a preliminary injunction to stop certain constructionactivities on the project, which the Court denied on July 6, 2005.  The parties are currently briefing crossmotions for summary judgment on the merits of the Sierra Club’s claims. Adecision is expected sometime in the latter part of 2006.  On October 26, 2005, the court granted themotions of the Meadowlands Venture and the USACE to dismiss the Hartz complaintfor lack of standing.  The deadline forappealing that decision has passed, so the Hartz action is ended.  On October 31, 2005, the USACE filed a motionto dismiss the complaint filed by the Borough of Carlstadt for lack ofstanding.  On February 7, 2006 the Courtgranted the motion and dismissed the Borough of Carlstadt complaint in itsentirety.  Subject to any appeal that maybe brought within 60 days after this order of dismissal, the Borough ofCarlstadt action is ended.

 

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

 

The New Jersey Builders’ Association (“NJBA”) has commenced an action,which is pending in the Appellate Division, alleging that the NJSEA has failedto meet a purported obligation to provide affordable housing at the MeadowlandsComplex and seeking, among other relief, an order enjoining the construction ofMeadowlands Xanadu.  NJBA filed anapplication for preliminary injunctive relief seeking to enjoin furtherconstruction of Meadowlands Xanadu, which the Appellate Division denied on July28, 2005.  The Meadowlands Venture is nota party to that action.

 

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

 

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

 

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

 

##### **ITEM4.          SUBMISSION OF MATTERS TO AVOTE OF SECURITY HOLDERS**

 

Not applicable.

 

41

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**PART II**

 

**ITEM 5.****                             MARKETFOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES**

 

##### **MARKET INFORMATION**

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

 

**HOLDERS**

 

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

 

**RECENT SALES OF UNREGISTERED SECURITIES; USES OF PROCEEDS FROMREGISTERED SECURITIES**

 

During the three months ended December 31, 2005, the Corporation issued77,000 shares of common stock to holders of common units in the OperatingPartnership upon the redemption of such common units in private offeringspursuant to Section 4(2) of the Securities Act. The holders of the common units were limited partners of the OperatingPartnership and accredited investors under Rule 501 of the Securities Act.  The common units were converted into an equalnumber of shares of common stock.  TheCorporation has registered the resale of such shares under the Securities Act.

 

##### **DIVIDENDS AND DISTRIBUTIONS**

 

During the year endedDecember 31, 2005, the Corporation and the Operating Partnership declared fourquarterly common stock dividends and common unit distributions of $0.63 pershare and per unit from the first to the fourth quarter.  Additionally, in 2005, the OperatingPartnership declared quarterly Series C preferred unit distributions of $50.00per preferred unit from the first to the fourth quarter.  The Operating Partnership also declared onequarterly Series B preferred unit distribution of $18.1818 per preferred unitfor the first quarter.

 

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

 

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

 

**SECURITIESAUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS**

 

Information regarding securities authorized for issuance under theequity compensation plans of the Corporation is disclosed in Item 12: SecurityOwnership of Certain Beneficial Owners and Management and Related StockholderMatters.

 

**PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS**

 

None.

 

42

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# **ITEM 6.          SELECTED FINANCIAL DATA**

 

The following table setsforth selected financial data on a consolidated basis for the OperatingPartnership.  The consolidated selectedoperating, balance sheet and other data of the Operating Partnership as ofDecember 31, 2005, 2004, 2003, 2002 and 2001, and for the years then ended havebeen derived from the Operating Partnership’s financial statements for therespective periods.

 

**Operating Data (a)**

 
| ** **                                                 | ** ** | **Year Ended December 31,** | ** ** |
|------------------------------------------------------------|------------|-----------------------------|------------|
| **In  thousands, except per share data**                   | ** ** | **2005**                    | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** | **2001** | ** ** |
| Total revenues                                             |       | $                           | 643,405    |   | $ | 577,749 |   | $ | 558,924 |   | $ | 534,071 |   | $ | 536,404 |   |
| Property expenses (b)                                      |       | $                           | 227,074    |   | $ | 186,446 |   | $ | 173,794 |   | $ | 158,191 |   | $ | 164,621 |   |
| General and administrative                                 |       | $                           | 33,090     |   | $ | 31,761 |   | $ | 31,284 |   | $ | 26,883 |   | $ | 28,328 |   |
| Interest expense                                           |       | $                           | 119,337    |   | $ | 109,649 |   | $ | 115,430 |   | $ | 105,861 |   | $ | 109,434 |   |
| Income from continuing operations                          |       | $                           | 109,599    |   | $ | 120,268 |   | $ | 161,372 |   | $ | 158,306 |   | $ | 158,323 |   |
| Net income available to common unitholders                 |       | $                           | 112,210    |   | $ | 113,354 |   | $ | 160,486 |   | $ | 158,991 |   | $ | 150,190 |   |
| Income from continuing operations per unit  – basic   |       | $                           | 1.41       |   | $ | 1.50 |   | $ | 2.20 |   | $ | 2.23 |   | $ | 2.03 |   |
| Income from continuing operations per unit  – diluted |       | $                           | 1.40       |   | $ | 1.49 |   | $ | 2.18 |   | $ | 2.22 |   | $ | 2.02 |   |
| Net income per unit – basic                           |       | $                           | 1.52       |   | $ | 1.66 |   | $ | 2.45 |   | $ | 2.44 |   | $ | 2.33 |   |
| Net income per unit – diluted                         |       | $                           | 1.51       |   | $ | 1.65 |   | $ | 2.43 |   | $ | 2.43 |   | $ | 2.32 |   |
| Distributions declared per common unit                     |       | $                           | 2.52       |   | $ | 2.52 |   | $ | 2.52 |   | $ | 2.50 |   | $ | 2.46 |   |
| Basic weighted average units outstanding                   |       | 73,729                      |       | 68,110 |   | 65,526 |   | 65,109 |   | 64,495 |   |
| Diluted weighted average units outstanding                 |       | 74,189                      |       | 68,743 |   | 65,980 |   | 65,475 |   | 64,787 |   |

 

**Balance Sheet Data**

 
| ** **                                                         | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------------------|------------|------------------|------------|
| **In  thousands**                                                  | ** ** | **2005**         | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** | **2001** | ** ** |
| Rental property, before accumulated  depreciation and amortization |       | $                | 4,491,752  |   | $ | 4,160,959 |   | $ | 3,954,632 |   | $ | 3,857,657 |   | $ | 3,378,071 |   |
| Rental property held for sale, net                                 |       | —           |       | $ | 19,132 |   | $ | — |   | $ | — |   | $ | 384,626 |   |
| Total assets                                                       |       | $                | 4,247,502  |   | $ | 3,850,165 |   | $ | 3,749,570 |   | $ | 3,796,429 |   | $ | 3,746,770 |   |
| Total debt (c)                                                     |       | $                | 2,126,181  |   | $ | 1,702,300 |   | $ | 1,628,584 |   | $ | 1,752,372 |   | $ | 1,700,150 |   |
| Total liabilities                                                  |       | $                | 2,335,396  |   | $ | 1,877,096 |   | $ | 1,779,983 |   | $ | 1,912,199 |   | $ | 1,867,938 |   |
| Partners’ capital                                             |       | $                | 1,912,106  |   | $ | 1,961,966 |   | $ | 1,969,587 |   | $ | 1,884,230 |   | $ | 1,878,832 |   |

 

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

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

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

 

43

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**ITEM 7.****                             MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

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

 

***Executive Overview***

 

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

 

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

 

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

 

•                                thegeneral economic climate;

•                                theoccupancy rates of the Properties;

•                                rentalrates on new or renewed leases;

•                                tenantimprovement and leasing costs incurred to obtain and retain tenants;

•                                theextent of early lease terminations;

•                                operatingexpenses;

•                                costof capital; and

•                                theextent of acquisitions, development and sales of real estate.

 

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

 

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

 

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

 

44

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December 31, 2004 was a non-strategic, non-core 318,224 square footproperty acquired through a deed in lieu of foreclosure, which was 12.7 percentleased at December 31, 2004 and subsequently sold on February 4, 2005.  Leases that expired as of December 31, 2005,2004 and 2003 aggregate 311,623, 439,697 and 143,059 square feet, respectively,or 1.1, 1.5 and 0.5 percentage of the net rentable square footage,respectively.  Market rental rates havedeclined in most markets from peak levels in late 2000 and early 2001.  Rental rates on the Operating Partnership’sspace that was re-leased (based on first rents payable) during the year endedDecember 31, 2005 decreased an average of 8.2 percent compared to rates thatwere in effect under expiring leases, as compared to a 8.7 percent decrease in2004 and a 7.8 percent decrease in 2003. The Operating Partnership believes that vacancy rates may continue toincrease in most of its markets in 2006. As a result, the Operating Partnership’s future earnings and cash flowmay continue to be negatively impacted by current market conditions.

 

The remaining portion of this Management’s Discussion and Analysis ofFinancial Condition and Results of Operations should help the readerunderstand:

 

•                                propertytransactions during the period;

•                                criticalaccounting policies and estimates;

•                                resultsof operations for the year ended December 31, 2005, as compared to the sameperiod last year;

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

•                                liquidityand capital resources.

 

## ***PropertyTransactions***

 

**Property Acquisitions**

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

 
| **Acquisition  Date**               | ** ** | **Property/Address**          | ** ** | **Location**                   | ** ** | **# of  Bldgs.** | ** ** | **Rentable  Square Feet** | *** *** | **Investment by  Operating  Partnership  (in thousands)** | *** *** |
|-------------------------------------|------------|-------------------------------|------------|--------------------------------|------------|------------------|------------|---------------------------|--------------|-----------------------------------------------------------|--------------|
| ** **                          | ** ** | ** **                    | ** ** | ** **                     | ** ** | ** **       | ** ** | ** **                | *** *** | ** **                                                | *** *** |
| 03/02/05                            |       | 101 Hudson Street (a)         |       | Jersey City, Hudson County, NJ |       | 1                |       | 1,246,283                 |         | $                                                         | 330,302      |   |
| 03/29/05                            |       | 23 Main Street (a) (b)        |       | Holmdel, Monmouth County, NJ   |       | 1                |       | 350,000                   |         | 23,948                                                    |         |
| 07/12/05                            |       | Monmouth Executive Center (c) |       | Freehold, Monmouth County, NJ  |       | 4                |       | 235,968                   |         | 33,561                                                    |         |
|                                |       |                          |       |                           |       |             |       |                      |         |                                                      |         |
| Total Office Property Acquisitions: |       |                          |       | 6                              |       | 1,832,251        |       | $                         | 387,811      |                                                      |

 

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

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

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

 

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

 

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

 

45

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Pursuant to the contemplated transactions, the Operating Partnership isexpected to:

 

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

•                  Acquiresubstantially all the ownership interests in 12 office properties, valued atapproximately $337 million and totaling 1.7 million square feet in Northern andCentral New Jersey; and

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

 

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

 

These plannedacquisitions are subject to the execution of definitive acquisition agreementswith Gale and SL Green in one instance, and with Gale alone in the otherinstance, which agreements shall contain mutually acceptable terms andcustomary closing conditions to be negotiated in good faith with such partiesand entered into as soon as practicable. While the Operating Partnership isconfident that these transactions will be completed in accordance with theterms outlined above, there can be no assurance that either or both will closeor that the structure or terms of one or both acquisition agreements may notreflect changes from the current agreements in principle.

 

**Property Sales**

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

 
| **Sale  Date**                | ** ** | **Property/Address**                       | ** ** | **Location**                              | ** ** | **# of  Bldgs.** | ** ** | **Rentable  Square  Feet** | *** *** | **Net  Sales  Proceeds  (in thousands)** | *** *** | **Net  Book  Value  (in thousands)** | *** *** | **Realized  Gain/  (Loss)  (in thousands)** | *** *** |
|-------------------------------|------------|--------------------------------------------|------------|-------------------------------------------|------------|------------------|------------|----------------------------|--------------|------------------------------------------|--------------|--------------------------------------|--------------|---------------------------------------------|--------------|
| ** **                    | ** ** | ** **                                 | ** ** | ** **                                | ** ** | ** **       | ** ** | ** **                 | *** *** | ** **                               | ** **   | ** **                           | ** **   | ** **                                  | ** **   |
| 02/04/05                      |       | 210 South 16th  Street                     |       | Omaha, Douglas County,  Nebraska          |       | 1                |       | 318,224                    |         | $                                        | 8,464        |                                 | $            | 8,210                                       |         | $ | 254 |   |
| 02/11/05                      |       | 1122 Alma Road                             |       | Richardson, Dallas  County, Texas         |       | 1                |       | 82,576                     |         | 2,075                                    |         | 2,344                                |         | (269                                        | )            |
| 02/15/05                      |       | 3 Skyline Drive                            |       | Hawthorne, Westchester  County, New York  |       | 1                |       | 75,668                     |         | 9,587                                    |         | 8,856                                |         | 731                                         |         |
| 05/11/05                      |       | 201 Willowbrook Blvd.                      |       | Wayne, Passaic County,  New Jersey (a)    |       | 1                |       | 178,329                    |         | 17,696                                   |         | 17,705                               |         | (9                                          | )            |
| 06/03/05                      |       | 600  Community Drive/  111 East Shore Road |       | North Hempstead, Nassau  County, New York |       | 2                |       | 292,849                    |         | 71,593                                   |         | 59,609                               |         | 11,984                                      |         |
| 12/29/05                      |       | 3600 South Yosemite                        |       | Denver, Denver County,  Colorado          |       | 1                |       | 133,743                    |         | 5,566                                    |         | 11,121                               |         | (5,555                                      | )            |
|                          |       |                                       |       |                                      |       |             |       |                       |         |                                     |         |                                 |         |                                        |         |
| Total Office Property  Sales: |       |                                       |       | 7                                         |       | 1,081,389        |       | $                          | 114,981      |                                     | $            | 107,845                              |         | $                                           | 7,136        |   |

 

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(a)          In connection with the sale, the Operating Partnershipprovided a mortgage loan to the buyer of $12 million which bears interest at5.74 percent, matures in five years with a five-year renewal option, andrequires monthly payments of principal and interest.

 

***Critical Accounting Policies and Estimates***

 

The Financial Statements have been prepared in conformity withgenerally accepted accounting principles. The preparation of the Financial Statements requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe Financial Statements, and the reported amounts of revenues and expensesduring the reported period.  Theseestimates and assumptions are based on management’s historical experience thatare believed to be reasonable at the time. However, because future events and their effects cannot be determinedwith certainty, the determination of estimates requires the exercise ofjudgment.  The Operating Partnership’scritical accounting policies are those which require assumptions to be madeabout matters that are highly uncertain. Different estimates could have a material effect on the OperatingPartnership’s financial results. Judgments and uncertainties affecting the application of these policiesand estimates may result in materially different amounts being reported underdifferent conditions and circumstances.

 

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**Rental Property:**

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

 

The Operating Partnershipconsiders a construction project as substantially completed and held availablefor occupancy upon the completion of tenant improvements, but no later than oneyear from cessation of major construction activity (as distinguished fromactivities such as routine maintenance and cleanup).  If portions of a rental project aresubstantially completed and occupied by tenants, or held available for occupancy,and other portions have not yet reached that stage, the substantially completedportions are accounted for as a separate project.  The Operating Partnership allocates costsincurred between the portions under construction and the portions substantiallycompleted and held available for occupancy and capitalizes only those costsassociated with the portion under construction.

 

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

 
| Leasehold interests               |   | Remaining lease term                                         |
|-----------------------------------|--------|--------------------------------------------------------------|
| Buildings and improvements        |   | 5 to 40 years                                                |
| Tenant improvements               |   | The shorter of the term of the  related lease or useful life |
| Furniture, fixtures and equipment |   | 5 to 10 years                                                |

 

Upon acquisition ofrental property, the Operating Partnership estimates the fair value of acquiredtangible assets, consisting of land, building and improvements, and identifiedintangible assets and liabilities generally consisting of the fair value of (i)above and below market leases, (ii) in-place leases and (iii) tenantrelationships.  The Operating Partnershipallocates the purchase price to the assets acquired and liabilities assumedbased on their relative fair values.  Inestimating the fair value of the tangible and intangible assets acquired, theOperating Partnership considers information obtained about each property as aresult of its due diligence and marketing and leasing activities, and utilizesvarious valuation methods, such as estimated cash flow projections utilizingappropriate discount and capitalization rates, estimates of replacement costsnet of depreciation, and available market information.  The fair value of the tangible assets of anacquired property considers the value of the property as if it were vacant.

 

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

 

Other intangibleassets acquired include amounts for in-place lease values and tenantrelationship values which are based on management’s evaluation of the specificcharacteristics of each tenant’s lease and the Operating Partnership’s overallrelationship with the respective tenant. Factors to be considered by management in its analysis of in-place leasevalues include an estimate of carrying costs during hypothetical expectedlease-up periods considering current market conditions, and costs to executesimilar leases.  In estimating carryingcosts, management includes real estate taxes, insurance and other operatingexpenses and estimates of lost rentals at market rates during the expectedlease-up periods, depending on local market conditions.  In estimating costs to execute similarleases, management considers leasing commissions, legal and other relatedexpenses.  Characteristics considered bymanagement in valuing tenant relationships include the nature and extent of theOperating Partnership’s existing business relationships with the tenant, growth

 

47

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prospects fordeveloping new business with the tenant, the tenant’s credit quality andexpectations of lease renewals.

The value ofin-place leases are amortized to expense over the remaining initial terms ofthe respective leases.  The value oftenant relationship intangibles will be amortized to expense over theanticipated life of the relationships.

 

On a periodic basis,management assesses whether there are any indicators that the value of theOperating Partnership’s rental properties may be impaired.  A property’s value is impaired only ifmanagement’s estimate of the aggregate future cash flows (undiscounted andwithout interest charges) to be generated by the property is less than thecarrying value of the property.  To theextent impairment has occurred, the loss shall be measured as the excess of thecarrying amount of the property over the fair value of the property.  The Operating Partnership’s estimates ofaggregate future cash flows expected to be generated by each property are basedon a number of assumptions that are subject to economic and marketuncertainties including, among others, demand for space, competition fortenants, changes in market rental rates, and costs to operate eachproperty.  As these factors are difficultto predict and are subject to future events that may alter management’sassumptions, the future cash flows estimated by management in its impairmentanalyses may not be achieved.  Managementdoes not believe that the value of any of the Operating Partnership’s rentalproperties is impaired.

 

**Rental Property Held for Sale and Discontinued Operations:**

When assets areidentified by management as held for sale, the Operating Partnershipdiscontinues depreciating the assets and estimates the sales price, net ofselling costs, of such assets.  If, inmanagement’s opinion, the net sales price of the assets which have beenidentified as held for sale is less than the net book value of the assets, avaluation allowance is established. Properties identified as held for sale and/or sold are presented indiscontinued operations for all periods presented.

 

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

 

**Revenue Recognition:**

Base rental revenue isrecognized on a straight-line basis over the terms of the respectiveleases.  Unbilled rents receivablerepresents the amount by which straight-line rental revenue exceeds rentscurrently billed in accordance with the lease agreements.  Above-market and below-market lease valuesfor acquired properties are recorded based on the present value (using adiscount rate which reflects the risks associated with the leases acquired) ofthe difference between (i) the contractual amounts to be paid pursuant to eachin-place lease and (ii) management’s estimate of fair market lease rates foreach corresponding in-place lease, measured over a period equal to theremaining term of the lease for above-market leases and the initial term plusthe term of any below-market fixed rate renewal options for below-marketleases. The capitalized above-market lease values are amortized as a reductionof base rental revenue over the remaining term of the respective leases, andthe capitalized below-market lease values are amortized as an increase to baserental revenue over the remaining initial terms plus the terms of anybelow-market fixed rate renewal options of the respective leases. Parking andother revenue includes income from parking spaces leased to tenants, incomefrom tenants for additional services provided by the Operating Partnership,income from tenants for early lease terminations and income from managingand/or leasing properties for third parties. Escalations and recoveries are received from tenants for certain costsas provided in the lease agreements.  These costs generally include real estatetaxes, utilities, insurance, common area maintenance and other recoverablecosts.

 

**Allowance for Doubtful Accounts:**

Management periodicallyperforms a detailed review of amounts due from tenants to determine if accountsreceivable balances are impaired based on factors affecting the collectibilityof those balances.  Management’s estimateof the allowance for doubtful accounts requires management to exercisesignificant judgment about the timing, frequency and severity of collectionlosses, which affects the allowance and net income.

 

48

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***Results From Operations***

 

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

 

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

 
| ** **                                                                                    | ** ** | **Year Ended**   | ** ** | ** ** | ** ** | ** **  | ** ** |
|-----------------------------------------------------------------------------------------------|------------|------------------|------------|------------|------------|-------------|------------|
| ** **                                                                                    | ** ** | **December 31,** | ** ** | **Dollar** | ** ** | **Percent** | ** ** |
| **(dollars  in thousands)**                                                                   | ** ** | **2005**         | ** ** | **2004**   | ** ** | **Change**  | ** ** | **Change** | ** ** |
| **Revenue from rental operations:**                                                           |       |             |       |       |       |        |       |   |   |
| Base rents                                                                                    |       | $                | 541,702    |       | $          | 498,392     |       | $ | 43,310 |   | 8.7 | % |
| Escalations and recoveries from tenants                                                       |       | 84,082           |       | 66,451     |       | 17,631      |       | 26.5 |   |
| Parking and other                                                                             |       | 17,621           |       | 12,906     |       | 4,715       |       | 36.5 |   |
| Total revenues                                                                                |       | 643,405          |       | 577,749    |       | 65,656      |       | 11.4 |   |
|                                                                                          |       |             |       |       |       |        |       |   |   |
| **Property expenses:**                                                                        |       |             |       |       |       |        |       |   |   |
| Real estate taxes                                                                             |       | 82,056           |       | 69,085     |       | 12,971      |       | 18.8 |   |
| Utilities                                                                                     |       | 55,843           |       | 41,649     |       | 14,194      |       | 34.1 |   |
| Operating services                                                                            |       | 89,175           |       | 75,712     |       | 13,463      |       | 17.8 |   |
| Sub-total                                                                                     |       | 227,074          |       | 186,446    |       | 40,628      |       | 21.8 |   |
|                                                                                          |       |             |       |       |       |        |       |   |   |
| General and administrative                                                                    |       | 33,090           |       | 31,761     |       | 1,329       |       | 4.2 |   |
| Depreciation and amortization                                                                 |       | 155,370          |       | 127,826    |       | 27,544      |       | 21.5 |   |
| Interest expense                                                                              |       | 119,337          |       | 109,649    |       | 9,688       |       | 8.8 |   |
| Interest income                                                                               |       | (856             | )          | (1,367     | )          | 511         |       | 37.4 |   |
| Total expenses                                                                                |       | 534,015          |       | 454,315    |       | 79,700      |       | 17.5 |   |
| Income from continuing operations before  equity in earnings of unconsolidated joint ventures |       | 109,390          |       | 123,434    |       | (14,044     | )          | (11.4 | ) |
| Minority interest in consolidated joint ventures                                              |       | (74              | )          | —     |       | (74         | )          | (100.0 | ) |
| Equity in earnings of unconsolidated joint  ventures, net                                     |       | 248              |       | (3,886     | )          | 4,134       |       | 106.4 |   |
| Gain on sale of investment in unconsolidated  joint ventures                                  |       | 35               |       | 720        |       | (685        | )          | (95.1 | ) |
| Income from continuing operations                                                             |       | 109,599          |       | 120,268    |       | (10,669     | )          | (8.9 | ) |
| Discontinued operations:                                                                      |       |             |       |       |       |        |       |   |   |
| Income (loss) from discontinued operations                                                    |       | 2,998            |       | 11,448     |       | (8,450      | )          | (73.8 | ) |
| Realized gains (losses) and unrealized  losses on disposition of rental property, net         |       | 5,522            |       | (726       | )          | 6,248       |       | 860.6 |   |
| Total discontinued operations, net                                                            |       | 8,520            |       | 10,722     |       | (2,202      | )          | (20.5 | ) |
| Net income                                                                                    |       | 118,119          |       | 130,990    |       | (12,871     | )          | (9.8 | ) |
| Preferred unit distributions                                                                  |       | (5,909           | )          | (17,636    | )          | 11,727      |       | 66.5 |   |
|                                                                                          |       |             |       |       |       |        |       |   |   |
| Net income available to common unitholders                                                    |       | $                | 112,210    |       | $          | 113,354     |       | $ | (1,144 | ) | (1.0 | )% |

 

49

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

 
| ** **                              | ** ** | **Total Operating Partnership** | ** ** | **Same-Store Properties** | ** ** | **Acquired Properties** | ** ** |
|-----------------------------------------|------------|---------------------------------|------------|---------------------------|------------|-------------------------|------------|
| ** **                              | ** ** | **Dollar**                      | ** ** | **Percent**               | ** ** | **Dollar**              | ** ** | **Percent** | ** ** | **Dollar** | ** ** | **Percent** | ** ** |
| ** **                              | ** ** | **Change**                      | ** ** | **Change**                | ** ** | **Change**              | ** ** | **Change** | ** ** | **Change** | ** ** | **Change** | ** ** |
| **Revenue  from rental operations:**    |       |                            |       |                      |       |                    |       |   |   |   |   |   |   |
| Base rents                              |       | $                               | 43,310     |                      | 8.7        | %                       | $          | (805 | ) | (0.2 | )% | $ | 44,115 |   | 8.9 | % |
| Escalations and recoveries from tenants |       | 17,631                          |       | 26.5                      |       | 7,039                   |       | 10.6 |   | 10,592 |   | 15.9 |   |
| Parking and other                       |       | 4,715                           |       | 36.5                      |       | 2,872                   |       | 22.3 |   | 1,843 |   | 14.2 |   |
| Total                                   |       | $                               | 65,656     |                      | 11.4       | %                       | $          | 9,106 |   | 1.6 | % | $ | 56,550 |   | 9.8 | % |
|                                    |       |                            |       |                      |       |                    |       |   |   |   |   |   |   |
| **Property  expenses:**                 |       |                            |       |                      |       |                    |       |   |   |   |   |   |   |
| Real estate taxes                       |       | $                               | 12,971     |                      | 18.8       | %                       | $          | 3,923 |   | 5.7 | % | $ | 9,048 |   | 13.1 | % |
| Utilities                               |       | 14,194                          |       | 34.1                      |       | 9,003                   |       | 21.6 |   | 5,191 |   | 12.5 |   |
| Operating services                      |       | 13,463                          |       | 17.8                      |       | 4,800                   |       | 6.3 |   | 8,663 |   | 11.5 |   |
| Total                                   |       | $                               | 40,628     |                      | 21.8       | %                       | $          | 17,726 |   | 9.5 | % | $ | 22,902 |   | 12.3 | % |
|                                    |       |                            |       |                      |       |                    |       |   |   |   |   |   |   |
| **OTHER  DATA:**                        |       |                            |       |                      |       |                    |       |   |   |   |   |   |   |
| Number of Consolidated Properties       |       | 267                             |       |                      |       | 247                     |       |   |   | 20 |   |   |   |
| Square feet (in thousands)              |       | 29,494                          |       |                      |       | 25,252                  |       |   |   | 4,242 |   |   |   |

 

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

 

Real estate taxeson the Same-Store Properties increased $3.9 million, or 5.7 percent, for 2005as compared to 2004, due primarily to property tax rate increases in certainmunicipalities in 2005, partially offset by lower assessments on certainproperties in 2005.  Utilities for theSame-Store Properties increased $9.0 million, or 21.6 percent, for 2005 ascompared to 2004, due primarily to increased electric rates and increased usagein 2005.  Operating services for theSame-Store Properties increased $4.8 million, or 6.3 percent, due primarily toincreases in 2005 as compared to 2004 in snow removal costs of $2.0 million,repairs and maintenance expenses of $1.1 million, property managementcompensation and related expenses of $0.8 million, and building engineer costsof $0.8 million.

 

General and administrative expense increased by $1.3 million, or 4.2percent, for 2005 as compared to 2004. This was due primarily to increases in 2005 as compared to 2004 incompensation costs and related expenses of $0.9 million and state income taxexpense of $0.5 million, as well as compensation costs and related expenses in2005 of $0.6 million in connection with the resignation of a non-executiveofficer, and a write-down in 2005 of a technology investment of $0.5million.  These increases were partiallyoffset by compensation costs and related expenses incurred in 2004 inconnection with the resignation of the Corporation’s president of $1.3 million.

 

Depreciation and amortization increased by $27.5 million, or 21.5percent, for 2005 over 2004.  Of thisincrease, $6.5 million, or 5.1 percent, was attributable to the Same-StoreProperties primarily on account of the amortization of additional tenantinstallation costs in 2005 and $21.0 million, or 16.4 percent, was due to theAcquired Properties.

 

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

 

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

 

50

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

 

Equity in earnings ofunconsolidated joint ventures increased $4.1 million, or 106.4 percent, for2005 as compared to 2004. This increase was due primarily to the following: anincrease of $5.2 million in 2005 on account of the Ashford Loop joint venturehaving a loss in 2004, with no activity in 2005 due to the Company’s sale ofits interest in the venture in early 2005; an increase of $0.8 million fromincreased earnings in 2005 at the Harborside South Pier Hyatt Hotel Venture;and an increase of $0.6 million in 2005 on account of equity in loss in 2004 atthe Ramland Realty joint venture, with no equity in earnings in 2005.  These increases were partially offset by adecrease in equity in earnings of $1.9 million at the G&G Martco jointventure on account of equity in loss in 2005; and a decrease of $0.7 million in2005 on account of equity in earnings in the HPMC joint venture in 2004, withno activity in 2005 due to the joint venture’s sale of the Pacific Plaza I& II complex in 2004.

 

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

 

Net income available tocommon unitholders decreased by approximately $1.2 million, or 1.0 percent,from $113.4 million in 2004 to $112.2 million in 2005.  This decrease was primarily the result of a decreasein 2005 from 2004 in income from continuing operations before equity inearnings of unconsolidated joint ventures of $14.0 million, a decrease inincome from discontinued operations of approximately $8.4 million, a gain onsale of investment in unconsolidated joint ventures of $0.7 million in 2004,and minority interest in consolidated joint ventures of $0.1 million in2005.  These were partially offset by adecrease in preferred unit distributions of $11.7 million in 2005 as comparedto 2004, realized gains on disposition of rental property of $5.5 million in2005, an increase in equity in earnings of unconsolidated joint ventures of$4.1 million, and realized gains and unrealized losses on disposition of rentalproperty of $0.7 million in 2004.

 

51

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

 
| ** **                                                                                    | ** ** | **Year Ended**   | ** ** | ** ** | ** ** | ** **  | ** ** |
|-----------------------------------------------------------------------------------------------|------------|------------------|------------|------------|------------|-------------|------------|
| ** **                                                                                    | ** ** | **December 31,** | ** ** | **Dollar** | ** ** | **Percent** | ** ** |
| **(dollars  in thousands)**                                                                   | ** ** | **2004**         | ** ** | **2003**   | ** ** | **Change**  | ** ** | **Change** | ** ** |
| **Revenue from rental operations:**                                                           |       |             |       |       |       |        |       |   |   |
| Base rents                                                                                    |       | $                | 498,392    |       | $          | 480,292     |       | $ | 18,100 |   | 3.8 | % |
| Escalations and recoveries from tenants                                                       |       | 66,451           |       | 59,885     |       | 6,566       |       | 11.0 |   |
| Parking and other                                                                             |       | 12,906           |       | 18,747     |       | (5,841      | )          | (31.2 | ) |
| Total revenues                                                                                |       | 577,749          |       | 558,924    |       | 18,825      |       | 3.4 |   |
|                                                                                          |       |             |       |       |       |        |       |   |   |
| **Property expenses:**                                                                        |       |             |       |       |       |        |       |   |   |
| Real estate taxes                                                                             |       | 69,085           |       | 62,462     |       | 6,623       |       | 10.6 |   |
| Utilities                                                                                     |       | 41,649           |       | 40,037     |       | 1,612       |       | 4.0 |   |
| Operating services                                                                            |       | 75,712           |       | 71,295     |       | 4,417       |       | 6.2 |   |
| Sub-total                                                                                     |       | 186,446          |       | 173,794    |       | 12,652      |       | 7.3 |   |
|                                                                                          |       |             |       |       |       |        |       |   |   |
| General and administrative                                                                    |       | 31,761           |       | 31,284     |       | 477         |       | 1.5 |   |
| Depreciation and amortization                                                                 |       | 127,826          |       | 113,202    |       | 14,624      |       | 12.9 |   |
| Interest expense                                                                              |       | 109,649          |       | 115,430    |       | (5,781      | )          | (5.0 | ) |
| Interest income                                                                               |       | (1,367           | )          | (1,098     | )          | (269        | )          | (24.5 | ) |
| Loss on early retirement of debt, net                                                         |       | —           |       | 2,372      |       | (2,372      | )          | (100.0 | ) |
| Total expenses                                                                                |       | 454,315          |       | 434,984    |       | 19,331      |       | 4.4 |   |
| Income from continuing operations before  equity in earnings of unconsolidated joint ventures |       | 123,434          |       | 123,940    |       | (506        | )          | (0.4 | ) |
| Equity in earnings of unconsolidated joint  ventures, net                                     |       | (3,886           | )          | 13,480     |       | (17,366     | )          | (128.8 | ) |
| Gain on sale of investment in  unconsolidated joint ventures                                  |       | 720              |       | 23,952     |       | (23,232     | )          | (97.0 | ) |
| Income from continuing operations                                                             |       | 120,268          |       | 161,372    |       | (41,104     | )          | (25.5 | ) |
| Discontinued operations:                                                                      |       |             |       |       |       |        |       |   |   |
| Income (loss) from discontinued operations                                                    |       | 11,448           |       | 12,913     |       | (1,465      | )          | (11.3 | ) |
| Realized gains (losses) and unrealized  losses on disposition of rental property, net         |       | (726             | )          | 3,541      |       | (4,267      | )          | (120.5 | ) |
| Total discontinued operations, net                                                            |       | 10,722           |       | 16,454     |       | (5,732      | )          | (34.8 | ) |
| Net income                                                                                    |       | 130,990          |       | 177,826    |       | (46,836     | )          | (26.3 | ) |
| Preferred unit distributions                                                                  |       | (17,636          | )          | (17,340    | )          | (296        | )          | (1.7 | ) |
|                                                                                          |       |             |       |       |       |        |       |   |   |
| Net income available to common unitholders                                                    |       | $                | 113,354    |       | $          | 160,486     |       | $ | (47,132 | ) | (29.4 | )% |

 

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

 
| ** **                              | ** ** | **Total Operating Partnership** | ** ** | **Same-Store Properties** | ** ** | **Acquired Properties** | ** ** |
|-----------------------------------------|------------|---------------------------------|------------|---------------------------|------------|-------------------------|------------|
| ** **                              | ** ** | **Dollar**                      | ** ** | **Percent**               | ** ** | **Dollar**              | ** ** | **Percent** | ** ** | **Dollar** | ** ** | **Percent** | ** ** |
| ** **                              | ** ** | **Change**                      | ** ** | **Change**                | ** ** | **Change**              | ** ** | **Change** | ** ** | **Change** | ** ** | **Change** | ** ** |
| **Revenue  from rental operations:**    |       |                            |       |                      |       |                    |       |   |   |   |   |   |   |
| Base rents                              |       | $                               | 18,100     |                      | 3.8        | %                       | $          | 2,356 |   | 0.5 | % | $ | 15,744 |   | 3.3 | % |
| Escalations and recoveries from tenants |       | 6,566                           |       | 11.0                      |       | 4,937                   |       | 8.2 |   | 1,629 |   | 2.8 |   |
| Parking and other                       |       | (5,841                          | )          | (31.2                     | )          | (5,834                  | )          | (31.2 | ) | (7 | ) | — |   |
| Total                                   |       | $                               | 18,825     |                      | 3.4        | %                       | $          | 1,459 |   | 0.3 | % | $ | 17,366 |   | 3.1 | % |
|                                    |       |                            |       |                      |       |                    |       |   |   |   |   |   |   |
| **Property  expenses:**                 |       |                            |       |                      |       |                    |       |   |   |   |   |   |   |
| Real estate taxes                       |       | $                               | 6,623      |                      | 10.6       | %                       | $          | 4,443 |   | 7.1 | % | $ | 2,180 |   | 3.5 | % |
| Utilities                               |       | 1,612                           |       | 4.0                       |       | 1,124                   |       | 2.8 |   | 488 |   | 1.2 |   |
| Operating services                      |       | 4,417                           |       | 6.2                       |       | 3,240                   |       | 4.5 |   | 1,177 |   | 1.7 |   |
| Total                                   |       | $                               | 12,652     |                      | 7.3        | %                       | $          | 8,807 |   | 5.1 | % | $ | 3,845 |   | 2.2 | % |
|                                    |       |                            |       |                      |       |                    |       |   |   |   |   |   |   |
| **OTHER  DATA:**                        |       |                            |       |                      |       |                    |       |   |   |   |   |   |   |
| Number of Consolidated Properties       |       | 261                             |       |                      |       | 244                     |       |   |   | 17 |   |   |   |
| Square feet (in thousands)              |       | 27,662                          |       |                      |       | 25,050                  |       |   |   | 2,612 |   |   |   |

 

Base rents for the Same-Store Properties increased $2.4 million, or 0.5percent, for 2004 as compared to 2003, due primarily to increases inoccupancies at the properties in 2004 from 2003.  Escalations and recoveries from tenants forthe Same-Store Properties increased $4.9 million, or 8.2 percent, for 2004 over2003, due primarily to an increased amount of total property expenses in2004.  Parking and other income for theSame-Store Properties decreased $5.8 million, or 31.2 percent, due primarily toa decrease in lease termination fees of $3.9 million in 2004 as compared to2003 and a construction management fee of $1.2 million in 2003.

 

Real estate taxeson the Same-Store Properties increased $4.4 million, or 7.1 percent, for 2004as compared to 2003, due primarily to property tax rate increases in certainmunicipalities in 2004, partially offset by lower assessments on certainproperties in 2004.  Utilities for theSame-Store Properties increased $1.1 million, or 2.8 percent, for 2004 ascompared to 2003, due primarily to increased electric rates in 2004.  Operating services for the Same-StoreProperties increased $3.2 million, or 4.5 percent, due primarily to increasedrepairs and maintenance expenses of $2.6 million, increased insurance costs of$2.1 million, and property management salaries and related expenses of $0.6million in 2004 as compared to 2003, partially offset by a decrease in snowremoval costs in 2004 of $2.0 million.

 

General and administrative increased by $0.5 million, or 1.5 percent,for 2004 as compared to 2003.  Thisincrease was due primarily to compensation costs incurred in connection withthe 2004 resignation of the Corporation’s president of $1.3 million and anincrease in other salaries and related expenses of $0.9 million in 2004,partially offset by costs for transactions not consummated of $1.7 million in2003.

 

Depreciation and amortization increased by $14.6 million, or 12.9percent, for 2004 over 2003.  Of thisincrease, $9.3 million, or 8.3 percent, was attributable to the Same-StoreProperties primarily on account of the amortization of additional tenantinstallation costs and $5.3 million, or 4.6 percent, was due to the AcquiredProperties.

 

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

 

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

 

Loss on early retirement of debt, net, amounted to $2.4 million in2003, which was due to costs incurred with the exchange in 2003 of $25.0million face amount of 7.18 percent senior unsecured notes due December 31,2003 for $26.1

 

53

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million face amount of 5.82 percent senior unsecured notes due March15, 2003, with interest payable semi-annually in arrears.

 

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

 

Equity in earnings ofunconsolidated joint ventures decreased $17.4 million, or 128.8 percent, for2004 as compared to 2003.  This decreasewas due primarily to the sale of the Operating Partnership’s investment in theAmerican Financial Exchange in late 2003 resulting in a reduction of $11.3million in 2004, the Operating Partnership’s share of a valuation allowancetaken by the Ashford Loop joint venture of $4.9 million in 2004, and areduction in 2004 of $1.7 million as a result of the sale in 2003 of a propertyin Anaheim, California, partially offset by an increase from operations of theHyatt Hotel at Harborside South Pier of $2.2 million for 2004 as compared to2003.

 

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

 

Net income available tocommon unitholders decreased by $47.1 million, or 29.4 percent, from $160.5million in 2003 to $113.4 million in 2004. This decrease was primarily the result of the Operating Partnership havingrealized an approximately $23.9 million gain on sale of investment inunconsolidated joint venture in 2003 for the sale of its investment in theAmerican Financial Exchange venture, a decrease in equity in earnings ofunconsolidated joint ventures of $17.4 million, realized gains on dispositionof rental property of $3.5 million in 2003, a decrease in income fromdiscontinued operations of $1.5 million for 2004 as compared to 2003, realizedgains (losses) and unrealized losses on disposition of rental property of $0.7million in 2004, a decrease in income from continuing operations before equityin earnings of unconsolidated joint ventures of $0.5 million, and an increasein preferred unit distributions of $0.3 million. These were partially offset bya gain on sale of investment in unconsolidated joint venture of $0.7 million in2004.

 

## **LIQUIDITY AND CAPITAL RESOURCES**

 

## ***Liquidity***

 

**Overview:**

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

 

The Operating Partnershipbelieves that with the general downturn in the economy in recent years, and thesoftening of the Operating Partnership’s markets specifically, it is reasonablylikely that vacancy rates may continue to increase, effective rental rates onnew and renewed leases may continue to decrease and tenant installation costs,including concessions, may continue to increase in most or all of its marketsin 2006.  As a result of the potentialnegative effects on the Operating Partnership’s revenue from the overall reduceddemand for office space, the Operating Partnership’s cash flow could beinsufficient to cover increased tenant installation costs over theshort-term.  If this situation were tooccur, the Operating Partnership expects that it would finance any shortfallsthrough borrowings under its revolving credit facility and other debtfinancings of the Operating Partnership and equity financings of theCorporation.

 

The Operating Partnership expects to meet its short-term liquidityrequirements generally through its working capital, net cash provided byoperating activities and from its revolving credit facility.  The Operating Partnership frequently examinespotential property acquisitions and development projects and, at any giventime, one or more of such

 

54

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acquisitions or development projects may be under consideration.  Accordingly, the ability to fund propertyacquisitions and development projects is a major part of the OperatingPartnership’s financing requirements. The Operating Partnership expects to meet its financing requirementsthrough funds generated from operating activities, proceeds from propertysales, long-term and short-term borrowings (including draws on the OperatingPartnership’s revolving credit facility) and the issuance of additional debtand/or equity securities.

 

**REIT Restrictions:**

To maintain its qualification as a REIT, the Corporation must makeannual distributions to its stockholders of at least 90 percent of its REITtaxable income, determined without regard to the dividends paid deduction andby excluding net capital gains. Moreover, the Corporation intends to continue to make regular quarterlydistributions to its common stockholders which, based upon current policy, inthe aggregate would equal approximately $156.6 million on an annualizedbasis.  However, any such distribution,whether for federal income tax purposes or otherwise, would only be paid out ofavailable cash, including borrowings and other sources, after meeting operatingrequirements, preferred stock and unit dividends and distributions, andscheduled debt service on the Operating Partnership’s debt.

 

**Property Lock-Ups:**

The Corporation may notdispose of or distribute certain of its properties, currently comprising 56properties with an aggregate net book value of approximately $1.3 billion,which were originally contributed by members of either the Mack Group (whichincludes William L. Mack, Chairman of the Corporation’s Board of Directors;David S. Mack, a director of the Corporation; Earle I. Mack, a former directorof the Corporation; and Mitchell E. Hersh, president, chief executive officerand a director of the Corporation), the Robert Martin Group (which includesMartin S. Berger, a director of the Corporation; Robert F. Weinberg, a formerdirector of the Corporation; and Timothy M. Jones, former president of theCorporation), the Cali Group (which includes John R. Cali, a director of theCorporation, and John J. Cali, a former director of the Corporation) or certainother common unitholders, without the express written consent of arepresentative of the Mack Group, the Robert Martin Group, the Cali Group orthe specific certain other common unitholders, as applicable, except in amanner which does not result in recognition of any built-in-gain (which mayresult in an income tax liability) or which reimburses the appropriate MackGroup, Robert Martin Group, Cali Group members or the specific certain othercommon unitholders for the tax consequences of the recognition of suchbuilt-in-gains (collectively, the “Property Lock-Ups”).  The aforementioned restrictions do not applyin the event that the Operating Partnership sells all of its properties or inconnection with a sale transaction which the Corporation’s Board of Directorsdetermines is reasonably necessary to satisfy a material monetary default onany unsecured debt, judgment or liability of the Operating Partnership or theCorporation or to cure any material monetary default on any mortgage secured bya property.  The Property Lock-Ups expireperiodically through 2010.  Upon theexpiration of the Property Lock-Ups, the Operating Partnership is generallyrequired to use commercially reasonable efforts to prevent any sale, transferor other disposition of the subject properties from resulting in therecognition of built-in gain to the appropriate Mack Group, Robert MartinGroup, Cali Group members or the specific certain other commonunitholders.  74 of our properties, withan aggregate net book value of approximately $667.7 million, have lapsedrestrictions and are subject to these conditions.

 

**Unencumbered Properties:**

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

 

**Credit Ratings:**

The Operating Partnershiphas three investment grade credit ratings. Standard & Poor’s Rating Services (“S&P”) and Fitch, Inc. (“Fitch”)have each assigned their BBB rating to existing and prospective seniorunsecured debt of the Operating Partnership. S&P and Fitch have also assigned their BBB- rating to existing andprospective preferred stock offerings of the Corporation.  Moody’s Investors Service (“Moody’s”) hasassigned its Baa2 rating to existing and prospective senior unsecured debt ofthe Operating Partnership and its Baa3 rating to its existing and prospectivepreferred stock offerings of the Corporation.

 

## ***CashFlows***

 

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

 

55

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1)                                      $242.9million provided by operating activities.

 

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

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

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

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

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

 

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

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

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

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

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

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

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

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

 

##### ***DebtFinancing***

 

##### **Summary of Debt:**

The following is abreakdown of the Operating Partnership’s debt between fixed and variable-ratefinancing as of December 31, 2005:

 
| ** **                                     | ** ** | **Balance**       | ** ** | ** **     | ** ** | **Weighted Average**  | ** ** | **Weighted Average Maturity** | ** ** |
|------------------------------------------------|------------|-------------------|------------|----------------|------------|-----------------------|------------|-------------------------------|------------|
| ** **                                     | ** ** | **($000’s)** | ** ** | **% of Total** | ** ** | **Interest Rate (a)** | ** ** | **in Years**                  | ** ** |
| ** **                                     | ** ** | ** **        | ** ** | ** **     | ** ** | ** **            | ** ** | ** **                    | ** ** |
| Fixed Rate Unsecured Debt                      |       | $                 | 1,430,509  |           | 67.28      | %                     | 6.42       | %                             | 6.13       |   |
| Fixed Rate Secured Debt and Other  Obligations |       | 468,672           |       | 22.04          | %          | 5.96                  | %          | 3.67                          |       |
| Variable Rate Unsecured Debt                   |       | 227,000           |       | 10.68          | %          | 4.84                  | %          | 3.90                          |       |
|                                           |       |              |       |           |       |                  |       |                          |       |
| **Totals/Weighted Average:**                   |       | $                 | 2,126,181  |           | 100.00     |                  | 6.15       | %                             | 5.35       |   |

 

**Debt Maturities:**

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

 
| ** **                                                                      | ** ** | **Scheduled**     | ** ** | **Principal**     | ** ** | ** **        | ** ** | **Weighted Avg.**         | ** ** |
|---------------------------------------------------------------------------------|------------|-------------------|------------|-------------------|------------|-------------------|------------|---------------------------|------------|
| ** **                                                                      | ** ** | **Amortization**  | ** ** | **Maturities**    | ** ** | **Total**         | ** ** | **Interest Rate of**      | ** ** |
| **Period**                                                                      | ** ** | **($000’s)** | ** ** | **($000’s)** | ** ** | **($000’s)** | ** ** | **Future Repayments (a)** | ** ** |
| ** **                                                                      | ** ** | ** **        | ** ** | ** **        | ** ** | ** **        | ** ** | ** **                | ** ** |
| 2006                                                                            |       | $                 | 18,276     |              | $          | 160,189           |       | $                         | 178,465    |   | 6.90 | % |
| 2007                                                                            |       | 17,098            |       | 9,364             |       | 26,462            |       | 5.69                      | %          |
| 2008                                                                            |       | 16,292            |       | —            |       | 16,292            |       | 4.97                      | %          |
| 2009                                                                            |       | 7,175             |       | 527,000           |       | 534,175           |       | 6.33                      | %          |
| 2010                                                                            |       | 1,480             |       | 315,000           |       | 316,480           |       | 5.19                      | %          |
| Thereafter                                                                      |       | 9,781             |       | 1,050,033         |       | 1,059,814         |       | 5.98                      | %          |
| Sub-total                                                                       |       | 70,102            |       | 2,061,586         |       | 2,131,688         |       | 6.15                      | %          |
| Adjustment for unamortized debt  discount/premium, net, as of December 31, 2005 |       | (5,507            | )          | —            |       | (5,507            | )          | —                    |       |
|                                                                            |       |              |       |              |       |              |       |                      |       |
| Totals/Weighted Average                                                         |       | $                 | 64,595     |              | $          | 2,061,586         |       | $                         | 2,126,181  |   | 6.15 | % |

 

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

 

56

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**Senior Unsecured Notes:**

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

 

On April 15, 2005, the Operating Partnership issued $150 million faceamount of 5.05 percent senior unsecured notes due April 15, 2010 with interestpayable semi-annually in arrears.  Theproceeds from the issuance (net of selling commissions and discount) ofapproximately $148.8 million were used to reduce outstanding borrowings underthe 2004 unsecured facility.

 

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

 

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

 

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

 

**Unsecured Revolving Credit Facility:**

In 2004, the OperatingPartnership obtained an unsecured revolving credit facility with a borrowingcapacity of $600 million (expandable to $800 million), which replaced a creditfacility of the same size.  The interestrate on outstanding borrowings (not electing the Operating Partnership’scompetitive bid feature) under the unsecured facility is currently LIBOR plus65 basis points.  The facility has acompetitive bid feature, which allows the Operating Partnership to solicit bidsfrom lenders under the facility to borrow up to $300 million at interest ratesless than the current LIBOR plus 65 basis point spread.  As of December 31, 2005, the OperatingPartnership’s outstanding borrowings carried a weighted average interest rateof LIBOR plus 49 points.  The OperatingPartnership may also elect an interest rate representing the higher of thelender’s prime rate or the Federal Funds rate plus 50 basis points.  The unsecured facility, which also required a20 basis point facility fee on the current borrowing capacity payable quarterlyin arrears, was scheduled to mature in November 2007.

 

On September 16, 2005,the Operating Partnership extended and modified its unsecured facility with agroup of 23 lenders (reduced from 27). The facility was extended for an additional two years and now matures inNovember 2009, with an extension option of one year, which would require apayment of 25 basis points of the then borrowing capacity of the facility uponexercise.  In addition, the facility feewas reduced by five basis points to 15 basis points at the BBB/Baa2 pricinglevel.

 

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

 

57

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| **Operating  Partnership’s  Unsecured Debt Ratings:  S&P Moody’s/Fitch (a)** | ** ** | **Interest Rate –  Applicable Basis Points  Above LIBOR** | ** ** | **Facility Fee  Basis Points** | ** ** |
|--------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|--------------------------------|------------|
| No ratings or less than BBB-/Baa3/BBB-                                                     |       | 112.5                                                          |       | 25.0                           |       |
| BBB-/Baa3/BBB-                                                                             |       | 80.0                                                           |       | 20.0                           |       |
| BBB/Baa2/BBB (current)                                                                     |       | 65.0                                                           |       | 15.0                           |       |
| BBB+/Baa1/BBB+                                                                             |       | 55.0                                                           |       | 15.0                           |       |
| A-/A3/A- or higher                                                                         |       | 50.0                                                           |       | 15.0                           |       |

 

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

 

The terms of theunsecured facility include certain restrictions and covenants which limit,among other things, the payment of dividends (as discussed below), theincurrence of additional indebtedness, the incurrence of liens and thedisposition of real estate properties (to the extent that: (i) such propertydispositions cause the Operating Partnership to default on any of the financialratios of the facility described below, or (ii) the property dispositions arecompleted while the Operating Partnership is under an event of default underthe facility, unless, under certain circumstances, such disposition is beingcarried out to cure such default), and which require compliance with financialratios relating to the maximum leverage ratio, the maximum amount of securedindebtedness, the minimum amount of tangible net worth, the minimum amount offixed charge coverage, the maximum amount of unsecured indebtedness, theminimum amount of unencumbered property interest coverage and certaininvestment limitations.  The dividendrestriction referred to above provides that, except to enable the Corporationto continue to qualify as a REIT under the Code, the Corporation will notduring any four consecutive fiscal quarters make distributions with respect tocommon stock or other common equity interests in an aggregate amount in excessof 90 percent of funds from operations (as defined in the facility agreement)for such period, subject to certain other adjustments.

 

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

 

**Mortgages, Loans Payable and Other Obligations:**

The Operating Partnershiphas mortgages, loans payable and other obligations which consist principally ofvarious loans collateralized by certain of the Operating Partnership’s rentalproperties.  Payments on mortgages, loanspayable and other obligations are generally due in monthly installments ofprincipal and interest, or interest only.

 

**Debt Strategy:**

The Operating Partnershipdoes not intend to reserve funds to retire the Operating Partnership’s seniorunsecured notes or its mortgages, loans payable and other obligations uponmaturity.  Instead, the OperatingPartnership will seek to refinance such debt at maturity or retire such debtthrough the issuance of additional equity or debt securities on or before theapplicable maturity dates.  If it cannotraise sufficient proceeds to retire the maturing debt, the Operating Partnershipmay draw on its revolving credit facility to retire the maturing indebtedness,which would reduce the future availability of funds under such facility.  As of December 31, 2005, the OperatingPartnership had $227 million of outstanding borrowings under its $600 millionunsecured revolving credit facility.  TheOperating Partnership is reviewing various refinancing options, including thepurchase of its senior unsecured notes in privately-negotiated transactions,the issuance of additional, or exchange of current, unsecured debt or equity securitiesof the Operating Partnership, or preferred stock of the Corporation, and/orobtaining additional mortgage debt, some or

 

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all of which may becompleted during 2006.  The OperatingPartnership anticipates that its available cash and cash equivalents and cashflows from operating activities, together with cash available from borrowingsand other sources, will be adequate to meet the Operating Partnership’s capitaland liquidity needs both in the short and long-term.  However, if these sources of funds areinsufficient or unavailable, the Corporation’s ability to make the expecteddistributions discussed below may be adversely affected.

 

***Equity Financing and Registration Statements***

 

**Equity Activity:**

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

 
| ** **                                                         | ** ** | **Common  Stock** | ** ** | **Common  Units** | ** ** | **Preferred Units,  as Converted (a)** | ** ** | **Total**  | ** ** |
|--------------------------------------------------------------------|------------|-------------------|------------|-------------------|------------|----------------------------------------|------------|------------|------------|
| Outstanding at December 31, 2004                                   |       | 61,038,875        |       | 7,616,447         |       | 6,205,426                              |       | 74,860,748 |       |
| Stock options exercised                                            |       | 574,506           |       | —            |       | —                                 |       | 574,506    |       |
| Preferred units converted into common units                        |       | —            |       | 6,205,426         |       | (6,205,426                             | )          | —     |       |
| Common units redeemed for Common Stock                             |       | 234,762           |       | (234,762          | )          | —                                 |       | —     |       |
| Common units issued                                                |       | —            |       | 63,328            |       | —                                 |       | 63,328     |       |
| Shares issued under Dividend Reinvestment  and Stock Purchase Plan |       | 8,922             |       | —            |       | —                                 |       | 8,922      |       |
| Shares issued under deferred compensation  plan                    |       | 4,921             |       | —            |       | —                                 |       | 4,921      |       |
| Restricted shares issued, net of  cancellations                    |       | 157,660           |       | —            |       | —                                 |       | 157,660    |       |
|                                                               |       |              |       |              |       |                                   |       |       |       |
| Outstanding at December 31, 2005                                   |       | 62,019,646        |       | 13,650,439        |       | —                                 |       | 75,670,085 |       |

 

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

 

**Share Repurchase Program:**

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

 

**Shelf Registration Statements:**

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

 

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

 

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***Off-Balance Sheet Arrangements***

 

**Unconsolidated Joint Venture Debt:**

The debt of the OperatingPartnership’s unconsolidated joint ventures aggregating $118.8 million, atDecember 31, 2005, is non-recourse to the Operating Partnership except forcustomary exceptions pertaining to such matters as intentional misuse of funds,environmental conditions and material misrepresentations.  The Operating Partnership has severallyguaranteed repayment of approximately $3.8 million on a mortgage at theHarborside South Pier joint venture.  TheOperating Partnership has also posted a $7.6 million letter of credit insupport of the Harborside South Pier joint venture, $3.8 million of which isindemnified by Hyatt.

 

The Operating Partnership’s off-balance sheet arrangements are furtherdiscussed in Note 4: Investments in Unconsolidated Joint Ventures to theFinancial Statements.

 

***Contractual Obligations***

 

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

 
| ** **                                     | ** ** | **Payments Due by Period** | ** ** |
|------------------------------------------------|------------|----------------------------|------------|
| ** **                                     | ** ** | ** **                 | ** ** | **Less than 1** | ** ** | **1 – 3** | ** ** | **4 – 5** | ** ** | **6 – 10** | ** ** | **After 10** | ** ** |
| ** **                                     | ** ** | **Total**                  | ** ** | **year** | ** ** | **years** | ** ** | **years** | ** ** | **years** | ** ** | **years** | ** ** |
| Senior unsecured notes                         |       | $                          | 1,790,776  |   | $ | 89,444 |   | $ | 178,889 |   | $ | 607,476 |   | $ | 812,067 |   | $ | 102,900 |   |
| Revolving credit facility (1)                  |       | 270,068                    |       | 10,996 |   | 21,992 |   | 237,080 |   | — |   | — |   |
| Mortgages, loans payable and other obligations |       | 538,793                    |       | 193,516 |   | 59,696 |   | 173,722 |   | 56,574 |   | 55,285 |   |
| Payments in lieu of taxes (PILOT)              |       | 71,064                     |       | 8,228 |   | 12,580 |   | 8,587 |   | 22,514 |   | 19,155 |   |
| Ground lease payments                          |       | 22,216                     |       | 530 |   | 1,544 |   | 1,020 |   | 2,606 |   | 16,516 |   |
| Total                                          |       | $                          | 2,692,917  |   | $ | 302,714 |   | $ | 274,701 |   | $ | 1,027,885 |   | $ | 893,761 |   | $ | 193,856 |   |

 

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(1)          Interest payments assume current creditfacility borrowings and interest rate remain at the December 31, 2005 leveluntil maturity.

 

***Other Commitments and Contingencies***

 

**Legal Proceedings:**

On February 12, 2003, the NJSEA selected TheMills Corporation and the Operating Partnership to redevelop the ContinentalAirlines Arena site (“Arena Site”) for mixed uses, including retail.  In March 2003, Hartz MountainIndustries, Inc., (“Hartz”), filed a lawsuit in the Superior Court of NewJersey, Law Division, for Bergen County, seeking to enjoin NJSEA from enteringinto a contract with the Meadowlands Venture for the redevelopment of theContinental Airlines Arena site.  In May2003, the court denied Hartz’s request for an injunction and dismissed its suitfor failure to exhaust administrative remedies. In June 2003, the NJSEA held hearings on Hartz’s protest, and on aparallel protest filed by another rejected developer, Westfield, Inc. (“Westfield”).  On September 10, 2003, the NJSEA ruledagainst Hartz’s and Westfield’s protests, Hartz and Westfield, as well asElliot Braha and three other taxpayers (collectively “Braha”), thereafter filedappeals from the NJSEA’s final decision. By decision dated May 14, 2004, the Appellate Division of the SuperiorCourt of New Jersey rejected the appellants’ contention that the NJSEA lacksstatutory authority to allow retail development of its property.  The Appellate Division also remanded Hart’sclaim under the Open Public Records Acts, seeking disclosure of additionaldocuments from NJSEA, to the Law Division for further proceedings. The SupremeCourt of New Jersey declined to review the Appellate Division’s decision.  On August 19, 2004, the Law Division issued adecision resolving Hartz’s Open Public Records Act claim and ordered NJSEA todisclose some, but not all, of the documents Hartz was seeking.  The Appellate Division, in a decisionrendered on November 24, 2004, upheld the findings of the Law Division in theremand proceeding.  The Supreme Court ofNew Jersey declined to review the Appellate Division’s decision.  At Hartz’s request, the NJSEA thereafter heldfurther hearings on December 15 and

 

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

 

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

 

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

 

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

 

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

 

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

 

A Hartz affiliate and a trade association have filed an appeal from anadvisory opinion favorable to the Meadowlands Venture issued by the Director ofthe Division of Alcoholic Beverage Control concerning the availability ofspecial concessionaire permits.  Thatappeal is also pending in the Appellate Division of the Superior Court of NewJersey.

 

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

 

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

 

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

 

The New Jersey Builders’ Association (“NJBA”) has commenced an action,which is pending in the Appellate Division, alleging that the NJSEA has failedto meet a purported obligation to provide affordable housing at the MeadowlandsComplex and seeking, among other relief, an order enjoining the construction ofMeadowlands Xanadu.  NJBA filed anapplication for preliminary injunctive relief seeking to enjoin furtherconstruction of Meadowlands Xanadu, which the Appellate Division denied on July28, 2005.  The Meadowlands Venture is nota party to that action.

 

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

 

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

 

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

 

***Inflation***

 

The Operating Partnership’sleases with the majority of its tenants provide for recoveries and escalationcharges based upon the tenant’s proportionate share of, and/or increases in,real estate taxes and certain operating costs, which reduce the OperatingPartnership’s exposure to increases in operating costs resulting frominflation.

 

### **DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS**

 

We consider portions of this information, including the documentsincorporated by reference, to be forward-looking statements within the meaningof Section 21E of the Securities Exchange Act of 1934, as amended.  We intend such forward-looking statements tobe covered by the safe harbor provisions for forward-looking statementscontained in Section 21E of such act. Such forward-looking statements relate to, without limitation, ourfuture economic performance, plans and objectives for future operations andprojections of revenue and other financial items.  Forward-looking statements can be identifiedby the use of words such as “may,” “will,” “plan,” “should,” “expect,” “anticipate,”“estimate,” “continue” or comparable terminology.  Forward-looking statements are inherentlysubject to risks and uncertainties, many of which we cannot predict withaccuracy and some of which we might not even anticipate.  Although we believe that the expectationsreflected in such forward-looking statements are based upon reasonableassumptions at the time made, we can give no assurance that such expectationswill be achieved.  Future events andactual results, financial and otherwise, may differ materially from the resultsdiscussed in the forward-looking statements. Readers are cautioned not to placeundue reliance on these forward-looking statements.

 

Among the factors about which we have made assumptions are:

 

•                  changesin the general economic climate and conditions, including those affectingindustries in which our principal tenants compete;

 

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

 

•                  theextent of any tenant bankruptcies or of any early lease terminations;

 

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

 

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

 

•                  changesin interest rate levels;

 

•                  changesin operating costs;

 

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

 

•                  theavailability of financing;

 

•                  changesin governmental regulation, tax rates and similar matters; and

 

•                  otherrisks associated with the development and acquisition of properties, includingrisks that the development may not be completed on schedule, that the tenantswill not take occupancy or pay rent, or that development or operating costs maybe greater than anticipated.

 

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

 

**ITEM 7A.****                    QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

 

Market risk is theexposure to loss resulting from changes in interest rates, foreign currencyexchange rates, commodity prices and equity prices.  In pursuing its business plan, the primarymarket risk to which the Operating Partnership is exposed is interest raterisk.  Changes in the general level ofinterest rates prevailing in the financial markets may affect the spreadbetween the Operating Partnership’s yield on invested assets and cost of fundsand, in turn, its ability to make distributions or payments to its investors.

 

Approximately $1.9billion of the Operating Partnership’s long-term debt bears interest at fixedrates and therefore the fair value of these instruments is affected by changesin market interest rates.  The followingtable presents principal cash flows (in thousands) based upon maturity dates ofthe debt obligations and the related weighted-average interest rates byexpected maturity dates for the fixed rate debt.  The interest rate on the variable rate debtas of December 31, 2005 was LIBOR plus 65 basis points.

 
| **December  31, 2005  Debt,  including current portion** | ** ** | **2006**   | ** ** | **2007**   | ** ** | **2008**   | ** ** | **2009**   | ** ** | **2010**   | ** ** | **Thereafter** | ** ** | **Total**  | ** ** | **Fair Value** | ** ** |
|----------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|----------------|------------|------------|------------|----------------|------------|
| **($’s  in thousands)**                             | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **     | ** ** | ** ** | ** ** | ** **     | ** ** |
|                                                     |       |       |       |       |       |       |       |       |       |       |       |           |       |       |       |           |       |
| Fixed Rate                                               |       | $          | 177,487    |       | $          | 25,485     |       | $          | 15,314     |       | $          | 306,383        |       | $          | 315,775    |           | $          | 1,058,737 |   | $ | 1,899,181 |   | $ | 1,938,567 |   |
| Average Interest Rate                                    |       | 6.90       | %          | 5.69       | %          | 4.97       | %          | 7.43       | %          | 5.19       | %          | 6.13           | %          | 6.30       | %          |           |       |
|                                                     |       |       |       |       |       |       |       |       |       |       |       |           |       |       |       |           |       |
| Variable Rate                                            |       |       |       |       |       |       |       | $          | 227,000    |       |       |           |       |       | $          | 227,000        |       | $ | 227,000 |   |
|                                                          |            |            |            |            |            |            |            |            |            |            |            |                |            |            |            |                |            |  |  |  |  |  |  |  |  |

 

While the Operating Partnership has not experienced any significantcredit losses, in the event of a significant rising interest rate environmentand/or economic downturn, defaults could increase and result in losses to theOperating Partnership which could adversely affect its operating results andliquidity.

 

The Operating Partnershiphas also invested in the marketable securities of another REIT and is primarilyexposed to equity price risk from adverse changes in market rates andconditions.  All marketable securitiesare classified as available for sale and are carried at fair value.

 

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**ITEM 8.****                             FINANCIALSTATEMENTS AND SUPPLEMENTARY DATA**

 

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

 

**ITEM 9.****                             CHANGESIN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE**

 

None.

 

**ITEM 9A.****                    CONTROLS ANDPROCEDURES**

 

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

 

*Management’s Report on Internal Control Over Financial Reporting. *Internal controlover financial reporting, as such term is defined in Rules 13a-15(f) and15d-15(f) under the Exchange Act, is a process designed by, or under thesupervision of, the Corporation’s chief executive officer and chief financialofficer, or persons performing similar functions, and effected by theCorporation’s board of directors, management and other personnel, to providereasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. The Operating Partnership’s management, with the participation of theCorporation’s chief executive officer and chief financial officer, hasestablished and maintained policies and procedures designed to maintain theadequacy of the Operating Partnership’s internal control over financialreporting, and includes those policies and procedures that:

 

(1)                      Pertain tothe maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the OperatingPartnership;

 

(2)                      Providereasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally acceptedaccounting principles, and that receipts and expenditures of the OperatingPartnership are being made only in accordance with authorizations of managementand directors of the Corporation; and

 

(3)                      Providereasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use or disposition of the Operating Partnership’s assets thatcould have a material effect on the financial statements.

 

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

 

Becauseof its inherent limitations, internal control over financial reporting may notprevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls maybecome

 

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inadequatebecause of changes in conditions, or that the degree or compliance with thepolicies or procedures may deteriorate.

 

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

 

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

 

**ITEM 9B.****                    OTHERINFORMATION**

 

Not Applicable.

 

## **PART III**

 

**ITEM 10.****                      DIRECTORSAND EXECUTIVE OFFICERS OF THE REGISTRANT**

 

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

 

**ITEM 11.****                      EXECUTIVECOMPENSATION**

 

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

 

**ITEM 12.****                      SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERS**

 

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

 

##### **ITEM 13.**                      CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS

 

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

 

### **ITEM 14.**                      PRINCIPAL ACCOUNTING FEES AND SERVICES

 

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

 

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**PART IV**

 

**ITEM 15.****                      EXHIBITS,FINANCIAL STATEMENT SCHEDULES**

 
| **(a) 1.** | ** ** | **Financial Statements and Report of PricewaterhouseCoopers LLP,  Independent Registered Public Accounting Firm**                                 |
|------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
|       |       |                                                                                                                                              |
|       |       | Consolidated Balance Sheets as of December 31, 2005 and 2004                                                                                      |
|       |       |                                                                                                                                              |
|       |       | Consolidated Statements of Operations for the Years Ended December  31, 2005, 2004 and 2003                                                       |
|       |       |                                                                                                                                              |
|       |       | Consolidated Statements of Changes in Stockholders’ Equity for the  Years Ended December 31, 2005, 2004 and 2003                             |
|       |       |                                                                                                                                              |
|       |       | Consolidated Statements of Cash Flows for the Years Ended December  31, 2005, 2004 and 2003                                                       |
|       |       |                                                                                                                                              |
|       |       | Notes to Consolidated Financial Statements                                                                                                        |
|       |       |                                                                                                                                              |
| **(a) 2.** | ** ** | **Financial Statement Schedules**                                                                                                                 |
|       |       |                                                                                                                                              |
|       |       | Schedule III - Real Estate Investments and Accumulated Depreciation  as of December 31, 2005                                                      |
|       |       |                                                                                                                                              |
|       |       | All other schedules are omitted because they are not required or the  required information is shown in the financial statements or notes thereto. |
|       |       |                                                                                                                                              |
| **(a) 3.** | ** ** | **Exhibits**                                                                                                                                      |
|       |       |                                                                                                                                              |
|       |       | The exhibits required  by this item are set forth on the Exhibit Index attached hereto.                                                           |

 

66

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## **REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

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

 

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

 

Consolidated financial statements and financial statement schedule

 

In our opinion, the consolidated financial statements listed in theindex appearing under Item 15(a)(1) present fairly, in all materialrespects, the financial position of Mack-Cali Realty, L.P. and its subsidiaries(collectively, the “Operating Partnership”) at December 31, 2005 and 2004, andthe results of their operations and their cash flows for each of the threeyears in the period ended December 31, 2005 in conformity with accountingprinciples generally accepted in the United States of America.  In addition, in our opinion, the financialstatement schedule listed in the index  appearing under Item15(a)(2) presents fairly, in all material respects, the information set forththerein when read in conjunction with the related consolidated financialstatements.  These financial statementsand financial statement schedule are the responsibility of the OperatingPartnership’s management.  Ourresponsibility is to express an opinion on these financial statements andfinancial statement schedule based on our audits.  We conducted our audits of these statementsin accordance with the standards of the Public Company Accounting OversightBoard (United States).  Those standardsrequire that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement.  An audit of financial statements includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements, assessing the accounting principles used and significantestimates made by management, and evaluating the overall financial statementpresentation.  We believe that our auditsprovide a reasonable basis for our opinion.

 

Internal control over financial reporting

 

Also, in our opinion, management’s assessment, included in Management’sReport on Internal Control Over Financial Reportingappearingunder Item 9A, that the Operating Partnership maintained effective internalcontrol over financial reporting as of December 31, 2005 based on criteriaestablished in *Internal Control - Integrated Framework*issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO), is fairly stated, in all material respects, based on those criteria.Furthermore, in our opinion, the Operating Partnership maintained, in allmaterial respects, effective internal control over financial reporting as ofDecember 31, 2005, based on criteria established in *InternalControl - Integrated Framework* issued by the COSO. The OperatingPartnership’s management is responsible for maintaining effective internalcontrol over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting. Our responsibility is to express opinions on management’s assessmentand on the effectiveness of the Operating Partnership’s internal controlover financial reporting based on our audit. We conducted our audit of internalcontrol over financial reporting in accordance with the standards of the PublicCompany Accounting Oversight Board (United States).  Those standards require that we plan andperform the audit to obtain reasonable assurance about whether effectiveinternal control over financial reporting was maintained in all materialrespects.  An audit of internal controlover financial reporting includes obtaining an understanding of internalcontrol over financial reporting, evaluating management’s assessment, testingand evaluating the design and operating effectiveness of internal control, andperforming such other procedures as we consider necessary in thecircumstances.  We believe that our auditprovides a reasonable basis for our opinions.

 

67

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

 

Because of its inherentlimitations, internal control over financial reporting may not prevent ordetect misstatements. Also, projections of any evaluation of effectiveness tofuture periods are subject to the risk that controls may become inadequatebecause of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.

 
| /s/ PricewaterhouseCoopers  LLP |
|---------------------------------|
| New York, New York              |
| February 22, 2006               |

 

68

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**MACK-CALIREALTY, L.P. AND SUBSIDIARIES**

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

 
| ** **                                                                        | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------------------------|------------|------------------|------------|
| ** **                                                                        | ** ** | **2005**         | ** ** | **2004** | ** ** |
| **ASSETS**                                                                        |       |             |       |   |   |
| Rental property                                                                   |       |             |       |   |   |
| Land and leasehold interests                                                      |       | $                | 637,653    |   | $ | 593,606 |   |
| Buildings and improvements                                                        |       | 3,539,003        |       | 3,296,789 |   |
| Tenant improvements                                                               |       | 307,664          |       | 262,626 |   |
| Furniture, fixtures and equipment                                                 |       | 7,432            |       | 7,938 |   |
|                                                                              |       | 4,491,752        |       | 4,160,959 |   |
| Less – accumulated depreciation and  amortization                            |       | (722,980         | )          | (641,626 | ) |
|                                                                              |       | 3,768,772        |       | 3,519,333 |   |
| Rental property held for sale, net                                                |       | —           |       | 19,132 |   |
| Net investment in rental property                                                 |       | 3,768,772        |       | 3,538,465 |   |
| Cash and cash equivalents                                                         |       | 60,397           |       | 12,270 |   |
| Marketable securities available for sale at  fair value                           |       | 50,847           |       | — |   |
| Investments in unconsolidated joint  ventures                                     |       | 62,138           |       | 46,743 |   |
| Unbilled rents receivable, net                                                    |       | 92,692           |       | 82,586 |   |
| Deferred charges and other assets, net                                            |       | 197,634          |       | 155,060 |   |
| Restricted cash                                                                   |       | 9,221            |       | 10,477 |   |
| Accounts receivable, net of allowance for  doubtful accounts of $1,088 and $1,235 |       | 5,801            |       | 4,564 |   |
|                                                                              |       |             |       |   |   |
| Total assets                                                                      |       | $                | 4,247,502  |   | $ | 3,850,165 |   |
|                                                                              |       |             |       |   |   |
| **LIABILITIES AND PARTNERS’ CAPITAL**                                        |       |             |       |   |   |
| Senior unsecured notes                                                            |       | $                | 1,430,509  |   | $ | 1,031,102 |   |
| Revolving credit facilities                                                       |       | 227,000          |       | 107,000 |   |
| Mortgages, loans payable and other obligations                                    |       | 468,672          |       | 564,198 |   |
| Distributions payable                                                             |       | 48,178           |       | 47,712 |   |
| Accounts payable, accrued expenses and other liabilities                          |       | 85,481           |       | 57,002 |   |
| Rents received in advance and security deposits                                   |       | 47,685           |       | 47,938 |   |
| Accrued interest payable                                                          |       | 27,871           |       | 22,144 |   |
| Total liabilities                                                                 |       | 2,335,396        |       | 1,877,096 |   |
|                                                                              |       |             |       |   |   |
| Minority interest in consolidated joint ventures                                  |       | —           |       | 11,103 |   |
|                                                                              |       |             |       |   |   |
| Commitments and contingencies                                                     |       |             |       |   |   |
|                                                                              |       |             |       |   |   |
| **Partners’ capital:**                                                       |       |             |       |   |   |
| General Partner, 10,000 and 10,000 preferred units outstanding                    |       | 24,836           |       | 24,836 |   |
| Limited partners, 0 and 215,018 preferred units outstanding                       |       | —           |       | 220,547 |   |
| General Partner, 62,019,646 and 61,038,875 common units outstanding               |       | 1,487,241        |       | 1,520,275 |   |
| Limited partners, 13,650,439 and 7,616,447 common units outstanding               |       | 400,819          |       | 196,308 |   |
| Accumulated other comprehensive loss                                              |       | (790             | )          | — |   |
| Total partners’ capital                                                      |       | 1,912,106        |       | 1,961,966 |   |
|                                                                              |       |             |       |   |   |
| Total liabilities and partners’ capital                                      |       | $                | 4,247,502  |   | $ | 3,850,165 |   |

 

*The accompanying notes are an integral part of these consolidatedfinancial statements.*

 

69

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**MACK-CALIREALTY, L.P. AND SUBSIDIARIES**

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

 
| ** **                                                                                    | ** ** | **Year Ended December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------|------------|-----------------------------|------------|
| ** **                                                                                    | ** ** | **2005**                    | ** ** | **2004** | ** ** | **2003** | ** ** |
| **REVENUES**                                                                                  |       |                        |       |   |   |   |   |
| Base rents                                                                                    |       | $                           | 541,702    |   | $ | 498,392 |   | $ | 480,292 |   |
| Escalations and recoveries from tenants                                                       |       | 84,082                      |       | 66,451 |   | 59,885 |   |
| Parking and other                                                                             |       | 17,621                      |       | 12,906 |   | 18,747 |   |
| Total revenues                                                                                |       | 643,405                     |       | 577,749 |   | 558,924 |   |
|                                                                                          |       |                        |       |   |   |   |   |
| **EXPENSES**                                                                                  |       |                        |       |   |   |   |   |
| Real estate taxes                                                                             |       | 82,056                      |       | 69,085 |   | 62,462 |   |
| Utilities                                                                                     |       | 55,843                      |       | 41,649 |   | 40,037 |   |
| Operating services                                                                            |       | 89,175                      |       | 75,712 |   | 71,295 |   |
| General and administrative                                                                    |       | 33,090                      |       | 31,761 |   | 31,284 |   |
| Depreciation and amortization                                                                 |       | 155,370                     |       | 127,826 |   | 113,202 |   |
| Interest expense                                                                              |       | 119,337                     |       | 109,649 |   | 115,430 |   |
| Interest income                                                                               |       | (856                        | )          | (1,367 | ) | (1,098 | ) |
| Loss on early retirement of debt, net                                                         |       | —                      |       | — |   | 2,372 |   |
| Total expenses                                                                                |       | 534,015                     |       | 454,315 |   | 434,984 |   |
| Income from continuing operations before  equity in earnings of unconsolidated joint ventures |       | 109,390                     |       | 123,434 |   | 123,940 |   |
| Minority interest in consolidated joint ventures                                              |       | (74                         | )          | — |   | — |   |
| Equity in earnings of unconsolidated joint ventures, net                                      |       | 248                         |       | (3,886 | ) | 13,480 |   |
| Gain on sale of investment in unconsolidated joint ventures                                   |       | 35                          |       | 720 |   | 23,952 |   |
| Income from continuing operations                                                             |       | 109,599                     |       | 120,268 |   | 161,372 |   |
| Discontinued operations:                                                                      |       |                        |       |   |   |   |   |
| Income from discontinued operations                                                           |       | 2,998                       |       | 11,448 |   | 12,913 |   |
| Realized gains (losses) and unrealized  losses on disposition of rental property, net         |       | 5,522                       |       | (726 | ) | 3,541 |   |
| Total discontinued operations, net                                                            |       | 8,520                       |       | 10,722 |   | 16,454 |   |
| Net income                                                                                    |       | 118,119                     |       | 130,990 |   | 177,826 |   |
| Preferred unit distributions                                                                  |       | (5,909                      | )          | (17,636 | ) | (17,340 | ) |
| Net income available to common unitholders                                                    |       | $                           | 112,210    |   | $ | 113,354 |   | $ | 160,486 |   |
|                                                                                          |       |                        |       |   |   |   |   |
| **Basic earnings per common unit:**                                                           |       |                        |       |   |   |   |   |
| Income from continuing operations                                                             |       | $                           | 1.41       |   | $ | 1.50 |   | $ | 2.20 |   |
| Discontinued operations                                                                       |       | 0.11                        |       | 0.16 |   | 0.25 |   |
| Net income available to common unitholders                                                    |       | $                           | 1.52       |   | $ | 1.66 |   | $ | 2.45 |   |
|                                                                                          |       |                        |       |   |   |   |   |
| **Diluted earnings per common unit:**                                                         |       |                        |       |   |   |   |   |
| Income from continuing operations                                                             |       | $                           | 1.40       |   | $ | 1.49 |   | $ | 2.18 |   |
| Discontinued operations                                                                       |       | 0.11                        |       | 0.16 |   | 0.25 |   |
| Net income available to common unitholders                                                    |       | $                           | 1.51       |   | $ | 1.65 |   | $ | 2.43 |   |
|                                                                                          |       |                        |       |   |   |   |   |
| Distributions declared per common unit                                                        |       | $                           | 2.52       |   | $ | 2.52 |   | $ | 2.52 |   |
|                                                                                          |       |                        |       |   |   |   |   |
| Basic weighted average units outstanding                                                      |       | 73,729                      |       | 68,110 |   | 65,526 |   |
|                                                                                          |       |                        |       |   |   |   |   |
| Diluted weighted average units outstanding                                                    |       | 74,189                      |       | 68,743 |   | 65,980 |   |

 

*The accompanying notes are an integral partof these consolidated financial statements.*

 

70

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**MACK-CALIREALTY, L.P. AND SUBSIDIARIES**

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

 
| ** **                                                                               | ** ** | **General**   | ** ** | **Limited**   | ** ** | **General** | ** ** | **Limited**  | ** ** | **General**     | ** ** | **Limited**     | ** ** | **General**     | ** ** | **Limited**     | ** ** | **Accumulated**   | ** ** | ** **         | ** ** | ** **        | ** ** |
|------------------------------------------------------------------------------------------|------------|---------------|------------|---------------|------------|-------------|------------|--------------|------------|-----------------|------------|-----------------|------------|-----------------|------------|-----------------|------------|-------------------|------------|--------------------|------------|-------------------|------------|
| ** **                                                                               | ** ** | **Partner**   | ** ** | **Partners**  | ** ** | **Partner** | ** ** | **Partners** | ** ** | **Partner**     | ** ** | **Partners**    | ** ** | **Partner**     | ** ** | **Partners**    | ** ** | **Others**        | ** ** | **Total**          | ** ** | ** **        | ** ** |
| ** **                                                                               | ** ** | **Preferred** | ** ** | **Preferred** | ** ** | **Common**  | ** ** | **Common**   | ** ** | **Preferred**   | ** ** | **Preferred**   | ** ** | **Common**      | ** ** | **Common**      | ** ** | **Comprehensive** | ** ** | **Partners’** | ** ** | **Comprehensive** | ** ** |
| ** **                                                                               | ** ** | **Units**     | ** ** | **Units**     | ** ** | **Units**   | ** ** | **Units**    | ** ** | **Unitholders** | ** ** | **Unitholders** | ** ** | **Unitholders** | ** ** | **Unitholders** | ** ** | **Income/(Loss)** | ** ** | **Capital**        | ** ** | **Income**        | ** ** |
| Balance at January 1,  2003                                                              |       | —        |       | 216           |       | 57,318      |       | 7,813        |       | $               | —     |            | $          | 221,445         |       | $               | 1,454,194  |              | $          | 208,591            |       | —            |       | $ | 1,884,230 |   |   |   |
| Net  income                                                                              |       | —        |       | —        |       | —      |       | —       |       | 1,672           |       | 15,668          |       | 141,381         |       | 19,105          |       | —            |       | 177,826            |       | $                 | 177,826    |   |
| Distributions                                                                            |       | —        |       | —        |       | —      |       | —       |       | (1,672          | )          | (15,668         | )          | (147,136        | )          | (19,657         | )          | —            |       | (184,133           | )          | —            |       |
| Issuance  of preferred units                                                             |       | 10            |       | —        |       | —      |       | —       |       | 24,836          |       | —          |       | —          |       | —          |       | —            |       | 24,836             |       | —            |       |
| Redemption  of preferred units for common units                                          |       | —        |       | (1            | )          | —      |       | 25           |       | —          |       | (898            | )          | —          |       | 898             |       | —            |       | —             |       | —            |       |
| Redemption  of limited partner common units for shares of common stock                   |       | —        |       | —        |       | 44          |       | (44          | )          | —          |       | —          |       | 1,385           |       | (1,385          | )          | —            |       | —             |       | —            |       |
| Units  issued under Dividend Reinvestment & Stock Repurchase Plan                    |       | —        |       | —        |       | 4           |       | —       |       | —          |       | —          |       | 148             |       | —          |       | —            |       | 148                |       | —            |       |
| Contributions  – proceeds from stock options exercised                              |       | —        |       | —        |       | 1,421       |       | —       |       | —          |       | —          |       | 47,196          |       | —          |       | —            |       | 47,196             |       | —            |       |
| Contributions  – proceeds from Stock Warrants exercised                             |       | —        |       | —        |       | 443         |       | —       |       | —          |       | —          |       | 16,581          |       | —          |       | —            |       | 16,581             |       | —            |       |
| Stock  options expense                                                                   |       | —        |       | —        |       | —      |       | —       |       | —          |       | —          |       | 189             |       | —          |       | —            |       | 189                |       | —            |       |
| Directors  Deferred comp. plan                                                           |       | —        |       | —        |       | —      |       | —       |       | —          |       | —          |       | 227             |       | —          |       | —            |       | 227                |       | —            |       |
| Issuance  of Restricted Stock Awards                                                     |       | —        |       | —        |       | 225         |       | —       |       | —          |       | —          |       | 1,586           |       | —          |       | —            |       | 1,586              |       | —            |       |
| Amortization  of stock comp.                                                             |       | —        |       | —        |       | —      |       | —       |       | —          |       | —          |       | 1,931           |       | —          |       | —            |       | 1,931              |       | —            |       |
| Cancellation  of restricted stock                                                        |       | —        |       | —        |       | (35         | )          | —       |       | —          |       | —          |       | (1,030          | )          | —          |       | —            |       | (1,030             | )          | —            |       |
| Balance at December 31,  2003                                                            |       | 10            |       | 215           |       | 59,420      |       | 7,795        |       | $               | 24,836     |            | $          | 220,547         |       | $               | 1,516,652  |              | $          | 207,552            |       | —            |       | $ | 1,969,587 |   | $ | 177,826 |   |
| Net  income                                                                              |       | —        |       | —        |       | —      |       | —       |       | 2,000           |       | 15,636          |       | 100,453         |       | 12,901          |       | —            |       | 130,990            |       | 130,990           |       |
| Distributions                                                                            |       | —        |       | —        |       | —      |       | —       |       | (2,000          | )          | (15,636         | )          | (153,097        | )          | (19,501         | )          | —            |       | (190,234           | )          | —            |       |
| Redemption  of limited partners common units for shares of common stock                  |       | —        |       | —        |       | 179         |       | (179         | )          | —          |       | —          |       | 4,644           |       | (4,644          | )          | —            |       | —             |       | —            |       |
| Units  issued under Dividend Reinvestment and Stock Purchase Plan                        |       | —        |       | —        |       | 12          |       | —       |       | —          |       | —          |       | 481             |       | —          |       | —            |       | 481                |       | —            |       |
| Contributions  – proceeds from stock options exercised                              |       | —        |       | —        |       | 1,251       |       | —       |       | —          |       | —          |       | 40,520          |       | —          |       | —            |       | 40,520             |       | —            |       |
| Contributions  – proceeds from Stock Warrants exercised                             |       | —        |       | —        |       | 149         |       | —       |       | —          |       | —          |       | 4,925           |       | —          |       | —            |       | 4,925              |       | —            |       |
| Stock  options expense                                                                   |       | —        |       | —        |       | —      |       | —       |       | —          |       | —          |       | 415             |       | —          |       | —            |       | 415                |       | —            |       |
| Directors  Deferred comp. plan                                                           |       | —        |       | —        |       | —      |       | —       |       | —          |       | —          |       | 265             |       | —          |       | —            |       | 265                |       | —            |       |
| Issuance  of Restricted Stock Awards                                                     |       | —        |       | —        |       | 47          |       | —       |       | —          |       | —          |       | 1,528           |       | —          |       | —            |       | 1,528              |       | —            |       |
| Amortization  of stock comp.                                                             |       | —        |       | —        |       | —      |       | —       |       | —          |       | —          |       | 3,489           |       | —          |       | —            |       | 3,489              |       | —            |       |
| Cancellation  of restricted stock                                                        |       | —        |       | —        |       | (19         | )          | —       |       | —          |       | —          |       | —          |       | —          |       | —            |       | —             |       | —            |       |
| Balance at December 31,  2004                                                            |       | 10            |       | 215           |       | 61,039      |       | 7,616        |       | $               | 24,836     |            | $          | 220,547         |       | $               | 1,520,275  |              | $          | 196,308            |       | —            |       | $ | 1,961,966 |   | $ | 130,990 |   |
| Net  income                                                                              |       | —        |       | —        |       | —      |       | —       |       | 2,000           |       | 3,909           |       | 93,488          |       | 18,722          |       | —            |       | 118,119            |       | 118,119           |       |
| Distributions                                                                            |       | —        |       | —        |       | —      |       | —       |       | (2,000          | )          | (3,909          | )          | (155,702        | )          | (30,754         | )          | —            |       | (192,365           | )          | —            |       |
| Conversion  of limited partners preferred units into limited partners common units       |       | —        |       | (215          | )          | —      |       | 6,206        |       | —          |       | (220,547        | )          | —          |       | 220,547         |       | —            |       | —             |       | —            |       |
| Redemption  of limited partners common units for shares of common stock                  |       | —        |       | —        |       | 235         |       | (235         | )          | —          |       | —          |       | 6,790           |       | (6,790          | )          | —            |       | —             |       | —            |       |
| Issuance  of limited partner common units                                                |       | —        |       | —        |       | —      |       | 63           |       | —          |       | —          |       | —          |       | 2,786           |       | —            |       | 2,786              |       | —-           |       |
| Units  issued under Dividend Reinvestment and Stock Purchase Plan                        |       | —        |       | —        |       | 9           |       | —       |       | —          |       | —          |       | 390             |       | —          |       | —            |       | 390                |       | —            |       |
| Contributions  – proceeds from stock options exercised                              |       | —        |       | —        |       | 574         |       | —       |       | —          |       | —          |       | 16,603          |       | —          |       | —            |       | 16,603             |       | -                 |       |
| Stock  options expense                                                                   |       | —        |       | —        |       | —      |       | —       |       | —          |       | —          |       | 448             |       | —          |       | —            |       | 448                |       | —            |       |
| Comprehensive  Loss: Unrealized holding loss on marketable securities available for sale |       | —        |       | —        |       | —      |       | —       |       | —          |       | —          |       | —          |       | —          |       | $                 | (790       | )                  | (790       | )                 | (790       | ) |
| Directors  Deferred comp. plan                                                           |       | —        |       | —        |       | 5           |       | —       |       | —          |       | —          |       | 288             |       | —          |       | —            |       | 288                |       | —            |       |
| Issuance  of Restricted Stock Awards                                                     |       | —        |       | —        |       | 166         |       | —       |       | —          |       | —          |       | —          |       |            |       |              |       |               |       |              |       |
| Amortization  of stock comp.                                                             |       | —        |       | —        |       | —      |       | —       |       | —          |       | —          |       | 4,661           |       | —          |       | —            |       | 4,661              |       | —            |       |
| Cancellation  of restricted stock                                                        |       | —        |       | —        |       | (8          | )          | —       |       | —          |       | —          |       | —          |       | —          |       | —            |       | —             |       | —            |       |
|                                                                                     |       |          |       |          |       |        |       |         |       |            |       |            |       |            |       |            |       |              |       |               |       |              |       |
| Balance at December 31,  2005                                                            |       | 10            |       | —        |       | 62,020      |       | 13,650       |       | $               | 24,836     |            | —     |            | $          | 1,487,241       |       | $                 | 400,819    |               | $          | (790              | )          | $ | 1,912,106 |   | $ | 117,329 |   |
|                                                                                          |            |               |            |               |            |             |            |              |            |                 |            |                 |            |                 |            |                 |            |                   |            |                    |            |                   |            |  |  |  |  |  |  |  |  |  |

 

*The accompanying notes are an integral partof these consolidated financial statements*

 

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**MACK-CALIREALTY, L.P. AND SUBSIDIARIES**

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

 
| ** **                                                                         | ** ** | **Year Ended December 31,** | ** ** |
|------------------------------------------------------------------------------------|------------|-----------------------------|------------|
| ** **                                                                         | ** ** | **2005**                    | ** ** | **2004** | ** ** | **2003** | ** ** |
| **CASH FLOWS FROM OPERATING ACTIVITIES**                                           |       |                        |       |   |   |   |   |
| Net income                                                                         |       | $                           | 118,119    |   | $ | 130,990 |   | $ | 177,826 |   |
| Adjustments to reconcile net income to net  cash provided by operating activities: |       |                        |       |   |   |   |   |
| Depreciation and amortization                                                      |       | 155,370                     |       | 127,826 |   | 113,202 |   |
| Depreciation and amortization on  discontinued operations                          |       | 729                         |       | 4,748 |   | 6,558 |   |
| Stock options expense                                                              |       | 448                         |       | 415 |   | 189 |   |
| Amortization of stock compensation                                                 |       | 4,661                       |       | 3,489 |   | 1,931 |   |
| Amortization of deferred financing costs  and debt discount                        |       | 3,271                       |       | 4,163 |   | 4,713 |   |
| Write-off of unamortized interest rate  contract                                   |       | —                      |       | — |   | 1,540 |   |
| Discount on early retirement of debt                                               |       | —                      |       | — |   | (2,008 | ) |
| Equity in earnings of unconsolidated joint  venture, net                           |       | (248                        | )          | 3,886 |   | (13,480 | ) |
| Gain on sale of investment in  unconsolidated joint ventures                       |       | (35                         | )          | (720 | ) | (23,952 | ) |
| (Realized gains) unrealized losses on  disposition of rental property              |       | (5,522                      | )          | 726 |   | (3,541 | ) |
| Minority interest in consolidated joint  ventures                                  |       | 74                          |       | — |   | — |   |
| Changes in operating assets and liabilities:                                       |       |                        |       |   |   |   |   |
| Increase in unbilled rents receivable, net                                         |       | (13,283                     | )          | (11,230 | ) | (10,120 | ) |
| Increase in deferred charges and other  assets, net                                |       | (40,566                     | )          | (48,305 | ) | (23,679 | ) |
| (Increase) decrease in accounts receivable,  net                                   |       | (1,237                      | )          | (106 | ) | 1,832 |   |
| Increase (decrease) in accounts payable,  accrued expenses and other liabilities   |       | 15,674                      |       | 15,579 |   | (9,351 | ) |
| Increase (decrease) in rents received in  advance and security deposits            |       | (253                        | )          | 7,839 |   | 1,061 |   |
| Increase (decrease) in accrued interest  payable                                   |       | 5,727                       |       | (860 | ) | (1,944 | ) |
|                                                                               |       |                        |       |   |   |   |   |
| Net cash provided by operating activities                                          |       | $                           | 242,929    |   | $ | 238,440 |   | $ | 220,777 |   |
|                                                                               |       |                        |       |   |   |   |   |
| **CASH FLOWS FROM INVESTING ACTIVITIES**                                           |       |                        |       |   |   |   |   |
| Additions to rental property                                                       |       | $                           | (451,335   | ) | $ | (200,033 | ) | $ | (113,926 | ) |
| Repayment of mortgage note receivable                                              |       | 81                          |       | 850 |   | 3,542 |   |
| Investment in unconsolidated joint ventures                                        |       | (17,788                     | )          | (27,945 | ) | (13,472 | ) |
| Distributions from unconsolidated joint ventures                                   |       | —                      |       | 25,942 |   | 14,624 |   |
| Proceeds from sale of investment in unconsolidated joint venture                   |       | 2,676                       |       | 720 |   | 164,867 |   |
| Acquisition of minority interest in consolidated joint venture                     |       | (7,713                      | )          | — |   | — |   |
| Proceeds from sales of rental property                                             |       | 102,980                     |       | 110,141 |   | 18,690 |   |
| Purchase of marketable securities available for sale                               |       | (51,637                     | )          | — |   | — |   |
| Funding of note receivable                                                         |       | —                      |       | (13,042 | ) | — |   |
| Decrease (increase) in restricted cash                                             |       | 1,256                       |       | (2,388 | ) | (312 | ) |
|                                                                               |       |                        |       |   |   |   |   |
| Net cash (used in) provided by investing  activities                               |       | $                           | (421,480   | ) | $ | (105,755 | ) | $ | 74,013 |   |
|                                                                               |       |                        |       |   |   |   |   |
| **CASH FLOW FROM FINANCING ACTIVITIES**                                            |       |                        |       |   |   |   |   |
| Proceeds from senior unsecured notes                                               |       | $                           | 398,480    |   | $ | 202,363 |   | $ | 124,714 |   |
| Borrowings from revolving credit facility                                          |       | 1,041,560                   |       | 612,475 |   | 297,852 |   |
| Repayment of senior unsecured notes                                                |       | —                      |       | (300,000 | ) | (95,284 | ) |
| Repayment of revolving credit facility                                             |       | (921,560                    | )          | (505,475 | ) | (370,852 | ) |
| Repayment of mortgages, loans payable and other obligations                        |       | (169,935                    | )          | (58,553 | ) | (78,687 | ) |
| Net proceeds from preferred units issuance                                         |       | —                      |       | — |   | 24,836 |   |
| Repurchase of common units                                                         |       | —                      |       | — |   | (1,030 | ) |
| Payment of financing costs                                                         |       | (5,071                      | )          | (5,648 | ) | (577 | ) |
| Proceeds from mortgages                                                            |       | 58,500                      |       | — |   | — |   |
| Proceeds from stock options exercised                                              |       | 16,603                      |       | 40,520 |   | 47,196 |   |
| Proceeds from stock warrants exercised                                             |       | —                      |       | 4,925 |   | 16,581 |   |
| Payment of distributions                                                           |       | (191,899                    | )          | (189,397 | ) | (182,331 | ) |
|                                                                               |       |                        |       |   |   |   |   |
| Net cash provided by (used in) financing  activities                               |       | $                           | 226,678    |   | $ | (198,790 | ) | $ | (217,582 | ) |
|                                                                               |       |                        |       |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                               |       | $                           | 48,127     |   | $ | (66,105 | ) | $ | 77,208 |   |
| Cash and cash equivalents, beginning of period                                     |       | 12,270                      |       | 78,375 |   | $ | 1,167 |   |
|                                                                               |       |                        |       |   |   |   |   |
| Cash and cash equivalents, end of period                                           |       | $                           | 60,397     |   | $ | 12,270 |   | $ | 78,375 |   |

 

*The accompanying notes are an integral partof these consolidated financial statements.*

 

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** **

**MACK-CALIREALTY, L.P. AND SUBSIDIARIES**

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

 

**1.****              ORGANIZATION ANDBASIS OF PRESENTATION**

 

**ORGANIZATION**

Mack-Cali Realty,L.P., a Delaware limited partnership, together with its subsidiaries (the “OperatingPartnership”), was formed on May 31, 1994 to conduct the business ofleasing, management, acquisition, development, construction and tenant-relatedservices for its sole general partner, Mack-Cali Realty Corporation and itssubsidiaries (the “Corporation” or “General Partner”).  The Operating Partnership, through itsoperating divisions and subsidiaries, including the Mack-Cali property-owningpartnerships and limited liability companies (collectively, the “PropertyPartnerships”) is the entity through which all of the General Partner’soperations are conducted.

 

The General Partner is a fully integrated, self-administered,self-managed real estate investment trust (“REIT”).  The General Partner controls the OperatingPartnership as its sole general partner, and owned an 82.0 percent and 88.9percent common unit interest in the Operating Partnership as of December 31,2005 and December 31, 2004, respectively.

 

The General Partner’s business is the ownership of interests in andoperation of the Operating Partnership, and all of the General Partner’sexpenses are incurred for the benefit of the Operating Partnership.  The General Partner is reimbursed by theOperating Partnership for all expenses it incurs relating to the ownership andoperation of the Operating Partnership.

 

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

 

### **BASIS OF PRESENTATION**

The accompanyingconsolidated financial statements include all accounts of the OperatingPartnership, its majority-owned and/or controlled subsidiaries, which consistprincipally of Mack-Cali Realty, L.P. (the “Operating Partnership”) andvariable interest entities for which the Operating Partnership has determineditself to be the primary beneficiary, if any. See Note 2: Significant Accounting Policies – Investments inUnconsolidated Joint Ventures, Net for the Operating Partnership’s treatment ofunconsolidated joint venture interests. Intercompany accounts and transactions have been eliminated.

 

The preparation offinancial statements in conformity with generally accepted accountingprinciples (“GAAP”) requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements andthe reported amounts of revenues and expenses during the reporting period.  Actual results could differ from thoseestimates.

 

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

 

**2.****              SIGNIFICANTACCOUNTING POLICIES**

 

***Rental***

***Property***                                                                        Rentalproperties are stated at cost less accumulated depreciation andamortization.  Costs directly related tothe acquisition, development and construction of rental properties arecapitalized.  Capitalized development andconstruction costs include pre-construction costs essential to the

 

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development of the property, development andconstruction costs, interest, property taxes, insurance, salaries and otherproject costs incurred during the period of development.  Included in total rental property isconstruction and development in-progress of $118,816 and $86,916 (includingland of $58,883 and $53,705) as of December 31, 2005 and 2004,respectively. Ordinary repairs and maintenance are expensed as incurred; majorreplacements 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 theaccounts.

 

The Operating Partnership considers a construction project assubstantially completed and held available for occupancy upon the completion oftenant improvements, but no later than one year from cessation of majorconstruction activity (as distinguished from activities such as routinemaintenance and cleanup).  If portions ofa rental project are substantially completed and occupied by tenants, or heldavailable for occupancy, and other portions have not yet reached that stage,the substantially completed portions are accounted for as a separateproject.  The Operating Partnershipallocates costs incurred between the portions under construction and theportions substantially completed and held available for occupancy, andcapitalizes only those costs associated with the portion under construction.

 

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

 
| Leasehold interests               |   | Remaining  lease term                                        |   |
|-----------------------------------|--------|--------------------------------------------------------------|--------|
| Buildings and improvements        |   | 5 to 40  years                                               |   |
| Tenant improvements               |   | The shorter  of the term of the related lease or useful life |   |
| Furniture, fixtures and equipment |   | 5 to 10  years                                               |   |

 

Upon acquisition of rental property, theOperating Partnership estimates the fair value of acquired tangible assets,consisting of land, building and improvements, and identified intangible assetsand liabilities, generally consisting of the fair value of (i) above andbelow market leases, (ii) in-place leases and (iii) tenantrelationships.  The Operating Partnershipallocates the purchase price to the assets acquired and liabilities assumedbased on their relative fair values.  Inestimating the fair value of the tangible and intangible assets acquired, theOperating Partnership considers information obtained about each property as aresult of its due diligence and marketing and leasing activities, and utilizesvarious valuation methods, such as estimated cash flow projections utilizingappropriate discount and capitalization rates, estimates of replacement costsnet of depreciation, and available market information.  The fair value of the tangible assets of anacquired property considers the value of the property as if it were vacant.

 

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

 

Other intangible assets acquired includeamounts for in-place lease values and tenant relationship values, which arebased on management’s evaluation of the specific characteristics of each tenant’slease and the Operating Partnership’s overall relationship with the respectivetenant.  Factors to be considered bymanagement in its analysis of in-place lease values include an

 

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estimate of carrying costs duringhypothetical expected lease-up periods considering current market conditions,and costs to execute similar leases.  Inestimating carrying costs, management includes real estate taxes, insurance andother operating expenses and estimates of lost rentals at market rates duringthe expected lease-up periods, depending on local market conditions.  In estimating costs to execute similarleases, management considers leasing commissions, legal and other relatedexpenses.  Characteristics considered bymanagement in valuing tenant relationships include the nature and extent of theOperating Partnership’s existing business relationships with the tenant, growthprospects for developing new business with the tenant, the tenant’s creditquality and expectations of lease renewals. The value of in-place leases are amortized to expense over the remaininginitial terms of the respective leases. The value of tenant relationship intangibles are amortized to expenseover the anticipated life of the relationships.

 

On a periodic basis, management assesseswhether there are any indicators that the value of the Operating Partnership’sreal estate properties held for use may be impaired.  A property’s value is impaired only ifmanagement’s estimate of the aggregate future cash flows (undiscounted and withoutinterest charges) to be generated by the property is less than the carryingvalue of the property. To the extent impairment has occurred, the loss shall bemeasured as the excess of the carrying amount of the property over the fairvalue of the property.  The OperatingPartnership’s estimates of aggregate future cash flows expected to be generatedby each property are based on a number of assumptions that are subject toeconomic and market uncertainties including, among others, demand for space,competition for tenants, changes in market rental rates, and costs to operateeach property.  As these factors aredifficult to predict and are subject to future events that may alter management’sassumptions, the future cash flows estimated by management in its impairmentanalyses may not be achieved.  Managementdoes not believe that the value of any of the Operating Partnership’s rentalproperties is impaired.

 

***RentalProperty***

***Heldfor Sale and***

***Discontinued***

***Operations******                                                          ***Whenassets are identified by management as held for sale, the Operating Partnershipdiscontinues depreciating the assets and estimates the sales price, net ofselling costs, of such assets.  If, inmanagement’s opinion, the net sales price of the assets which have beenidentified as held for sale is less than the net book value of the assets, avaluation allowance is established. Properties identified as held for sale and/or sold are presented indiscontinued operations for all periods presented.  See Note 7: Discontinued Operations.

 

If circumstances arise that previously wereconsidered unlikely and, as a result, the Operating Partnership decides not tosell a property previously classified as held for sale, the property isreclassified as held and used.  Aproperty that is reclassified is measured and recorded individually at thelower of (a) its carrying amount before the property was classified asheld for sale, adjusted for any depreciation (amortization) expense that wouldhave been recognized had the property been continuously classified as held andused, or (b) the fair value at the date of the subsequent decision not tosell.

 

***Investments in***

***Unconsolidated***

***Joint Ventures, Net***               The OperatingPartnership accounts for its investments in unconsolidated joint ventures forwhich Financial Accounting Standards Board (“FASB”) Interpretation No. 46(revised December 2003), Consolidation of Variable Interest Entities (“FIN46”) does not apply under the equity method of accounting as the OperatingPartnership exercises significant influence, but does not control theseentities.  These investments are recordedinitially at cost, as Investments in Unconsolidated Joint Ventures, andsubsequently adjusted for equity in earnings and cash contributions anddistributions.

 

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

 

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means other than voting rights (“variable interest entities” or “VIEs”)and the determination of which business enterprise, if any, should consolidatethe VIE (the “primary beneficiary”). Generally, FIN 46 applies when either (1) the equity investors (ifany) lack one or more of the essential characteristics of a controllingfinancial interest, (2) the equity investment at risk is insufficient tofinance that entity’s activities without additional subordinated financialsupport or (3) the equity investors have voting rights that are notproportionate to their economic interests and the activities of the entityinvolve or are conducted on behalf of an investor with a disproportionatelysmall voting interest.

 

The Operating Partnership has evaluated its joint ventures with regardsto FIN 46.  As of December 31, 2005,the Operating Partnership has identified its Meadowlands Xanadu joint venturewith the Mills Corporation as a VIE, but is not consolidating such venture asthe Operating Partnership is not the primary beneficiary.  Disclosure about this VIE is included in Note4: Investments in Unconsolidated Joint Ventures.

 

On a periodic basis, management assesses whether there are anyindicators that the value of the Operating Partnership’s investments inunconsolidated joint ventures may be impaired. An investment is impaired only if management’s estimate of the value ofthe investment is less than the carrying value of the investment, and suchdecline in value is deemed to be other than temporary.  To the extent impairment has occurred, theloss shall be measured as the excess of the carrying amount of the investmentover the value of the investment.  Management does not believe that the value ofany of the Operating Partnership’s investments in unconsolidated joint venturesis impaired.  See Note 4: Investments inUnconsolidated Joint Ventures.

 

***Cash and Cash***

***Equivalents***                                                      Allhighly liquid investments with a maturity of three months or less whenpurchased are considered to be cash equivalents.

 

***Marketable***

***Securities***                                                                  TheOperating Partnership classifies its marketable securities among threecategories: Held-to-maturity, trading and available-for-sale.  Unrealized holding gains and losses areexcluded from earnings and reported as other comprehensive income (loss) instockholders’ equity until realized.

 

A decline in the market value of anymarketable security below cost that is deemed to be other than temporaryresults in a reduction in the carrying amount to fair value.  Any impairment would be charged to earningsand a new cost basis for the security established.

 

The Operating Partnership’s marketablesecurities at December 31, 2005 carried a value of $50,847 and consistedof 1,468,300 shares of common stock in CarrAmerica Realty Corporation, whichwere all acquired in 2005.  From January 1,2006 through January 25, 2006, the Operating Partnership purchased anadditional 336,500 shares of common stock in CarrAmerica for a total purchaseprice of $11,912.

 

The Operating Partnership’s marketablesecurities at December 31, 2005 are all classified as available-for-saleand are carried at fair value based on quoted market prices.  The Operating Partnership recorded anunrealized holding loss of $790 as other comprehensive loss in 2005.

 

***Deferred***

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

 

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***Deferred***

***Leasing Costs***                                           Costsincurred in connection with leases are capitalized and amortized on astraight-line basis over the terms of the related leases and included indepreciation and amortization. Unamortized deferred leasing costs are charged to amortization expenseupon early termination of the lease. Certain employees of the OperatingPartnership are compensated for providing leasing services to theProperties.  The portion of suchcompensation, which is capitalized and amortized, approximated $3,855, $3,907and $3,783 for the years ended December 31, 2005, 2004 and 2003,respectively.

 

***Derivative***

***Instruments***                                                       TheOperating Partnership measures derivative instruments, including certainderivative instruments embedded in other contracts, at fair value and recordsthem as an asset or liability, depending on the Operating Partnership’s rightsor obligations under the applicable derivative contract.  For derivatives designated and qualifying asfair value hedges, the changes in the fair value of both the derivativeinstrument and the hedged item are recorded in earnings.  For derivatives designated as cash flowhedges, the effective portions of the derivative are reported in othercomprehensive income (“OCI”) and are subsequently reclassified into earningswhen the hedged item affects earnings. Changes in fair value of derivativeinstruments not designated as hedging and ineffective portions of hedges arerecognized in earnings in the affected period.

 

***Revenue***

***Recognition***                                                    Baserental revenue is recognized on a straight-line basis over the terms of therespective leases. Unbilled rents receivable represents the amount by whichstraight-line rental revenue exceeds rents currently billed in accordance withthe lease agreements.  Above-market andbelow-market lease values for acquired properties are recorded based on thepresent value (using a discount rate which reflects the risks associated withthe leases acquired) of the difference between (i) the contractual amountsto be paid pursuant to each in-place lease and (ii) management’s estimateof fair market lease rates for each corresponding in-place lease, measured overa period equal to the remaining term of the lease for above-market leases andthe initial term plus the term of any below-market fixed-rate renewal optionsfor below-market leases.  The capitalizedabove-market lease values for acquired properties are amortized as a reductionof base rental revenue over the remaining term of the respective leases, andthe capitalized below-market lease values are amortized as an increase to baserental revenue over the remaining initial terms plus the terms of anybelow-market fixed-rate renewal options of the respective leases.  Escalations and recoveries from tenants arereceived from tenants for certain costs as provided in the leaseagreements.  These costs generallyinclude real estate taxes, utilities, insurance, common area maintenance andother recoverable costs.  See Note 16:Tenant Leases.  Parking and other revenueincludes income from parking spaces leased to tenants, income from tenants foradditional services arranged for the Operating Partnership, income from tenantsfor early lease terminations and income from managing and/or leasing propertiesfor third parties

 

***Allowance for***

***Doubtful Accounts******                ***Management periodicallyperforms a detailed review of amounts due from tenants to determine if accountsreceivable balances are impaired based on factors affecting the collectibilityof those balances.  Management’s estimateof the allowance for doubtful accounts requires management to exercisesignificant judgment about the timing, frequency and severity of collectionlosses, which affects the allowance and net income.

 

***Income and***

***Other Taxes***                    TheOperating Partnership is a partnership and, as a result, all income and lossesof the partnership are allocated to the partners for inclusion in theirrespective income tax returns. Accordingly, no provision or benefit for income taxes has been made inthe accompanying financial statements.

 

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As of December 31, 2005, the estimatednet basis of the rental property for Federal income tax purposes was lower thanthe net assets as reported in the Operating Partnership’s financial statementsby approximately $914,030.  The OperatingPartnership’s taxable income for the year ended December 31, 2005 wasestimated to be approximately $176,224 and for the years ended December 31,2004 and 2003 was approximately $174,249 and $182,178, respectively.  The differences between book income andtaxable income primarily result from differences in depreciation expense, therecording of rental income, differences in the deductibility of certainexpenses for tax purposes, differences in revenue recognition and the rules fortax purposes of a property exchange

 

***Earnings***

***Per Unit***                                                                          TheOperating Partnership presents both basic and diluted earnings per unit (“EPU”).  Basic EPU excludes dilution and is computedby dividing net income available to common unitholders by the weighted averagenumber of units outstanding for the period. Diluted EPU reflects the potential dilution that could occur ifsecurities or other contracts to issue common units were exercised or convertedinto common units, where such exercise or conversion would result in a lowerEPU amount.

 

***Distributions***

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

 

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

 

***Costs Incurred***

***For Preferred***

***Stock Issuances******                                ***Costs incurredin connection with the Corporation’s preferred stock issuances are reflected asa reduction of General Partner’s capital.

 

***Stock***

***Compensation******                                       ***TheOperating Partnership accounts for stock options and restricted stock awardsgranted prior to 2002 using the intrinsic value method prescribed in AccountingPrinciples Board Opinion No. 25,  “Accountingfor Stock Issued to Employees,” and related Interpretations (“APB No. 25”).Under APB No. 25, compensation cost for stock options is measured as theexcess, if any, of the quoted market price of the Corporation’s stock at thedate of grant over the exercise price of the option granted.  Compensation cost for stock options isrecognized ratably over the vesting period. The Corporation’s policy is to grant options with an exercise priceequal to the quoted closing market price of the Corporation’s stock on thebusiness day preceding the grant date. Accordingly, no compensation cost has been recognized under theCorporation’s stock option plans for the granting of stock options made priorto 2002.  Restricted stock awards grantedprior to 2002 are valued at the vesting dates of such awards with compensationcost for such awards recognized ratably over the vesting period.

 

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

 

The followingtable illustrates the effect on net income and earnings per unit if the fairvalue based method had been applied to all outstanding and unvested stockawards in each period:

 
| ** **                                                         | ** **                                                                                       | **2005**      | ** ** | **2004**      | ** ** | **2003**      | ** ** |
|--------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|---------------|------------|---------------|------------|---------------|------------|
| ** **                                                         | ** **                                                                                       | **Basic EPS** | ** ** | **Basic EPS** | ** ** | **Basic EPS** | ** ** |
| Net income, as reported                                            |                                                                                             | $             | 118,119    |          | $          | 130,990       |       | $ | 177,826 |   |
| Add:                                                               | Stock-based  compensation expense included in reported net income                                |          | 5,109      |          | 5,432      |          | 4,353      |   |
| Deduct:                                                            | Total  stock-based compensation expense determined under fair value based method for  all awards |          | (5,391     | )             | (6,308     | )             | (5,094     | ) |
| Pro forma net income                                               |                                                                                             | 117,837       |       | 130,114       |       | 177,085       |       |
| Deduct:                                                            | Preferred unit distributions                                                                     |          | (5,909     | )             | (17,636    | )             | (17,340    | ) |
| Pro forma net income available to common  unitholders – basic |                                                                                             | $             | 111,928    |          | $          | 112,478       |       | $ | 159,745 |   |
|                                                               |                                                                                             |          |       |          |       |          |       |
| Earnings Per Unit:                                                 |                                                                                             |          |       |          |       |          |       |
| Basic – as  reported                                          |                                                                                             | $             | 1.52       |          | $          | 1.66          |       | $ | 2.45 |   |
| Basic – pro  forma                                            |                                                                                             | $             | 1.52       |          | $          | 1.65          |       | $ | 2.44 |   |
|                                                               |                                                                                             |          |       |          |       |          |       |
| Diluted – as  reported                                        |                                                                                             | $             | 1.51       |          | $          | 1.65          |       | $ | 2.43 |   |
| Diluted –  pro forma                                          |                                                                                             | $             | 1.51       |          | $          | 1.64          |       | $ | 2.42 |   |

 

***Other***

***Comprehensive***

***Income******                                                                              ***Othercomprehensive income (loss) includes items that are recorded in equity, such asunrealized holding gains or losses on marketable securities available for sale.

 

79

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**3.****              REAL ESTATEPROPERTY TRANSACTIONS**

 

### **2005 TRANSACTIONS**

### **Property Acquisitions**

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

 
| **Acquisition  Date**               | ** ** | **Property/Address**          | ** ** | **Location**                   | ** ** | **# of  Bldgs.** | ** ** | **Rentable  Square Feet** | *** *** | **Investment by  Operating  Partnership  (in thousands)** | *** *** |
|-------------------------------------|------------|-------------------------------|------------|--------------------------------|------------|------------------|------------|---------------------------|--------------|-----------------------------------------------------------|--------------|
| 03/02/05                            |       | 101 Hudson Street (a)         |       | Jersey City, Hudson County, NJ |       | 1                |       | 1,246,283                 |         | $                                                         | 330,302      |   |
| 03/29/05                            |       | 23 Main Street (a) (b)   |       | Holmdel, Monmouth County, NJ   |       | 1                |       | 350,000                   |         | 23,948                                                    |         |
| 07/12/05                            |       | Monmouth Executive Center (c) |       | Freehold, Monmouth County, NJ  |       | 4                |       | 235,968                   |         | 33,561                                                    |         |
|                                |       |                          |       |                           |       |             |       |                      |         |                                                      |         |
| Total Office Property Acquisitions: |       |                          |       | 6                              |       | 1,832,251        |       | $                         | 387,811      |                                                      |

 

----

(a)          Transaction was fundedprimarily through borrowing on the Operating Partnership’s revolving creditfacility.

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

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

 

In November 2005, the Operating Partnershipannounced that it entered into a contract to acquire all the interests inCapital Office Park, a seven-building office complex totaling approximately842,300 square feet in Greenbelt, Maryland for aggregate purchase considerationof approximately $161,700.  The purchaseconsideration for the acquisition, which is expected to close in the firstquarter of 2006, will consist of the issuance of approximately $97,900 ofcommon units in the Operating Partnership and the assumption of approximately$63,800 of mortgage debt. At closing, the sellers may elect to receiveapproximately $27,900 in cash in lieu of common operating partnership units.

 

**Property Sales**

TheOperating Partnership sold the following operating properties during the yearended December 31, 2005:

 
| **Sale ****Date**       | ** ** | **Property/Address**                     | ** ** | **Location**                             | ** ** | **# of   Bldgs.** | ** ** | **Rentable   Square   Feet** | ** ** | **Net   Sales   Proceeds  (in thousands)** | ** ** | **Net   Book   Value  (in thousands)** | ** ** | **Realized   Gain/   (Loss)  (in thousands)** | ** ** |
|------------------------------|------------|------------------------------------------|------------|------------------------------------------|------------|-------------------|------------|------------------------------|------------|--------------------------------------------|------------|----------------------------------------|------------|-----------------------------------------------|------------|
| 02/04/05                     |       | 210 South 16th Street                    |       | Omaha, Douglas County, Nebraska          |       | 1                 |       | 318,224                      |       | $                                          | 8,464      |                                   | $          | 8,210                                         |       | $ | 254 |   |
| 02/11/05                     |       | 1122 Alma Road                           |       | Richardson, Dallas County, Texas         |       | 1                 |       | 82,576                       |       | 2,075                                      |       | 2,344                                  |       | (269                                          | )          |
| 02/15/05                     |       | 3 Skyline Drive                          |       | Hawthorne, Westchester County, New York  |       | 1                 |       | 75,668                       |       | 9,587                                      |       | 8,856                                  |       | 731                                           |       |
| 05/11/05                     |       | 201  Willowbrook Blvd.                   |       | Wayne, Passaic County, New Jersey (a)    |       | 1                 |       | 178,329                      |       | 17,696                                     |       | 17,705                                 |       | (9                                            | )          |
| 06/03/05                     |       | 600  Community Drive/111 East Shore Road |       | North Hempstead, Nassau County, New York |       | 2                 |       | 292,849                      |       | 71,593                                     |       | 59,609                                 |       | 11,984                                        |       |
| 12/29/05                     |       | 3600 South Yosemite                      |       | Denver, Denver County, Colorado          |       | 1                 |       | 133,743                      |       | 5,566                                      |       | 11,121                                 |       | (5,555                                        | )          |
|                         |       |                                     |       |                                     |       |              |       |                         |       |                                       |       |                                   |       |                                          |       |
| Total Office Property Sales: |       |                                     |       | 7                                        |       | 1,081,389         |       | $                            | 114,981    |                                       | $          | 107,845                                |       | $                                             | 7,136      |   |

 

----

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

 

80

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### **2004 TRANSACTIONS**

### **Property Acquisitions**

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

 
| **Acquisition   Date**              | ** ** | **Property/Address**                | ** ** | **Location**                       | ** ** | **# of   Bldgs.** | ** ** | **Rentable   Square Feet** | *** *** | **Investment by   Operating   Partnership  (in thousands)** | *** *** |
|-------------------------------------|------------|-------------------------------------|------------|------------------------------------|------------|-------------------|------------|----------------------------|--------------|-------------------------------------------------------------|--------------|
| ** **                          | ** ** | ** **                          | ** ** | ** **                         | ** ** | ** **        | ** ** | ** **                 | *** *** | ** **                                                  | *** *** |
| 04/14/04                            |       | 5 Wood Hollow Road (a)              |       | Parsippany, Morris County, NJ      |       | 1                 |       | 317,040                    |         | $                                                           | 34,187       |   |
| 05/12/04                            |       | 210 South 16th Street (b)           |       | Omaha, Douglas County, NE          |       | 1                 |       | 318,224                    |         | 8,507                                                       |         |
| 06/01/04                            |       | 30 Knightsbridge Road (c)           |       | Piscataway, Middlesex County, NJ   |       | 4                 |       | 680,350                    |         | 49,205                                                      |         |
| 06/01/04                            |       | 412 Mt. Kemble Avenue (c)           |       | Morris Township, Morris County, NJ |       | 1                 |       | 475,100                    |         | 39,743                                                      |         |
| 10/21/04                            |       | 232 Strawbridge Road (a)            |       | Moorestown, Burlington County, NJ  |       | 1                 |       | 74,258                     |         | 8,761                                                       |         |
| 11/23/04                            |       | One River Centre (d)                |       | Middletown, Monmouth County, NJ    |       | 3                 |       | 457,472                    |         | 69,015                                                      |         |
| 12/20/04                            |       | 4, 5 & 6 Century Drive (a) |       | Parsippany, Morris County, NJ      |       | 3                 |       | 279,811                    |         | 30,860                                                      |         |
| 12/30/04                            |       | 150 Monument Road (a)               |       | Bala Cynwyd, Montgomery County, PA |       | 1                 |       | 125,783                    |         | 18,904                                                      |         |
|                                |       |                                |       |                               |       |              |       |                       |         |                                                        |         |
| Total Office Property Acquisitions: |       |                                |       | 15                                 |       | 2,728,038         |       | $                          | 259,182      |                                                        |

 

----

(a)          Transaction was fundedprimarily through borrowing on the Operating Partnership’s revolving creditfacility.

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

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

(1)                      Acquired 30 Knightsbridge Road, a four-buildingoffice complex, aggregating 680,350 square feet and located in Piscataway, NewJersey.  AT&T, which occupied theentire complex, has leased back from the Operating Partnership two of thebuildings in the complex, totaling 275,000 square feet, for 10 years and sevenmonths, and leased back the remaining 405,350 square feet of the complexthrough October 2004;

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

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

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

(5)                      AssumedAT&T’s lease obligations with third-party landlords at seven officebuildings, aggregating 922,674 square feet, which carry a weighted average remainingterm of 4.5 years as of the date of acquisition.  At acquisition the Operating Partnershipestimated that the obligations, net of estimated sub-lease income, totalapproximately $84.8 million, with a net present value of approximately $76.2million utilizing a weighted average discount rate of 4.85 percent.  The net present value of the assumedobligations as of December 31, 2005 is included in mortgages, loanspayable and other obligations (see Note 10: Mortgages, Loans Payable and OtherObligations).

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

 

##### **LandAcquisitions**

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

 

On June 25, 2004, the Operating Partnership acquired approximately59.9 acres of developable land located in West Windsor, New Jersey forapproximately $20,572.

 

81

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**PropertySales**

TheOperating Partnership sold the following operating properties during the yearended December 31, 2004:

 
| ** **                       | ** ** | ** **            | ** ** | ** **                         | ** ** | ** ** | ** ** | ** **      | *** *** | **Net Sales**      | ** ** | **Net Book**       | ** ** | **Realized**       | *** *** |
|----------------------------------|------------|-----------------------|------------|------------------------------------|------------|------------|------------|-----------------|--------------|--------------------|------------|--------------------|------------|--------------------|--------------|
| **Sale**                         | ** ** | ** **            | ** ** | ** **                         | ** ** | **# of**   | ** ** | **Rentable**    | *** *** | **Proceeds**       | ** ** | **Value**          | ** ** | **Gain/(Loss)**    | *** *** |
| **Date**                         | ** ** | **Property/Address**  | ** ** | **Location**                       | ** ** | **Bldgs.** | ** ** | **Square Feet** | *** *** | **(in thousands)** | ** ** | **(in thousands)** | ** ** | **(in thousands)** | *** *** |
| ** **                       | ** ** | ** **            | ** ** | ** **                         | ** ** | ** ** | ** ** | ** **      | *** *** | ** **         | ** ** | ** **         | ** ** | ** **         | *** *** |
| **Office:**                      | ** ** | ** **            | ** ** | ** **                         | ** ** | ** ** | ** ** | ** **      | ** **   | ** **         | ** ** | ** **         | ** ** | ** **         | ** **   |
| 10/05/04                         |       | 340 Mt. Kemble Avenue |       | Morris Township, Morris County, NJ |       | 1          |       | 387,000         |         | $                  | 75,017     |               | $          | 62,787             |         | $ | 12,230 |   |
| 11/23/04                         |       | Texas Portfolio (a)   |       | Dallas and San Antonio, TX         |       | 2          |       | 554,330         |         | 35,124             |       | 36,224             |       | (1,100             | )            |
|                             |       |                  |       |                               |       |       |       |            |         |               |       |               |       |               |         |
| **Total Office Property Sales:** |       | ** **            |       | 3                                  |       | 941,330    |       | $               | 110,141      |               | $          | 99,011             |       | $                  | 11,130       |   |

 

----

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

 

**4.****              INVESTMENTS INUNCONSOLIDATED JOINT VENTURES**

 

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

 

##### **MEADOWLANDS XANADU**

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

 

On December 3,2003, the Meadowlands Venture entered into a redevelopment agreement (the “RedevelopmentAgreement”) with the New Jersey Sports and Exposition Authority (“NJSEA”) forthe redevelopment of the area surrounding the Continental Airlines Arena inEast Rutherford, New Jersey and the construction of the Meadowlands Xanaduproject.  The Redevelopment Agreementprovides for a 75-year ground lease and requires the Meadowlands Venture to paythe NJSEA a $160,000 development rights fee and fixed rent over the term.  Fixed rent will be in the amount of $1 peryear for the first 15 years, increasing to $7,500 from the 16th tothe 18th years, increasing to $8,447 in the 19th year,increasing to $8,700 in the 20th year, increasing to $8,961 in the21st year, then to $9,200 in the 23rd to 26thyears, with additional increases over the remainder of the term, as set forthin the ground lease.  The ground leasealso allows for the potential for participation rent payments by theMeadowlands Venture, as described in the ground lease agreement.  The First Amendment to the RedevelopmentAgreement and the ground lease, itself, were signed on October 5,2004.  The Meadowlands Venture receivedall necessary permits and approvals from the NJSEA and U.S. Army Corps ofEngineers in March 2005 and commenced construction in the same month.  As a condition to the commencement of work tofill wetlands pursuant to the permit issued by the U.S. Army Corps of Engineersand pursuant to the Redevelopment Agreement, as amended, the MeadowlandsVenture conveyed certain vacant land, known as the Empire Tract, to aconservancy trust.  On June 30,2005, the $160,000 development rights fee was deposited into an escrow accountby the Meadowlands Venture in accordance with the terms of the First Amendmentto the Redevelopment Agreement.  On suchdate, the following amounts were paid from escrow:  (i) approximately $37,197 to defeasecertain debt obligations of the NJSEA; and (ii) $26,800 to the NJSEA,which, in turn, paid such amount to the Meadowlands Venture for the EmpireTract.  Subsequently, additional monieswere released from the escrow account to the NJSEA, such that a total of$130,000 has been released to the NJSEA. The escrow balance of $30,000 is to be released and paid in accordancewith the terms of the First Amendment to the Redevelopment Agreement.

 

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TheOperating Partnership and Mills own a 20 percent and 80 percent interest,respectively, in the Meadowlands Venture. These interests were subject to certain participation rights by The NewYork Giants, which were subsequently terminated in April 2004.  The Meadowlands Xanadu Venture Agreementrequired the Operating Partnership to make an equity contribution up to amaximum of $32,500, which it fulfilled in April 2005.  Pursuant to the Meadowlands Xanadu VentureAgreement, Mills has received subordinated capital credit in the venture ofapproximately $118,000, which represents certain costs incurred by Mills inconnection with the Empire Tract prior to the creation of the MeadowlandsVenture.  However, under the FirstAmendment to the Meadowlands Xanadu Venture Agreement, the OperatingPartnership and Mills agreed that due to the expected receipt by theMeadowlands Venture of certain other sums and certain development costs savingsin connection with Meadowlands Xanadu, Mills’ subordinated capital credit inthe venture for the Empire Tract should be reduced to $60,000 as of the date ofthe First Amendment to the Meadowlands Xanadu Venture Agreement.  The Meadowlands Xanadu Venture Agreementrequires Mills to contribute the balance of the capital required to completethe entertainment phase, subject to certain limitations.  The Operating Partnership will receive a 9percent preferred return on its equity investment, only after Mills receives a9 percent preferred return on its equity investment.  Residual returns, subject to participation byother parties, will be in proportion to each partner’s respective percentageinterest.

 

Millswill develop, lease and operate the entertainment phase of the MeadowlandsXanadu project.  The Meadowlands Venturehas formed and owns, directly and indirectly, all of the partnership interestsin and to the component ventures which were formed for the future developmentof the office and hotel phases, which the Operating Partnership will develop,lease and operate.  Upon the OperatingPartnership’s exercise of its rights under the Meadowlands Xanadu VentureAgreement to develop the office and hotel phases, the Meadowlands Venture willconvey ownership of the component ventures to the Operating Partnership andMills or its affiliate, and the Operating Partnership or its affiliate will ownan 80 percent interest and Mills or its affiliate will own a 20 percent interestin such component ventures.  However,under the First Amendment to the Meadowlands Xanadu Venture Agreement, if theMeadowlands Venture develops a hotel that has video lottery terminals (or “slots”),or any other legalized form of gaming on or in its premises, then the OperatingPartnership or its affiliate will own a 50 percent interest in such componentventure and Mills or its affiliate will own a 50 percent interest.  The Meadowlands Xanadu Venture Agreement requiresthat the Operating Partnership must exercise its rights with respect to thefirst office and hotel phase no later than four years after the grand openingof the entertainment phase, and requires that the Operating Partnershipexercise all of its rights with respect to the office and hotel phases no laterthan 10 years from such date, but does not require that any or all componentsbe developed.  However, under theMeadowlands Xanadu Venture Agreement, Mills has the right to accelerate suchexercise schedule, subject to certain conditions.  Should the Operating Partnership fail to meetthe time schedule described above for the exercise of its rights withrespect to the office and hotel phases, the Operating Partnership will forfeitits rights to control future development. If this occurs, Mills will have the right to develop the additionalphases, subject to the Operating Partnership’s right to participate, or tocause the Meadowlands Venture to sell such components to a third party, subjectto a sales price limitation of 95 percent of the value that would have beenrequired to form such component ventures.

 

Commencing three years after the grand opening of the entertainmentphase of the Meadowlands Xanadu project, either Mills or the OperatingPartnership may sell its partnership interest to a third party subject to thefollowing provisions:

 

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

 

•                  Millshas a right of first refusal with respect of a sale by the OperatingPartnership of its partnership interests.

 

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

 

On February 12, 2003, theNJSEA selected The Mills Corporation and the Operating Partnership to redevelopthe Continental Airlines Arena site (“Arena Site”) for mixed uses, includingretail.  In March 2003, HartzMountain Industries, Inc., (“Hartz”), filed a lawsuit in the SuperiorCourt of New Jersey, Law Division, for Bergen County, seeking

 

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to enjoin NJSEA from entering into a contract with theMeadowlands Venture for the redevelopment of the Continental Airlines Arenasite.  In May 2003, the court deniedHartz’s request for an injunction and dismissed its suit for failure to exhaustadministrative remedies.  In June 2003,the NJSEA held hearings on Hartz’s protest, and on a parallel protest filed byanother rejected developer, Westfield, Inc. (“Westfield”).  On September 10, 2003, the NJSEA ruledagainst Hartz’s and Westfield’s protests, Hartz and Westfield, as well asElliot Braha and three other taxpayers (collectively “Braha”), thereafter filedappeals from the NJSEA’s final decision. By decision dated May 14, 2004, the Appellate Division of theSuperior Court of New Jersey rejected the appellants’ contention that the NJSEAlacks statutory authority to allow retail development of its property.  The Appellate Division also remanded Hart’sclaim under the Open Public Records Acts, seeking disclosure of additionaldocuments from NJSEA, to the Law Division for further proceedings. The SupremeCourt of New Jersey declined to review the Appellate Division’s decision.  On August 19, 2004, the Law Division issueda decision resolving Hartz’s Open Public Records Act claim and ordered NJSEA todisclose some, but not all, of the documents Hartz was seeking.  The Appellate Division, in a decisionrendered on November 24, 2004, upheld the findings of the Law Division inthe remand proceeding.  The Supreme Courtof New Jersey declined to review the Appellate Division’s decision.  At Hartz’s request, the NJSEA thereafter heldfurther hearings on December 15 and 16, 2004, to review certain additionalfacts in support of Hartz’s and Westfield’s bid protest.  Braha, as a taxpayer, did not have standingto participate in the supplemental protest hearing.  On March 4, 2005, the Hearing Officerrendered his Supplemental Report and Recommendation to the NJSEA, finding nomerit in the protests presented by Hartz and Westfield.  The NJSEA accepted the Hearing Officer’sSupplemental Report and Recommendation on March 30, 2005 and Hartz andBraha have appealed that decision to the Appellate Division.

 

In January 2004, Hartz and Westfield alsoappealed to the Appellate Division of the Supreme Court of New Jersey from theNJSEA’s December 2003 approval and execution of the RedevelopmentAgreement with the Meadowlands Venture.

 

In November 2004, Hartz and Westfield filedadditional appeals in the Appellate Division challenging NJSEA’s resolutionauthorizing the execution of the First Amendment to the Redevelopment Agreementwith Meadowlands Venture and the ground lease with the Meadowlands Venture.

 

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

 

On September 30, 2004, the Borough of Carlstadtfiled an action in the Superior Court of New Jersey Law Division, challengingMeadowlands Xanadu, which asserts claims that are substantially the same asclaims asserted by Hartz and Braha in the above appeals.  By Order dated November 19, 2004, theLaw Division transferred that matter to the Superior Court of New Jersey,Appellate Division.  The matter ispending.

 

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

 

A Hartz affiliate and a trade association have filedan appeal from an advisory opinion favorable to the Meadowlands Venture issuedby the Director of the Division of Alcoholic Beverage Control concerning theavailability of special concessionaire permits. That appeal is also pending in the Appellate Division of the SuperiorCourt of New Jersey.

 

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

 

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

 

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

 

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

 

On January 25, 2006, the Bergen Cliff HawksBaseball Club, LLC (the “Cliff Hawks”), filed a complaint against the OperatingPartnership and Mills, alleging that the Operating Partnership and Millsbreached an agreement to provide the Cliff Hawks with a minor league baseballpark as part of the Xanadu Project.  Thismatter remains pending.

 

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

 

###### **HPMC**

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

 

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

 

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

 

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

 

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

 

###### **G&G MARTCO (Convention Plaza)**

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

 

**PLAZA VIII AND IX ASSOCIATES, L.L.C./AMERICANFINANCIAL EXCHANGE L.L.C.**

On May 20, 1998, the Operating Partnership entered into a jointventure with Columbia Development Company, L.L.C. (“Columbia”) to form AmericanFinancial Exchange L.L.C. (“AFE”).  Theventure was formed to acquire land for future development, located on theHudson River waterfront in Jersey City, New Jersey, adjacent to the OperatingPartnership’s Harborside Financial Center office complex.  Among other things, the partnership agreementprovides for a preferred return on the Operating Partnership’s invested capitalin the venture, in addition to the Operating Partnership’s proportionate shareof the venture’s profit, as defined in the agreement.  The joint venture acquired land on which itinitially constructed a parking facility. In the fourth quarter 2000, the joint venture started construction ofPlaza 10, a 577,575 square foot office building, which was 100 percentpre-leased to Charles Schwab & Co. Inc. (“Schwab”) for a 15-year term,on certain of the land owned by the venture. The lease agreement with Schwab obligated the venture, among otherthings, to deliver space to the tenant by required timelines and offersexpansion options, at the tenant’s election.

 

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

 

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

 

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

 

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

On August 20, 1998, theOperating Partnership entered into a joint venture with S.B. New York RealtyCorp. to form Ramland Realty Associates L.L.C. The venture was formed to own, manage and operate One Ramland Road, a232,000 square foot office/flex building and adjacent developable land, locatedin Orangeburg, New York.  In August 1999,the joint venture completed redevelopment of the property and placed theoffice/flex building in service.  TheOperating Partnership holds a 50 percent interest in the joint venture.  The venture has a mortgage loan with a$14,936 balance at December 31, 2005 secured by its office/flexproperty.  The mortgage bears interest ata rate of LIBOR plus 175 basis points and matures in January 2007, withtwo one-year extension options, subject to certain conditions.

 

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

 

The Operating Partnership performs management, leasing and other servicesfor the property owned by the joint venture and recognized $93, $165 and$12 in fees for such services in the years ended December 31, 2005, 2004and 2003 respectively.

 

###### **ASHFORD LOOP ASSOCIATES L.P. (1001 South DairyAshford/2100 West Loop South)**

On September 18, 1998, the Operating Partnershipentered into a joint venture with Prudential to form Ashford Loop AssociatesL.P. The venture was formed to own, manage and operate 1001 South DairyAshford, a 130,000 square foot office building acquired on September 18,1998, and 2100 West Loop South, a 168,000 square foot office building acquiredon November 25, 1998, both located in Houston, Texas.  The Operating Partnership held a 20 percentinterest in the joint venture.  Includedin depreciation and amortization in the results of operations for the yearended December 31, 2004 presented herein for the joint venture is avaluation allowance of $24,575 on account of the carrying value of the venture’sassets exceeding the net realizable value as of December 31, 2004.  Included in the Operating Partnership’sequity in earnings (loss) of unconsolidated joint venture for the year ended December 31,2004 was a $4,915 loss representing the Operating Partnership’s share of thevaluation allowance.  On February 25,2005, the Operating Partnership sold its interest in the venture to Prudentialfor $2,664 and recognized a gain on the sale of $35.

 

**SOUTH PIER AT HARBORSIDE – HOTEL DEVELOPMENT**

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

 

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

 

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# **NORTHPIER AT HARBORSIDE – RESIDENTIAL DEVELOPMENT**

On April 3,2001, the Operating Partnership sold its North Pier at Harborside FinancialCenter, Jersey City, New Jersey to an entity which planned on developingresidential housing on the site.  At thetime, the Operating Partnership received net sales proceeds of approximately$3,357 (which included a note receivable of $2,027 subsequently repaid in2002), and recognized a gain of $439 from the transaction.  On March 31, 2004, the OperatingPartnership received additional purchase consideration of $720, for which theOperating Partnership recorded a gain of $720 in gain on sale of investment inunconsolidated joint ventures for the year ended December 31, 2004.

 

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**SUMMARIESOF UNCONSOLIDATED JOINT VENTURES**

The following is a summary of the financial position of theunconsolidated joint ventures in which the Operating Partnership had investmentinterests as of December 31, 2005 and 2004:

 
| ** **                                                                    | ** ** | **December 31, 2005** | ** ** |
|-------------------------------------------------------------------------------|------------|----------------------------|------------|
| ** **                                                                    | ** ** | **Meadowlands  Xanadu**    | ** ** | **HPMC** | ** ** | **G&G  Martco** | ** ** | **American  Financial  Exchange** | ** ** | **Plaza  VIII & IX  Associates** | ** ** | **Ramland  Realty** | ** ** | **Ashford  Loop** | ** ** | **Harborside  South Pier** | ** ** | **Combined  Total** | ** ** |
| **Assets:**                                                                   |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rental Property, net                                                          |       | $                          | 407,322    |   | — |   | $ | 10,632 |   | — |   | $ | 12,024 |   | $ | 12,511 |   | — |   | $ | 74,306 |   | $ | 516,795 |   |
| Other assets                                                                  |       | 171,029                    |       | — |   | 6,427 |   | — |   | 1,662 |   | 1,188 |   | — |   | 11,772 |   | 192,078 |   |
| Total assets                                                                  |       | $                          | 578,351    |   | — |   | $ | 17,059 |   | — |   | $ | 13,686 |   | $ | 13,699 |   | — |   | $ | 86,078 |   | $ | 708,873 |   |
| **Liabilities and partners/****members’ capital (deficit):**             |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgages and loans payable                                                   |       | $                          | —     |   | — |   | $ | 46,588 |   | — |   | $ | — |   | $ | 14,936 |   | — |   | $ | 57,234 |   | $ | 118,758 |   |
| Other liabilities                                                             |       | 76,875                     |       | — |   | 875 |   | — |   | 1,361 |   | 220 |   | — |   | 4,170 |   | 83,501 |   |
| Partners’/members’ capital                                          |       | 501,476                    |       | — |   | (30,404 | ) | — |   | 12,325 |   | (1,457 | ) | — |   | 24,674 |   | 506,614 |   |
| Total liabilities and partners/ members’ capital                         |       | $                          | 578,351    |   | — |   | $ | 17,059 |   | — |   | $ | 13,686 |   | $ | 13,699 |   | — |   | $ | 86,078 |   | $ | 708,873 |   |
| Operating Partnership’s net investment in  unconsolidated joint ventures |       | $                          | 34,640     |   | — |   | $ | 6,438 |   | — |   | $ | 6,084 |   | — |   | — |   | $ | 14,976 |   | $ | 62,138 |   |

 
| ** **                                                                    | ** ** | **December 31, 2004** | ** ** |
|-------------------------------------------------------------------------------|------------|----------------------------|------------|
| ** **                                                                    | ** ** | **Meadowlands  Xanadu**    | ** ** | **HPMC** | ** ** | **G&G  Martco** | ** ** | **American  Financial  Exchange** | ** ** | **Plaza  VIII & IX  Associates** | ** ** | **Ramland  Realty** | ** ** | **Ashford  Loop** | ** ** | **Harborside  South Pier** | ** ** | **Combined  Total** | ** ** |
| **Assets:**                                                                   |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rental Property, net                                                          |       | $                          | 235,254    |   | — |   | $ | 8,571 |   | — |   | $ | 12,629 |   | $ | 13,030 |   | $ | 11,256 |   | $ | 79,721 |   | $ | 360,461 |   |
| Other assets                                                                  |       | 1,420                      |       | — |   | 4,589 |   | — |   | 1,463 |   | 1,559 |   | 539 |   | 12,034 |   | 21,604 |   |
| Total assets                                                                  |       | $                          | 236,674    |   | — |   | $ | 13,160 |   | — |   | $ | 14,092 |   | $ | 14,589 |   | $ | 11,795 |   | $ | 91,755 |   | $ | 382,065 |   |
| **Liabilities and partners/****members’ capital (deficit):**             |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgages and loans payable                                                   |       | $                          | —     |   | — |   | $ | 43,236 |   | — |   | $ | — |   | $ | 14,936 |   | $ | — |   | $ | 66,191 |   | $ | 124,363 |   |
| Other liabilities                                                             |       | 8,205                      |       | — |   | 963 |   | — |   | 1,376 |   | 334 |   | 670 |   | 4,009 |   | 15,557 |   |
| Partners’/members’ capital                                          |       | 228,469                    |       | — |   | (31,039 | ) | — |   | 12,716 |   | (681 | ) | 11,125 |   | 21,555 |   | 242,145 |   |
| Total liabilities and partners/  members’ capital                        |       | $                          | 236,674    |   | — |   | $ | 13,160 |   | — |   | $ | 14,092 |   | $ | 14,589 |   | $ | 11,795 |   | $ | 91,755 |   | $ | 382,065 |   |
| Operating Partnership’s net investment in  unconsolidated joint ventures |       | $                          | 17,359     |   | — |   | $ | 7,157 |   | — |   | $ | 6,279 |   | $ | — |   | $ | 2,664 |   | $ | 13,284 |   | $ | 46,743 |   |

 

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

 
| ** **                                                                                    | ** ** | **Year Ended December 31, 2005** | ** ** |
|-----------------------------------------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                                                    | ** ** | **Meadowlands  Xanadu**               | ** ** | **HPMC** | ** ** | **G&G  Martco** | ** ** | **American  Financial  Exchange** | ** ** | **Plaza  VIII & IX  Associates** | ** ** | **Ramland  Realty** | ** ** | **Ashford  Loop** | ** ** | **Harborside  South Pier** | ** ** | **Combined  Total** | ** ** |
| Total revenues                                                                                |       | —                                |       | — |   | $ | 6,767 |   | — |   | $ | 396 |   | $ | 2,028 |   | — |   | $ | 35,101 |   | $ | 44,292 |   |
| Operating and Other expenses                                                                  |       | —                                |       | — |   | (3,662 | ) | — |   | (172 | ) | (1,407 | ) | — |   | (22,147 | ) | (27,388 | ) |
| Depreciation and amortization                                                                 |       | —                                |       | — |   | (1,200 | ) | — |   | (616 | ) | (638 | ) | — |   | (5,484 | ) | (7,938 | ) |
| Interest expense                                                                              |       | —                                |       | — |   | (2,270 | ) | — |   | — |   | (759 | ) | — |   | (4,198 | ) | (7,227 | ) |
|                                                                                          |       |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                             |       | —                                |       | — |   | $ | (365 | ) | — |   | $ | (392 | ) | $ | (776 | ) | — |   | $ | 3,272 |   | $ | 1,739 |   |
| Operating Partnership’s equity in earnings  (loss) of unconsolidated joint ventures |       | —                                |       | — |   | $ | (1,219 | ) | — |   | $ | (196 | ) | — |   | $ | (30 | ) | $ | 1,693 |   | $ | 248 |   |
|                                                                                               |            |                                       |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 
| ** **                                                                                    | ** ** | **Year Ended December 31, 2004** | ** ** |
|-----------------------------------------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                                                    | ** ** | **Meadowlands  Xanadu**               | ** ** | **HPMC** | ** ** | **G&G  Martco** | ** ** | **American  Financial  Exchange** | ** ** | **Plaza  VIII & IX  Associates** | ** ** | **Ramland  Realty** | ** ** | **Ashford  Loop** | ** ** | **Harborside  South Pier** | ** ** | **Combined  Total** | ** ** |
| Total revenues                                                                                |       | —                                |       | $ | 10,755 |   | $ | 7,113 |   | — |   | $ | 91 |   | $ | 1,981 |   | $ | 2,937 |   | $ | 30,345 |   | $ | 53,222 |   |
| Operating and Other expenses                                                                  |       | —                                |       | (259 | ) | (3,676 | ) | — |   | (166 | ) | (1,539 | ) | (3,403 | ) | (19,613 | ) | (28,656 | ) |
| Depreciation and amortization                                                                 |       | —                                |       | — |   | (1,002 | ) | — |   | (616 | ) | (630 | ) | (25,550 | ) | (6,501 | ) | (34,299 | ) |
| Interest expense                                                                              |       | —                                |       | — |   | (1,342 | ) | — |   | — |   | (479 | ) | — |   | (2,412 | ) | (4,233 | ) |
|                                                                                          |       |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                             |       | —                                |       | $ | 10,496 |   | $ | 1,093 |   | — |   | $ | (691 | ) | $ | (667 | ) | $ | (26,016 | ) | $ | 1,819 |   | $ | (13,966 | ) |
| Operating Partnership’s equity in earnings  (loss) of unconsolidated joint ventures |       | —                                |       | $ | 661 |   | $ | 730 |   | — |   | $ | (346 | ) | $ | (600 | ) | $ | (5,203 | ) | $ | 872 |   | $ | (3,886 | ) |

 
| ** **                                                                                    | ** ** | **Year Ended December 31, 2003** | ** ** |
|-----------------------------------------------------------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                                                    | ** ** | **Meadowlands  Xanadu**               | ** ** | **HPMC** | ** ** | **G&G  Martco** | ** ** | **American  Financial  Exchange (a)** | ** ** | **Plaza  VIII & IX  Associates** | ** ** | **Ramland  Realty** | ** ** | **Ashford  Loop** | ** ** | **Harborside  South Pier** | ** ** | **Combined  Total** | ** ** |
| Total revenues                                                                                |       | —                                |       | $ | 3,995 |   | $ | 12,411 |   | $ | 17,398 |   | $ | 1,730 |   | $ | 249 |   | $ | 3,801 |   | $ | 23,933 |   | $ | 63,517 |   |
| Operating and Other expenses                                                                  |       | —                                |       | (71 | ) | (4,017 | ) | (3,040 | ) | (44 | ) | (981 | ) | (3,062 | ) | (16,326 | ) | (27,541 | ) |
| Depreciation and amortization                                                                 |       | —                                |       | — |   | (1,533 | ) | (2,912 | ) | (228 | ) | (555 | ) | (974 | ) | (6,262 | ) | (12,464 | ) |
| Interest expense                                                                              |       | —                                |       | — |   | (1,497 | ) | — |   | — |   | (451 | ) | — |   | (3,174 | ) | (5,122 | ) |
|                                                                                          |       |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                             |       | —                                |       | $ | 3,924 |   | $ | 5,364 |   | $ | 11,446 |   | $ | 1,458 |   | $ | (1,738 | ) | $ | (235 | ) | $ | (1,829 | ) | $ | 18,390 |   |
| Operating Partnership’s equity in earnings  (loss) of unconsolidated joint ventures |       | —                                |       | $ | 2,325 |   | $ | 2,559 |   | $ | 11,342 |   | $ | (83 | ) | $ | (1,332 | ) | $ | (47 | ) | $ | (1,284 | ) | $ | 13,480 |   |

 

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

 

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**5.****              DEFERRED CHARGESAND OTHER ASSETS**

 
| ** **                                                | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                | ** ** | **2005**              | ** ** | **2004** | ** ** |
| Deferred  leasing costs                                   |       | $                     | 182,975    |   | $ | 152,525 |   |
| Deferred  financing costs                                 |       | 21,764                |       | 17,137 |   |
|                                                      |       | 204,739               |       | 169,662 |   |
| Accumulated  amortization                                 |       | (73,410               | )          | (58,170 | ) |
| Deferred  charges, net                                    |       | 131,329               |       | 111,492 |   |
| Notes  receivable                                         |       | 11,919                |       | — |   |
| In-place  lease values and related intangible assets, net |       | 37,028                |       | 17,560 |   |
| Prepaid  expenses and other assets, net                   |       | 17,358                |       | 26,008 |   |
|                                                      |       |                  |       |   |   |
| Total  deferred charges and other assets, net             |       | $                     | 197,634    |   | $ | 155,060 |   |

 

**6.****              RESTRICTED CASH**

 

Restricted cash includes security deposits for certain of the OperatingPartnership’s properties, and escrow and reserve funds for debt service, realestate taxes, property insurance, capital improvements, tenant improvements,and leasing costs established pursuant to certain mortgage financingarrangements, and is comprised of the following:

 
| ** **                      | ** ** | **December 31,** | ** ** |
|---------------------------------|------------|-----------------------|------------|
| ** **                      | ** ** | **2005**              | ** ** | **2004** | ** ** |
| Security  deposits              |       | $                     | 8,398      |   | $ | 8,976 |   |
| Escrow and  other reserve funds |       | 823                   |       | 1,501 |   |
|                            |       |                  |       |   |   |
| Total  restricted cash          |       | $                     | 9,221      |   | $ | 10,477 |   |

 

**7.****              DISCONTINUEDOPERATIONS**

 

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

 

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

 

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

 

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

 
| ** **                                 | ** ** | **Year Ended December 31,** | ** ** |
|--------------------------------------------|------------|----------------------------------|------------|
| ** **                                 | ** ** | **2005**                         | ** ** | **2004** | ** ** | **2003** | ** ** |
| Total  revenues                            |       | $                                | 5,253      |   | $ | 25,404 |   | $ | 29,865 |   |
| Operating  and other expenses              |       | (1,568                           | )          | (8,800 | ) | (9,519 | ) |
| Depreciation  and amortization             |       | (729                             | )          | (4,748 | ) | (6,558 | ) |
| Interest  expense (net of interest income) |       | 42                               |       | (408 | ) | (875 | ) |
|                                       |       |                             |       |   |   |   |   |
| Income from  discontinued operations       |       | $                                | 2,998      |   | $ | 11,448 |   | $ | 12,913 |   |

 
| ** **                                                                            | ** ** | **Year Ended December 31,** | ** ** |
|---------------------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                            | ** ** | **2005**                         | ** ** | **2004** | ** ** | **2003** | ** ** |
| Realized  gains (losses) on disposition of rental property, net                       |       | $                                | 7,136      |   | $ | 11,130 |   | $ | 3,541 |   |
| Unrealized  losses on disposition of rental property                                  |       | (1,614                           | )          | (11,856 | ) | — |   |
|                                                                                  |       |                             |       |   |   |   |   |
| Realized  gains (losses) and unrealized losses on disposition of rental property, net |       | $                                | 5,522      |   | $ | (726 | ) | $ | 3,541 |   |

 

**8.****              SENIOR UNSECUREDNOTES**

 

A summary of theOperating Partnership’s senior unsecured notes as of December 31, 2005 and2004 is as follows:

 
| ** **                                                 | ** ** | **December 31,** | ** ** | **Effective** | ** ** |
|------------------------------------------------------------|------------|-----------------------|------------|---------------|------------|
| ** **                                                 | ** ** | **2005**              | ** ** | **2004**      | ** ** | **Rate (1)** | ** ** |
| 7.250%  Senior Unsecured Notes, due March 15, 2009    |       | $                     | 299,246    |          | $          | 299,012 |   | 7.49 | % |
| 5.050%  Senior Unsecured Notes, due April 15, 2010    |       | 149,765               |       | —        |       | 5.27 | % |
| 7.835%  Senior Unsecured Notes, due December 15, 2010 |       | 15,000                |       | 15,000        |       | 7.95 | % |
| 7.750%  Senior Unsecured Notes, due February 15, 2011 |       | 299,122               |       | 298,948       |       | 7.93 | % |
| 6.150%  Senior Unsecured Notes, due December 15, 2012 |       | 91,488                |       | 90,998        |       | 6.89 | % |
| 5.820%  Senior Unsecured Notes, due March 15, 2013    |       | 25,309                |       | 25,199        |       | 6.45 | % |
| 4.600%  Senior Unsecured Notes, due June 15, 2013     |       | 99,787                |       | 99,758        |       | 4.74 | % |
| 5.125%  Senior Unsecured Notes, due February 15, 2014 |       | 201,948               |       | 202,187       |       | 5.11 | % |
| 5.125%  Senior Unsecured Notes, due January 15, 2015  |       | 149,164               |       | —        |       | 5.30 | % |
| 5.800%  Senior Unsecured Notes, due January 15, 2016  |       | 99,680                |       | —        |       | 5.87 | % |
|                                                       |       |                  |       |          |       |   |   |
| Total Senior  Unsecured Notes                              |       | $                     | 1,430,509  |          | $          | 1,031,102 |   | 6.42 | % |

 

----

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

 

On January 24, 2006, the Operating Partnership issued $100,000face amount of 5.80 percent senior unsecured notes due January 15, 2016with interest payable semi-annually in arrears, and $100,000 face amount of5.25 percent senior unsecured notes due January 15, 2012 with interestpayable semi-annually in arrears.  Thetotal proceeds from the issuances, including accrued interest on the 5.80percent notes, of approximately $200,784 were used to reduce outstandingborrowings under the Operating Partnership’s unsecured facility.

 

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

 

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

 

On January 25,2005, the Operating Partnership issued $150,000 face amount of 5.125 percentsenior unsecured notes due January 15, 2015 with interest payablesemi-annually in arrears.  The proceeds fromthe issuance (including premium and net of selling commissions) ofapproximately $148,103 were used primarily to reduce outstanding borrowingsunder the Operating Partnership’s unsecured facility.

 

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

 

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

 

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

 

**9.****              UNSECUREDREVOLVING CREDIT FACILITY**

 

On November 23, 2004, theOperating Partnership obtained an unsecured revolving credit facility with aborrowing capacity of $600,000 (expandable to $800,000), which replaced acredit facility of the same size.  Theinterest rate on outstanding borrowings (not electing the Operating Partnership’scompetitive bid feature) under the unsecured facility is currently LIBOR plus65 basis points.  The facility has acompetitive bid feature, which allows the Operating Partnership to solicit bidsfrom lenders under the facility to borrow up to $300,000 at interest rates lessthan the current LIBOR plus 65 basis point spread.  As of December 31, 2005, the OperatingPartnership’s outstanding borrowings carried a weighted average interest rateof LIBOR plus 49 points.  The OperatingPartnership may also elect an interest rate representing the higher of thelender’s prime rate or the Federal Funds rate plus 50 basis points.  The unsecured facility, which also required a20 basis point facility fee on the current borrowing capacity payable quarterlyin arrears, was scheduled to mature in November 2007.

 

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

 

The interest rateand the facility fee are subject to adjustment, on a sliding scale, based uponthe operating partnership’s unsecured debt ratings.  In the event of a change in the OperatingPartnership’s unsecured debt rating, the interest and facility fee rates willbe adjusted in accordance with the following table:

 

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| **Operating Partnership’s   Unsecured Debt Ratings:  S&P Moody’s/Fitch (a)** | ** ** | **Interest Rate –  Applicable Basis Points   Above LIBOR** | ** ** | **Facility Fee   Basis Points** | ** ** |
|--------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------|------------|---------------------------------|------------|
| No ratings  or less than BBB-/Baa3/BBB-                                                    |       | 112.5                                                           |       | 25.0                            |       |
| BBB-/Baa3/BBB-                                                                             |       | 80.0                                                            |       | 20.0                            |       |
| BBB/Baa2/BBB  (current)                                                                    |       | 65.0                                                            |       | 15.0                            |       |
| BBB+/Baa1/BBB+                                                                             |       | 55.0                                                            |       | 15.0                            |       |
| A-/A3/A- or  higher                                                                        |       | 50.0                                                            |       | 15.0                            |       |

 

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

 

The terms of theunsecured facility include certain restrictions and covenants which limit,among other things, the payment of dividends (as discussed below), theincurrence of additional indebtedness, the incurrence of liens and thedisposition of real estate properties (to the extent that: (i) suchproperty dispositions cause the Operating Partnership to default on any of thefinancial ratios of the facility described below, or (ii) the propertydispositions are completed while the Operating Partnership is under an event ofdefault under the facility, unless, under certain circumstances, suchdisposition is being carried out to cure such default), and which requirecompliance with financial ratios relating to the maximum leverage ratio, themaximum amount of secured indebtedness, the minimum amount of tangible networth, the minimum amount of fixed charge coverage, the maximum amount ofunsecured indebtedness, the minimum amount of unencumbered property interestcoverage and certain investment limitations. The dividend restriction referred to above provides that, except to enablethe Corporation to continue to qualify as a REIT under the Code, theCorporation will not during any four consecutive fiscal quarters makedistributions with respect to common stock or other common equity interests inan aggregate amount in excess of 90 percent of funds from operations (asdefined in the facility agreement) for such period, subject to certain otheradjustments.

 

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

 

###### **SUMMARY**

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

 

**10.****       MORTGAGES, LOANS PAYABLEAND OTHER OBLIGATIONS**

 

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

 

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

 
| **Property Name**                                     | ** ** | **Lender**                   | ** ** | **Effective  Interest  Rate (a)** | ** ** | **Principal Balance at  December 31,** | ** ** | **Maturity** | ** ** |
|-------------------------------------------------------|------------|------------------------------|------------|-----------------------------------|------------|---------------------------------------------|------------|--------------|------------|
| ** **                                            | **2005**   | ** **                   | **2004**   |
| Harborside –  Plaza 2 and 3                      |       | Northwestern/Principal       |       | 7.37                              | %          | $                                           | 144,642    |         | $          | 149,473 |   | 01/01/06 | (b) |
| Monmouth  Executive Center                            |       | Lehman Brothers CMBS         |       | 4.98                              | %          | 16,044                                      |       | —       |       | 09/01/06 |   |
| Mack-Cali  Airport                                    |       | Allstate Life Insurance Co.  |       | 7.05                              | %          | 9,644                                       |       | 9,852        |       | 04/01/07 |   |
| Various (c)                                           |       | Prudential Insurance Co.     |       | 4.84                              | %          | 150,000                                     |       | 150,000      |       | 01/15/10 |   |
| 2200  Renaissance Boulevard                           |       | TIAA                         |       | 5.89                              | %          | 18,174                                      |       | 18,509       |       | 12/01/12 |   |
| Soundview  Plaza                                      |       | TIAA                         |       | 6.02                              | %          | 18,427                                      |       | 18,816       |       | 01/01/13 |   |
| Assumed  obligations(d)                               |       | various                      |       | 4.86                              | %          | 53,241                                      |       | 67,269       |       | 05/01/09 |   |
| 500 West  Putnam Avenue                               |       | New York Life Ins. Co.       |       | 5.52                              | %          | 25,000                                      |       | —       |       | 01/10/16 |   |
| 23 Main  Street                                       |       | JP Morgan CMBS               |       | 5.59                              | %          | 33,500                                      |       | —       |       | 09/01/18 |   |
| Mack-Cali  Centre VI                                  |       | Principal Life Insurance Co. |       | 6.87                              | %          | —                                      |       | 35,000       |       | — |   |
| One River  Center                                     |       | New York Life Ins. Co.       |       | 5.50                              | %          | —                                      |       | 45,490       |       | — |   |
| Mack-Cali  Bridgewater I                              |       | New York Life Ins. Co.       |       | 7.00                              | %          | —                                      |       | 23,000       |       | — |   |
| Mack-Cali  Woodbridge II                              |       | New York Life Ins. Co.       |       | 7.50                              | %          | —                                      |       | 17,500       |       | — |   |
| Mack-Cali  Short Hills                                |       | Prudential Insurance Co.     |       | 7.74                              | %          | —                                      |       | 22,789       |       | — |   |
| 500 West  Putnam Avenue                               |       | New York Life Ins. Co.       |       | 6.52                              | %          | —                                      |       | 6,500        |       | — |   |
|                                                  |       |                         |       |                              |       |                                        |       |         |       |   |   |
| Total  mortgages, loans payable and other obligations |       |                         |       | $                                 | 468,672    |                                        | $          | 564,198      |       |   |   |

 

----

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

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

(c)          Mortgage iscollateralized by seven properties.

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

 

**SCHEDULED PRINCIPAL PAYMENTS**

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

 
| **Period**                                                                           | ** ** | **Scheduled  Amortization** | ** ** | **Principal  Maturities** | ** ** | **Total** | ** ** | **Weighted Avg.  Interest Rate of  Future Repayments (a)** | ** ** |
|--------------------------------------------------------------------------------------|------------|-----------------------------|------------|---------------------------|------------|-----------|------------|------------------------------------------------------------|------------|
| 2006                                                                                 |       | $                           | 18,276     |                      | $          | 160,189   |       | $                                                          | 178,465    |   | 6.90 | % |
| 2007                                                                                 |       | 17,098                      |       | 9,364                     |       | 26,462    |       | 5.69                                                       | %          |
| 2008                                                                                 |       | 16,292                      |       | —                    |       | 16,292    |       | 4.97                                                       | %          |
| 2009                                                                                 |       | 7,175                       |       | 527,000                   |       | 534,175   |       | 6.33                                                       | %          |
| 2010                                                                                 |       | 1,480                       |       | 315,000                   |       | 316,480   |       | 5.19                                                       | %          |
| Thereafter                                                                           |       | 9,781                       |       | 1,050,033                 |       | 1,059,814 |       | 5.98                                                       | %          |
| Sub-total                                                                            |       | 70,102                      |       | 2,061,586                 |       | 2,131,688 |       | 6.15                                                       | %          |
| Adjustment  for unamortized debt discount/premium, net, as of December 31, 2005 |       | (5,507                      | )          | —                    |       | (5,507    | )          | —                                                     |       |
|                                                                                 |       |                        |       |                      |       |      |       |                                                       |       |
| Totals/Weighted  Average                                                             |       | $                           | 64,595     |                      | $          | 2,061,586 |       | $                                                          | 2,126,181  |   | 6.15 | % |

 

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

 

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###### **CASH PAID FOR INTEREST AND INTEREST CAPITALIZED**

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

 

###### **SUMMARY OF INDEBTEDNESS**

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

 

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

 

**11.****       PARTNERS’ CAPITAL**

 

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

 

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

 

**GENERAL PARTNER:**

 

**PREFERRED STOCK**

On March 14, 2003, in a publicly registeredtransaction with a single institutional buyer, the Corporation completed thesale and issuance of 10,000 shares of eight-percent Series C cumulativeredeemable perpetual preferred stock (“Series C Preferred Stock”) in theform of 1,000,000 depositary shares ($25 stated value per depositaryshare).  Each depositary share represents1/100th of a share of Series C Preferred Stock.  The Corporation received net proceeds ofapproximately $24,836 from the sale.

 

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

 

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

 

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

 

**REPURCHASE OF GENERAL PARTNER**

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

 

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10, 2003, the Corporation purchased and retired, under the RepurchaseProgram, 3,746,400 shares of its outstanding common stock for an aggregate costof approximately $104,512.  Concurrentwith these purchases, the Corporation sold to the Operating Partnership3,746,400 of its outstanding common units for an aggregate cost ofapproximately $104,512. The Corporation has a remaining authorization torepurchase up to an additional $45,488 of its outstanding common stock, whichit may repurchase from time to time in open market transactions at prevailingprices or through privately negotiated transactions.

 

###### **DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN**

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

 

###### **SHAREHOLDER RIGHTS PLAN**

On June 10, 1999, the Board of Directors of the Corporationauthorized a dividend distribution of one preferred share purchase right (“Right”)for each outstanding share of common stock which were distributed to allholders of record of the common stock on July 6, 1999.  Each Right entitles the registered holder topurchase from the Corporation one one-thousandth of a share of Series Ajunior participating preferred stock, par value $0.01 per share (“PreferredShares”), at a price of $100.00 per one one-thousandth of a Preferred Share (“PurchasePrice”), 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 exchangedearlier by the Corporation.

 

The Rights are attached to each share of common stock.  The Rights are generally exercisable only ifa person or group becomes the beneficial owner of 15 percent or more of theoutstanding common stock or announces a tender offer for 15 percent or more ofthe outstanding common stock (“Acquiring Person”).  In the event that a person or group becomesan 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 thePurchase Price of the Right.

 

###### **STOCK OPTION PLANS**

In May 2004, theCorporation established the 2004 Incentive Stock Plan under which a total of2,500,000 shares have been reserved for issuance.  No options have been granted through December 31,2005 under this plan.  In September 2000,the Corporation established the 2000 Employee Stock Option Plan (“2000 EmployeePlan”) and the Amended and Restated 2000 Director Stock Option Plan (“2000Director Plan”).  In May 2002,shareholders of the Corporation approved amendments to both plans to increasethe total shares reserved for issuance under both of the 2000 plans from2,700,000 to 4,350,000 shares of the Corporation’s common stock (from 2,500,000to 4,000,000 shares under the 2000 Employee Plan and from 200,000 to 350,000shares under the 2000 Director Plan).  In1994, and as subsequently amended, the Corporation established the Mack-CaliEmployee Stock Option Plan (“Employee Plan”) and the Mack-Cali Director StockOption Plan (“Director Plan”) under which a total of 5,380,188 shares (subjectto adjustment) of the Corporation’s common stock had been reserved for issuance(4,980,188 shares under the Employee Plan and 400,000 shares under the DirectorPlan).  As the Employee Plan and DirectorPlan expired in 2004, stock options may no longer be issued under thoseplans.  Stock options granted under theEmployee Plan in 1994 and 1995 became exercisable over a three-yearperiod.  Stock options granted under the2000 Employee Plan and those options granted subsequent to 1995 under theEmployee Plan become exercisable over a five-year period.  All stock options granted under both the 2000Director Plan and Director Plan become exercisable in one year.  All options were granted at the fair marketvalue at the dates of grant and have terms of ten years.  As of December 31, 2005 and December 31,2004, the stock options outstanding had a weighted average remainingcontractual life of approximately 5.7 and 6.5 years, respectively.

 

97

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Information regarding the Corporation’s stock optionplans is summarized below:

 
| ** **                                                    | ** ** | **Shares Under Options** | ** ** | **Weighted Average   Exercise Price** | ** ** |
|---------------------------------------------------------------|------------|--------------------------|------------|---------------------------------------|------------|
| Outstanding  at January 1, 2003                          |       | 3,585,930                |       | $                                     | 32.19      |   |
| Granted                                                       |       | 954,800                  |       | $                                     | 28.50      |   |
| Exercised                                                     |       | (1,421,455               | )          | $                                     | 33.21      |   |
| Lapsed or  canceled                                           |       | (129,140                 | )          | $                                     | 30.54      |   |
| Outstanding  at December 31, 2003                        |       | 2,990,135                |       | $                                     | 30.56      |   |
| Granted                                                       |       | 10,000                   |       | $                                     | 38.07      |   |
| Exercised                                                     |       | (1,250,864               | )          | $                                     | 32.40      |   |
| Lapsed or  canceled                                           |       | (45,640                  | )          | $                                     | 28.49      |   |
| Outstanding  at December 31, 2004                        |       | 1,703,631                |       | $                                     | 29.31      |   |
| Granted                                                       |       | 5,000                    |       | $                                     | 45.47      |   |
| Exercised                                                     |       | (574,506                 | )          | $                                     | 28.92      |   |
| Lapsed or  canceled                                           |       | (50,540                  | )          | $                                     | 28.60      |   |
| Outstanding  at December 31, 2005 ($24.63 – $45.47) |       | 1,083,585                |       | $                                     | 29.63      |   |
| Options  exercisable at December 31, 2004                |       | 1,048,691                |       | $                                     | 29.67      |   |
| Options  exercisable at December 31, 2005                |       | 782,905                  |       | $                                     | 29.96      |   |
| Available  for grant at December 31, 2004                |       | 4,728,358                |       |                                  |       |
| Available  for grant at December 31, 2005                |       | 4,590,098                |       |                                  |       |

 

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

 
| ** **               | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|--------------------------|------------|----------|------------|----------|------------|----------|------------|
| Expected life (in years) |       | 6        |       | 6        |       | 6        |       |
| Risk-free interest rate  |       | 3.97     | %          | 3.74     | %          | 3.65     | %          |
| Volatility               |       | 15.00    | %          | 19.50    | %          | 14.02    | %          |
| Dividend yield           |       | 5.54     | %          | 6.65     | %          | 8.85     | %          |

 

The OperatingPartnership recognized stock options expense of $448, $415 and $189 for theyears ended December 31, 2005, 2004 and 2003, respectively.

 

###### **STOCK WARRANTS**

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

 
| ** **                             | ** ** | **Shares Under Warrants** | ** ** | **Weighted Average   Exercise Price** | ** ** |
|----------------------------------------|------------|---------------------------|------------|---------------------------------------|------------|
| Outstanding  at January 1, 2003   |       | 642,476                   |       | $                                     | 36.49      |   |
| Exercised                              |       | (443,226                  | )          | $                                     | 37.41      |   |
| Lapsed or  canceled                    |       | (50,000                   | )          | $                                     | 38.75      |   |
| Outstanding  at December 31, 2003 |       | 149,250                   |       | $                                     | 33.00      |   |
| Exercised                              |       | (149,250                  | )          | $                                     | 33.00      |   |
| Outstanding  at December 31, 2004 |       | —                    |       | —                                |       |

 

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**STOCK COMPENSATION**

The Corporation has granted stock awards to officers, certain other employees,and non-employee members of the Board of Directors of the Corporation, whichallow the holders to each receive a certain amount of shares of the Corporation’scommon stock generally over a one to five-year vesting period.  Certain Restricted Stock Awards arecontingent upon the Corporation meeting certain performance and/or stock priceappreciation objectives.  All RestrictedStock Awards provided to the officers and certain other employees were grantedunder the 2000 Employee Plan and the Employee Plan. Restricted Stock Awardsgranted to directors were granted under the 2000 Director Plan.

 

Information regarding the Restricted Stock Awards is summarized below:

 
| ** **                            | ** ** | **Shares** | ** ** |
|---------------------------------------|------------|------------|------------|
| Outstanding at January 1, 2003   |       | 153,736    |       |
| Granted (a)                           |       | 225,549    |       |
| Vested                                |       | (97,916    | )          |
| Canceled                              |       | (500       | )          |
| Outstanding at December 31, 2003 |       | 280,869    |       |
| Granted (b)                           |       | 47,056     |       |
| Vested                                |       | (109,938   | )          |
| Canceled                              |       | (19,284    | )          |
| Outstanding at December 31, 2004 |       | 198,703    |       |
| Granted (c)                           |       | 165,660    |       |
| Vested                                |       | (109,419   | )          |
| Canceled                              |       | (8,000     | )          |
|                                  |       |       |       |
| Outstanding at December 31, 2005 |       | 246,944    |       |

 

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

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

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

(b)         Included in the 47,056 RestrictedStock Awards granted in 2004 were 34,056 awards granted to the Corporation’sfour executive officers, Mitchell E. Hersh, Barry Lefkowitz, Roger W. Thomasand Michael Grossman.

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

 

###### **DEFERRED STOCK COMPENSATION PLAN FOR DIRECTORS**

The Deferred Compensation Plan for Directors, which commenced January 1,1999, allows non-employee directors of the Corporation to elect to defer up to100 percent of their annual retainer fee into deferred stock units.  The deferred stock units are convertible intoan equal number of shares of common stock upon the directors’ termination ofservice from the Board of Directors or a change in control of the Corporation,as defined in the plan.  Deferred stockunits are credited to each director quarterly using the closing price of theCorporation’s common stock on the applicable dividend record date for therespective quarter.  Each participatingdirector’s account is also credited for an equivalent amount of deferred stockunits based on the dividend rate for each quarter.

 

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

 

**LIMTED PARTNERS CAPITAL:**

 

##### **SERIES B PREFERRED UNITS**

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

 

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

 

On June 13, 2005, theOperating Partnership caused the mandatory conversion (the “Conversion”) of all215,018 outstanding Series B Preferred Units into 6,205,425.72 CommonUnits.  Each Series B Preferred Unitwas converted into whole and fractional Common Units equal to (x) the $1,000stated value, divided by (y) the conversion price of $34.65.  A description of the rights, preferences andprivileges of the Common Units is set forth below.

 

###### **COMMON UNITS**

Certain individuals and entities own common units in the OperatingPartnership.  A common unit and a shareof common stock of the Corporation have substantially the same economiccharacteristics in as much as they effectively share equally in the net incomeor loss of the Operating Partnership. Common units are redeemable by the common unitholders at their option,subject to certain restrictions, on the basis of one common unit for either oneshare of common stock or cash equal to the fair market value of a share at thetime of the redemption.  The Corporationhas the option to deliver shares of common stock in exchange for all or anyportion of the cash requested.  Thecommon unitholders may not put the units for cash to the Corporation or theOperating Partnership.  When a unitholderredeems a common unit for common stock of the Corporation, limited partners’capital is reduced and the General Partner’s capital is increased.

 

As of December 31,2005, 2004 and 2003, the Operating Partnership had 13,650,439, 7,616,447 and7,795,498 common units outstanding, respectively.

 

###### **EARNINGS PER UNIT**

Basic EPU excludesdilution and is computed by dividing net income available to common unitholdersby the weighted average number of units outstanding for the period.  Diluted EPU reflects the potential dilutionthat could occur if securities or other contracts to issue common units were exercisedor converted into common units.

 

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

 
| ** **                                                         | ** ** | **Year Ended December 31,** | ** ** |
|--------------------------------------------------------------------|------------|----------------------------------|------------|
| **Computation of Basic EPU**                                       | ** ** | **2005**                         | ** ** | **2004** | ** ** | **2003** | ** ** |
| Income from  continuing operations                                 |       | $                                | 109,599    |   | $ | 120,268 |   | $ | 161,372 |   |
| Deduct:  Preferred unit distributions                              |       | (5,909                           | )          | (17,636 | ) | (17,340 | ) |
| Income from  continuing operations available to common unitholders |       | 103,690                          |       | 102,632 |   | 144,032 |   |
| Income from  discontinued operations                               |       | 8,520                            |       | 10,722 |   | 16,454 |   |
| Net income  available to common unitholders                        |       | $                                | 112,210    |   | $ | 113,354 |   | $ | 160,486 |   |
|                                                               |       |                             |       |   |   |   |   |
| Weighted  average common units                                     |       | 73,729                           |       | 68,110 |   | 65,526 |   |
|                                                               |       |                             |       |   |   |   |   |
| **Basic  EPU:**                                                    | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** |
| Income from  continuing operations                                 |       | $                                | 1.41       |   | $ | 1.50 |   | $ | 2.20 |   |
| Income from  discontinued operations                               |       | 0.11                             |       | 0.16 |   | 0.25 |   |
| Net income  available to common unitholders                        |       | $                                | 1.52       |   | $ | 1.66 |   | $ | 2.45 |   |

 
| ** **                                                         | ** ** | **Year Ended December 31,** | ** ** |
|--------------------------------------------------------------------|------------|----------------------------------|------------|
| **Computation of Diluted EPU**                                     | ** ** | **2005**                         | ** ** | **2004** | ** ** | **2003** | ** ** |
| Income from  continuing operations available to common unitholders |       | $                                | 103,690    |   | $ | 102,632 |   | $ | 144,032 |   |
| Income from  discontinued operations for diluted earnings per unit |       | 8,520                            |       | 10,722 |   | 16,454 |   |
| Net income  available to common unitholders                        |       | $                                | 112,210    |   | $ | 113,354 |   | $ | 160,486 |   |
|                                                               |       |                             |       |   |   |   |   |
| Weighted  average common units                                     |       | 74,189                           |       | 68,743 |   | 65,980 |   |
|                                                               |       |                             |       |   |   |   |   |
| **Diluted  EPU:**                                                  | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** |
| Income from  continuing operations                                 |       | $                                | 1.40       |   | $ | 1.49 |   | $ | 2.18 |   |
| Income from  discontinued operations                               |       | 0.11                             |       | 0.16 |   | 0.25 |   |
| Net income  available to common unitholders                        |       | $                                | 1.51       |   | $ | 1.65 |   | $ | 2.43 |   |

 

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

 
| ** **         | ** **               | **Year Ended December 31,** | ** ** |
|--------------------|--------------------------|----------------------------------|------------|
| ** **         | ** **               | **2005**                         | ** ** | **2004** | ** ** | **2003** | ** ** |
| Basic              | EPU units                |                             | 73,729     |   | 68,110 |   | 65,526 |   |
| Add:               | Stock  options           |                             | 401        |   | 569 |   | 436 |   |
|               | Restricted  Stock Awards |                             | 59         |   | 58 |   | 10 |   |
|               | Stock  Warrants          |                             | —     |   | 6 |   | 8 |   |
| Diluted EPU  Units |                     | 74,189                           |       | 68,743 |   | 65,980 |   |

 

Not included inthe computations of diluted EPU were 1,507, 0, and 738,003 stock options and1,530,105, 6,205,426 and 6,219,001 Series B Preferred Units, on an asconverted basis into common units, as such securities were anti-dilutive duringthe years ended December 31, 2005, 2004 and 2003, respectively.  Unvested restricted stock outstanding as of December 31,2005, 2004 and 2003 were 246,944, 198,703 and 280,869, respectively.

 

**12.****       CONSOLIDATED JOINTVENTURES**

 

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

 

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

 

**13.****       EMPLOYEE BENEFIT 401(k)PLAN**

 

All employees ofthe Corporation who meet certain minimum age and period of service requirementsare eligible to participate in a 401(k) defined contribution plan (the “401(k)Plan”).  The 401(k) Plan allows eligibleemployees to defer up to 15 percent of their annual compensation, subject to certainlimitations imposed by federal law.  Theamounts contributed by employees are immediately vested andnon-forfeitable.  The Corporation, atmanagement’s discretion, may match employee contributions and/or makediscretionary contributions.  Total expenserecognized by the Operating Partnership for the years ended December 31,2005, 2004 and 2003 was $400, $400 and $336, respectively.

 

**14.****       DISCLOSURE OF FAIR VALUEOF FINANCIAL INSTRUMENTS**

 

The followingdisclosure of estimated fair value was determined by management using availablemarket information and appropriate valuation methodologies.  However, considerable judgment is necessaryto interpret market data and develop estimated fair value.  Accordingly, the estimates presented hereinare not necessarily indicative of the amounts the Operating Partnership couldrealize on disposition of the financial instruments at December 31, 2005and 2004.  The use of different marketassumptions and/or estimation methodologies may have a material effect on theestimated fair value amounts.

 

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

 

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

 

Disclosure about fair value of financial instruments is based onpertinent information available to management as of December 31, 2005 and2004.  Although management is not awareof any factors that would significantly affect the fair value amounts, suchamounts have not been comprehensively revalued for purposes of these financialstatements since December 31, 2005 and current estimates of fair value maydiffer significantly from the amounts presented herein.

 

**15.****       COMMITMENTS ANDCONTINGENCIES**

 

###### **TAX ABATEMENT AGREEMENTS**

##### **Harborside FinancialCenter**

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

 

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

 

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

 

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The 101 Hudson Street agreement commenced in1991 for a term of 15 years and expires in 2006.  The PILOT currently provides for the paymentof a minimum annual service charge of approximately $4,193, subject to certainadjustments as provided in the PILOT agreement. The PILOT totaled $3,518 for the period of time during the year ended December 31,2005 for which the Operating Partnership owned the property.

 

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

 

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

 

##### **LITIGATION**

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

 

**GROUND LEASE AGREEMENTS**

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

 
| **Year**           | ** ** | **Amount** | ** ** |
|--------------------|------------|------------|------------|
| 2006               |       | $          | 530        |   |
| 2007               |       | 528        |       |
| 2008               |       | 506        |       |
| 2009               |       | 510        |       |
| 2010               |       | 510        |       |
| 2011 through  2080 |       | 19,632     |       |
|               |       |       |       |
| Total              |       | $          | 22,216     |   |

 

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

 

###### **OTHER**

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

 

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OperatingPartnership is generally required to use commercially reasonable efforts toprevent any sale, transfer or other disposition of the subject properties fromresulting in the recognition of built-in gain to the appropriate Mack Group,Robert Martin Group, Cali Group members or the specific certain other commonunitholders.  74 of our properties, withan aggregate net book value of approximately $667.7 million, have lapsedrestrictions and are subject to these conditions.

 

**16.****       TENANT LEASES**

 

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

 

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

 
| **Year**            | ** ** | **Amount** | ** ** |
|---------------------|------------|------------|------------|
| 2006                |       | $          | 527,783    |   |
| 2007                |       | 500,305    |       |
| 2008                |       | 448,527    |       |
| 2009                |       | 398,318    |       |
| 2010                |       | 346,888    |       |
| 2011 and thereafter |       | 1,044,254  |       |
|                |       |       |       |
| Total               |       | $          | 3,266,075  |   |

 

**17.****       SEGMENT REPORTING**

 

The Operating Partnership operates in one business segment - realestate.  The Operating Partnershipprovides leasing, management, acquisition, development, construction andtenant-related services for its portfolio. The Operating Partnership does not have any foreign operations.  The accounting policies of the segments arethe same as those described in Note 2.

 

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

 

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

 
| ** **                                                | ** ** | **Total Segment** | ** ** | **Corporate & Other (d)** | ** ** | **Total   Operating   Partnership** | ** ** |
|-----------------------------------------------------------|------------|-------------------|------------|------------------------------------|------------|-------------------------------------|------------|
| **Total revenues:**                                       |       |              |       |                               |       |                                |       |
| 2005                                                      |       | $                 | 640,656    |                               | $          | 2,749                               |       | $ | 643,405 |   |
| 2004                                                      |       | 573,868           |       | 3,881                              |       | 577,749                             |       |
| 2003                                                      |       | 554,003           |       | 4,921                              |       | 558,924                             |       |
|                                                      |       |              |       |                               |       |                                |       |
| **Total operating and interest expenses (a):**            |       |              |       |                               |       |                                |       |
| 2005                                                      |       | $                 | 227,696    |                               | $          | 150,949                             |       | $ | 378,645 | (e) |
| 2004                                                      |       | 184,504           |       | 141,985                            |       | 326,489                             | (f)        |
| 2003                                                      |       | 173,830           |       | 147,952                            |       | 321,782                             | (g)        |
|                                                      |       |              |       |                               |       |                                |       |
| **Equity in earnings of unconsolidated joint  ventures:** |       |              |       |                               |       |                                |       |
| 2005                                                      |       | $                 | 248        |                               | $          | —                              |       | $ | 248 |   |
| 2004                                                      |       | (3,886            | )          | —                             |       | (3,886                              | )          |
| 2003                                                      |       | 13,480            |       | —                             |       | 13,480                              |       |
|                                                      |       |              |       |                               |       |                                |       |
| **Net operating income (b):**                             |       |              |       |                               |       |                                |       |
| 2005                                                      |       | $                 | 413,208    |                               | $          | (148,200                            | )          | $ | 265,008 | (e) |
| 2004                                                      |       | 385,478           |       | (138,104                           | )          | 247,374                             | (f)        |
| 2003                                                      |       | 393,653           |       | (143,031                           | )          | 250,622                             | (g)        |
|                                                      |       |              |       |                               |       |                                |       |
| **Total assets:**                                         |       |              |       |                               |       |                                |       |
| 2005                                                      |       | $                 | 4,097,098  |                               | $          | 150,404                             |       | $ | 4,247,502 |   |
| 2004                                                      |       | 3,809,320         |       | 40,845                             |       | 3,850,165                           |       |
|                                                      |       |              |       |                               |       |                                |       |
| **Total long-lived assets (c):**                          |       |              |       |                               |       |                                |       |
| 2005                                                      |       | $                 | 3,921,536  |                               | $          | 2,066                               |       | $ | 3,923,602 |   |
| 2004                                                      |       | 3,663,618         |       | 4,176                              |       | 3,667,794                           |       |

 

----

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

(b)         Net operating incomerepresents total revenues less total operating and interest expenses [asdefined in Note (a)], plus equity in earnings (loss) of unconsolidated jointventures, for the period.

(c)          Long-lived assets arecomprised of net investment in rental property, unbilled rents receivable andinvestments in unconsolidated joint ventures.

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

(e)          Excludes $155,370 ofdepreciation and amortization.

(f)            Excludes $127,826 ofdepreciation and amortization.

(g)         Excludes $113,202 ofdepreciation and amortization.

 

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**18.****       RELATED PARTYTRANSACTIONS**

 

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

 

The OperatingPartnership has conducted business with certain entities (“RMC Entity” or “RMCEntities”), whose principals include Timothy M. Jones, Martin S. Berger andRobert F. Weinberg, each of whom are affiliated with the Operating Partnershipas the former president of the Corporation, a current member of the Board ofDirectors of the Corporation and a former member of the Board of Directors ofthe Corporation, respectively.  Inconnection with the Operating Partnership’s acquisition of 65 Class Aproperties from The Robert Martin Company (“Robert Martin”) on January 31,1997, as subsequently modified, the Operating Partnership granted Robert Martinthe right to designate one seat on the Corporation’s Board of Directors (“RMBoard Seat”), which right has since expired. Robert Martin designated Martin S. Berger and Robert F. Weinberg tojointly share the RM Board Seat, as follows: Mr. Weinberg served as amember of the Board of Directors of the Corporation from 1997 until December 1,1998, at which time Mr. Weinberg resigned and Mr. Berger wasappointed to serve in such capacity.  Mr. Bergerserved as a member of the Board of Directors of the Corporation from December 1,1998 until March 6, 2001, at which time Mr. Berger resigned and Mr. Weinbergwas appointed to serve in such capacity until the Corporation’s 2003 annualmeeting of stockholders.  The Corporationelected to nominate for re-election to its Board of Directors Mr. Bergerat the Corporation’s 2003 annual meeting of stockholders.  Mr. Berger was elected to the Board ofDirectors of the Corporation and Mr. Berger and Mr. Weinberg haveagreed that the seat will be rotated among Mr. Berger and Mr. Weinbergannually at the time of each annual meeting of stockholders.  Mr. Berger currently serves in thiscapacity.  Upon the death of Mr. Bergeror Mr. Weinberg, the surviving person shall solely fill the remainder ofthe term of the RM Board Seat.  Suchbusiness was as follows:

 

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

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

 

Mr. Bergerholds a 24 percent interest, acts as chairman and chief executive officer, Mr. Weinbergalso holds a 24 percent interest and is a director, and W. Mack holds a ninepercent interest and is a director of City and Suburban Federal Savings Bankand/or one of its affiliates, which leases a total of 15,879 square feet ofspace at two of the Operating Partnership’s office properties, comprised of3,037 square feet scheduled to expire in June 2008 and 12,842 square feetscheduled to expire in April 2013. As of February 13, 2004, City and Suburban assigned its lease withrespect to 3,037 square feet of office space to an unaffiliated third party andhas no continuing obligations under such lease. The Operating Partnership recognized $396, $398 and $429 in revenueunder the leases for the years ended December 31, 2005, 2004 and 2003,respectively, and had no accounts receivable from the company as of December 31,2005 and 2004.

 

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

 

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

 

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

 

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

 

**19.****       IMPACT OFRECENTLY-ISSUED ACCOUNTING STANDARDS**

 

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

In October 2004, the FASB issued SFAS No. 123R (revised2004), *“Share-Based Payment”* (“SFAS 123R”).  SFAS 123R requires companies to categorizeshare-based payments as either liability or equity awards.  For liability awards, companies willremeasure the award at fair value at each balance sheet date until the award issettled.  Equity classified awards aremeasured at the grant-date fair value and are not remeasured.  SFAS 123R will be effective for annualperiods beginning after June 15, 2005. Awards issued, modified, or settled after the effective date will bemeasured and recorded in accordance with SFAS 123R.  The Operating Partnership does not expectthat the implementation of this standard will have a material effect on theOperating Partnership’s consolidated financial position or results ofoperations.

 

**SFAS No. 153,***Accounting for Non-monetary Transactions*

In December 2004,the FASB issued SFAS No. 153, *“Accounting forNon-monetary Transactions”* (“SFAS 153”).  SFAS 153 requires non-monetary exchanges tobe accounted for at fair value, recognizing any gain or loss, if thetransactions meet a commercial-substance criterion and fair value isdeterminable.  SFAS No. 153 iseffective for non-monetary transactions occurring in fiscal years beginningafter June 15, 2005.  The OperatingPartnership does not expect that the implementation of this standard will havea material effect on the Operating Partnership’s consolidated financialposition or results of operations.

 

**Emerging Issues Task Force (“EITF”) Issue No. 04-5,***Determining Whether aGeneral Partner, or the General Partners as a Group, Controls a LimitedPartnership or Similar Entity When the Limited Partners Have Certain Rights*Atits June 2005 meeting, the EITF reached a consensus that a sole generalpartner is presumed to control a limited partnership (or similar entity like anLLC) and should consolidate the limited partnership unless one of the followingtwo conditions exist:

 

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

 

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

 

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

 

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

Issuedin March 2005, FIN 47 clarifies that the term *conditionalasset retirement obligation* as used in FASB Statement No. 143, *Accounting for Asset Retirement Obligations*(“SFAS No. 143”),refers to a legal obligation to perform an asset retirement activity in whichthe timing and/or method of settlement are conditional on a future event thatmay or may not be within the control of the entity.  The obligation to perform the assetretirement activity is unconditional even though uncertainty exists about thetiming and/or method of settlement. Thus, the timing and/or method of settlement may be conditional on afuture event.  Accordingly, an entity isrequired to recognize a liability for the fair value of a conditional assetretirement obligation if the fair value of the liability can be reasonablyestimated.  The fair value of a liabilityfor the conditional asset retirement obligation should be recognized whenincurred – generally upon acquisition, construction, or development and/orthrough the normal operation of the asset. Uncertainty about the timing and/or method of settlement of aconditional asset retirement obligation should be factored into the measurementof the liability when sufficient information exists.  SFAS No. 143 acknowledges that in somecases, sufficient information may not be available to reasonably estimate thefair value of an asset retirement obligation. FIN 47 also clarifies when an entity would have sufficient informationto reasonably estimate the fair value of an asset retirement obligation.  FIN 47 is effective for the year ended December 31,2005 and did not have a material effect on the Operating Partnership’sconsolidated financial position or results of operations for 2005.

 

108

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**20.****       CONDENSED QUARTERLYFINANCIAL INFORMATION *(unaudited**)***

 

The following summarizes the condensed quarterlyfinancial information for the Operating Partnership:

 
| **Quarter Ended 2005:**                                                                        | ** ** | **December 31** | ** ** | **September 30** | ** ** | **June 30** | ** ** | **March 31** | ** ** |
|------------------------------------------------------------------------------------------------|------------|----------------------|------------|-----------------------|------------|------------------|------------|-------------------|------------|
| Total  revenues                                                                                |       | $                    | 163,346    |                  | $          | 163,968          |       | $                 | 163,064    |   | $ | 153,027 |   |
| Operating  and other expenses                                                                  |       | 59,407               |       | 59,771                |       | 55,469           |       | 52,427            |       |
| General and  administrative                                                                    |       | 9,245                |       | 8,109                 |       | 8,310            |       | 7,426             |       |
| Depreciation  and amortization                                                                 |       | 40,502               |       | 40,665                |       | 38,450           |       | 35,753            |       |
| Interest  expense                                                                              |       | 30,418               |       | 30,158                |       | 30,363           |       | 28,398            |       |
| Interest  income                                                                               |       | (364                 | )          | (308                  | )          | (120             | )          | (64               | )          |
| Total  expenses                                                                                |       | 139,208              |       | 138,395               |       | 132,472          |       | 123,940           |       |
| Income from  continuing operations before equity in earnings of unconsolidated joint  ventures |       | 24,138               |       | 25,573                |       | 30,592           |       | 29,087            |       |
| Minority  interest in consolidated joint ventures                                              |       | —               |       | —                |       | —           |       | (74               | )          |
| Equity in  earnings of unconsolidated joint ventures, net                                      |       | (304                 | )          | 322                   |       | 542              |       | (312              | )          |
| Gain on sale  of investment in unconsolidated joint ventures                                   |       | —               |       | —                |       | —           |       | 35                |       |
| Income from  continuing operations                                                             |       | 23,834               |       | 25,895                |       | 31,134           |       | 28,736            |       |
| Discontinued  operations:                                                                      |       |                 |       |                  |       |             |       |              |       |
| Income from  discontinued operations                                                           |       | (181                 | )          | (191                  | )          | 1,561            |       | 1,809             |       |
| Realized  gains (losses) and unrealized losses on disposition of rental property, net          |       | (5,556               | )          | —                |       | 11,975           |       | (897              | )          |
| Total discontinued  operations, net                                                            |       | (5,737               | )          | (191                  | )          | 13,536           |       | 912               |       |
| Net income                                                                                     |       | 18,097               |       | 25,704                |       | 44,670           |       | 29,648            |       |
| Preferred  unit distributions                                                                  |       | (500                 | )          | (500                  | )          | (500             | )          | (4,409            | )          |
| Net income  available to common unitholders                                                    |       | $                    | 17,597     |                  | $          | 25,204           |       | $                 | 44,170     |   | $ | 25,239 |   |
|                                                                                           |       |                 |       |                  |       |             |       |              |       |
| **Basic  earnings per unit:**                                                                  |       |                 |       |                  |       |             |       |              |       |
| Income from  continuing operations                                                             |       | $                    | 0.31       |                  | $          | 0.34             |       | $                 | 0.41       |   | $ | 0.36 |   |
| Discontinued  operations                                                                       |       | (0.08                | )          | (0.01                 | )          | 0.18             |       | 0.01              |       |
| Net income  available to common unitholders                                                    |       | $                    | 0.23       |                  | $          | 0.33             |       | $                 | 0.59       |   | $ | 0.37 |   |
|                                                                                           |       |                 |       |                  |       |             |       |              |       |
| **Diluted  earnings per unit:**                                                                |       |                 |       |                  |       |             |       |              |       |
| Income from  continuing operations                                                             |       | $                    | 0.31       |                  | $          | 0.34             |       | $                 | 0.40       |   | $ | 0.35 |   |
| Discontinued  operations                                                                       |       | (0.08                | )          | (0.01                 | )          | 0.18             |       | 0.01              |       |
| Net income  available to common unitholders                                                    |       | $                    | 0.23       |                  | $          | 0.33             |       | $                 | 0.58       |   | $ | 0.36 |   |
|                                                                                           |       |                 |       |                  |       |             |       |              |       |
| Distributions  declared per common unit                                                        |       | $                    | 0.63       |                  | $          | 0.63             |       | $                 | 0.63       |   | $ | 0.63 |   |

 

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| **Quarter Ended 2004:**                                                                        | ** ** | **December 31** | ** ** | **September 30** | ** ** | **June 30** | ** ** | **March 31** | ** ** |
|------------------------------------------------------------------------------------------------|------------|----------------------|------------|-----------------------|------------|------------------|------------|-------------------|------------|
| Total  revenues                                                                                |       | $                    | 149,069    |                  | $          | 147,618          |       | $                 | 141,678    |   | $ | 139,384 |   |
| Operating  and other expenses                                                                  |       | 49,492               |       | 47,166                |       | 45,068           |       | 44,720            |       |
| General and  administrative                                                                    |       | 9,117                |       | 7,562                 |       | 8,685            |       | 6,397             |       |
| Depreciation  and amortization                                                                 |       | 34,420               |       | 32,286                |       | 31,487           |       | 29,633            |       |
| Interest  expense                                                                              |       | 26,780               |       | 27,320                |       | 26,512           |       | 29,037            |       |
| Interest  income                                                                               |       | (328                 | )          | (99                   | )          | (220             | )          | (720              | )          |
| Total  expenses                                                                                |       | 119,481              |       | 114,235               |       | 111,532          |       | 109,067           |       |
| Income from  continuing operations before equity in earnings of unconsolidated joint  ventures |       | 29,588               |       | 33,383                |       | 30,146           |       | 30,317            |       |
| Equity in  earnings of unconsolidated joint ventures, net                                      |       | (4,463               | )          | (690                  | )          | 1,090            |       | 177               |       |
| Gain on sale  of investment in unconsolidated joint ventures                                   |       | —               |       | —                |       | —           |       | 720               |       |
| Income from  continuing operations                                                             |       | 25,125               |       | 32,693                |       | 31,236           |       | 31,214            |       |
| Discontinued  operations (net of minority interest):                                           |       |                 |       |                  |       |             |       |              |       |
| Income from  discontinued operations                                                           |       | 2,235                |       | 3,452                 |       | 2,813            |       | 2,948             |       |
| Realized  gains (losses) and unrealized losses on disposition of rental property, net          |       | 11,130               |       | —                |       | (11,856          | )          | —            |       |
| Total  discontinued operations, net                                                            |       | 13,365               |       | 3,452                 |       | (9,043           | )          | 2,948             |       |
| Net income                                                                                     |       | 38,490               |       | 36,145                |       | 22,193           |       | 34,162            |       |
| Preferred  unit distributions                                                                  |       | (4,409               | )          | (4,409                | )          | (4,409           | )          | (4,409            | )          |
| Net income  available to common unitholders                                                    |       | $                    | 34,081     |                  | $          | 31,736           |       | $                 | 17,784     |   | $ | 29,753 |   |
|                                                                                           |       |                 |       |                  |       |             |       |              |       |
| **Basic  earnings per unit:**                                                                  |       |                 |       |                  |       |             |       |              |       |
| Income from  continuing operations                                                             |       | $                    | 0.30       |                  | $          | 0.41             |       | $                 | 0.39       |   | $ | 0.40 |   |
| Discontinued  operations                                                                       |       | 0.20                 |       | 0.05                  |       | (0.13            | )          | 0.04              |       |
| Net income  available to common unitholders                                                    |       | $                    | 0.50       |                  | $          | 0.46             |       | $                 | 0.26       |   | $ | 0.44 |   |
|                                                                                           |       |                 |       |                  |       |             |       |              |       |
| **Diluted  earnings per unit:**                                                                |       |                 |       |                  |       |             |       |              |       |
| Income from  continuing operations                                                             |       | $                    | 0.30       |                  | $          | 0.41             |       | $                 | 0.39       |   | $ | 0.40 |   |
| Discontinued  operations                                                                       |       | 0.19                 |       | 0.05                  |       | (0.13            | )          | 0.04              |       |
| Net income  available to common unitholders                                                    |       | $                    | 0.49       |                  | $          | 0.46             |       | $                 | 0.26       |   | $ | 0.44 |   |
|                                                                                           |       |                 |       |                  |       |             |       |              |       |
| Distributions  declared per common unit                                                        |       | $                    | 0.63       |                  | $          | 0.63             |       | $                 | 0.63       |   | $ | 0.63 |   |

 

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**MACK-CALIREALTY, L.P.**

**REALESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION**

**December 31,2005**

***(dollars in thousands)***

 

**SCHEDULE III**

 
| ** **                    | ** ** | ** **       | ** ** | ** **   | ** ** | ** **                 | ** ** | **Initial Costs** | ** ** | **Costs   Capitalized  Subsequent  to Acquisition** | ** ** | **Gross Amount at Which   Carried at Close of   Period (a)** | ** ** | ** ** | ** **                      |
|-------------------------------|------------|------------------|------------|--------------|------------|----------------------------|------------|-------------------|------------|-----------------------------------------------------|------------|--------------------------------------------------------------|------------|------------|---------------------------------|
| **Property  Location (b)**    | ** ** | **Year   Built** | ** ** | **Acquired** | ** ** | **Related   Encumbrances** | ** ** | **Land**          | ** ** | **Building and   Improvements**                     | ** ** | ** **                                                   | **Land**   | ** ** | **Building and   Improvements** | ** ** | **Total** | ** ** | **Accumulated   Depreciation** | ** ** |
|                          |       |             |       |         |       |                       |       |              |       |                                                |       |                                                         |       |       |                            |   |   |   |   |   |   |
| **NEW JERSEY**                |       |             |       |         |       |                       |       |              |       |                                                |       |                                                         |       |       |                            |   |   |   |   |   |   |
| **Atlantic County**           |       |             |       |         |       |                       |       |              |       |                                                |       |                                                         |       |       |                            |   |   |   |   |   |   |
| ***Egg Harbor***              |       |             |       |         |       |                       |       |              |       |                                                |       |                                                         |       |       |                            |   |   |   |   |   |   |
| 100 Decadon Drive (O)         |       | 1987             |       | 1995         |       | —                     |       | 300               |       | 3,282                                               |       | 385                                                          |       | 300        |                            | 3,667 |   | 3,967 |   | 1,102 |   |
| 200 Decadon Drive (O)         |       | 1991             |       | 1995         |       | —                     |       | 369               |       | 3,241                                               |       | 519                                                          |       | 369        |                            | 3,760 |   | 4,129 |   | 1,039 |   |
|                          |       |             |       |         |       |                       |       |              |       |                                                |       |                                                         |       |       |                            |   |   |   |   |   |   |
| **Bergen County**             |       |             |       |         |       |                       |       |              |       |                                                |       |                                                         |       |       |                            |   |   |   |   |   |   |
| ***Fair Lawn***               |       |             |       |         |       |                       |       |              |       |                                                |       |                                                         |       |       |                            |   |   |   |   |   |   |
| 17-17 Rte 208 North (O)       |       | 1987             |       | 1995         |       | —                     |       | 3,067             |       | 19,415                                              |       | 2,320                                                        |       | 3,067      |                            | 21,735 |   | 24,802 |   | 6,486 |   |
| ***Fort Lee***                |       |             |       |         |       |                       |       |              |       |                                                |       |                                                         |       |       |                            |   |   |   |   |   |   |
| One Bridge Plaza (O)          |       | 1981             |       | 1996         |       | —                     |       | 2,439             |       | 24,462                                              |       | 3,810                                                        |       | 2,439      |                            | 28,272 |   | 30,711 |   | 6,955 |   |
| 2115 Linwood Avenue (O)       |       | 1981             |       | 1998         |       | —                     |       | 474               |       | 4,419                                               |       | 4,755                                                        |       | 474        |                            | 9,174 |   | 9,648 |   | 2,302 |   |
| ***Little Ferry***            |       |             |       |         |       |                       |       |              |       |                                                |       |                                                         |       |       |                            |   |   |   |   |   |   |
| 200 Riser Road (O)            |       | 1974             |       | 1997         |       | 9,644                      |       | 3,888             |       | 15,551                                              |       | 692                                                          |       | 3,888      |                            | 16,243 |   | 20,131 |   | 3,235 |   |
| ***Montvale***                |       |             |       |         |       |                       |       |              |       |                                                |       |                                                         |       |       |                            |   |   |   |   |   |   |
| 95 Chestnut Ridge Road (O)    |       | 1975             |       | 1997         |       | —                     |       | 1,227             |       | 4,907                                               |       | 718                                                          |       | 1,227      |                            | 5,625 |   | 6,852 |   | 1,273 |   |
| 135 Chestnut Ridge Road (O)   |       | 1981             |       | 1997         |       | —                     |       | 2,587             |       | 10,350                                              |       | 2,345                                                        |       | 2,587      |                            | 12,695 |   | 15,282 |   | 3,205 |   |
| ***Paramus***                 |       |             |       |         |       |                       |       |              |       |                                                |       |                                                         |       |       |                            |   |   |   |   |   |   |
| 15 East Midland Avenue (O)    |       | 1988             |       | 1997         |       | 20,600                     |       | 10,375            |       | 41,497                                              |       | 80                                                           |       | 10,375     |                            | 41,577 |   | 51,952 |   | 8,357 |   |
| 461 From Road (O)             |       | 1988             |       | 1997         |       | —                     |       | 13,194            |       | 52,778                                              |       | 243                                                          |       | 13,194     |                            | 53,021 |   | 66,215 |   | 10,671 |   |
| 650 From Road (O)             |       | 1978             |       | 1997         |       | 25,600                     |       | 10,487            |       | 41,949                                              |       | 5,863                                                        |       | 10,487     |                            | 47,812 |   | 58,299 |   | 10,382 |   |
| 140 East Ridgewood Avenue (O) |       | 1981             |       | 1997         |       | 16,100                     |       | 7,932             |       | 31,463                                              |       | 3,431                                                        |       | 7,932      |                            | 34,894 |   | 42,826 |   | 6,859 |   |
| 61 South Paramus Avenue (O)   |       | 1985             |       | 1997         |       | 20,800                     |       | 9,005             |       | 36,018                                              |       | 5,491                                                        |       | 9,005      |                            | 41,509 |   | 50,514 |   | 9,628 |   |
| ***Rochelle Park***           |       |             |       |         |       |                       |       |              |       |                                                |       |                                                         |       |       |                            |   |   |   |   |   |   |
| 120 Passaic Street (O)        |       | 1972             |       | 1997         |       | —                     |       | 1,354             |       | 5,415                                               |       | 102                                                          |       | 1,357      |                            | 5,514 |   | 6,871 |   | 1,118 |   |
| 365 West Passaic Street (O)   |       | 1976             |       | 1997         |       | 12,250                     |       | 4,148             |       | 16,592                                              |       | 3,082                                                        |       | 4,148      |                            | 19,674 |   | 23,822 |   | 4,758 |   |
| ***Upper Saddle River***      |       |             | ** ** | ** **   | ** ** | —                     | ** ** | ** **        | ** ** | ** **                                          | ** ** | ** **                                                   | ** ** | ** ** | ** **                      | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| 1 Lake Street (O)             |       | 1994             |       | 1997         |       | 35,550                     |       | 13,952            |       | 55,812                                              |       | 50                                                           |       | 13,952     |                            | 55,862 |   | 69,814 |   | 11,228 |   |
| 10 Mountainview Road (O)      |       | 1986             |       | 1998         |       | —                     |       | 4,240             |       | 20,485                                              |       | 2,049                                                        |       | 4,240      |                            | 22,534 |   | 26,774 |   | 4,356 |   |
| ***Woodcliff Lake***          |       |             |       |         |       |                       |       |              |       |                                                |       |                                                         |       |       |                            |   |   |   |   |   |   |
| 400 Chestnut Ridge Road (O)   |       | 1982             |       | 1997         |       | —                     |       | 4,201             |       | 16,802                                              |       | 5,080                                                        |       | 4,201      |                            | 21,882 |   | 26,083 |   | 4,235 |   |
| 470 Chestnut Ridge Road (O)   |       | 1987             |       | 1997         |       | —                     |       | 2,346             |       | 9,385                                               |       | 5                                                            |       | 2,346      |                            | 9,390 |   | 11,736 |   | 1,888 |   |
| 530 Chestnut Ridge Road (O)   |       | 1986             |       | 1997         |       | —                     |       | 1,860             |       | 7,441                                               |       | 3                                                            |       | 1,860      |                            | 7,444 |   | 9,304 |   | 1,497 |   |
| 300 Tice Boulevard (O)        |       | 1991             |       | 1996         |       | —                     |       | 5,424             |       | 29,688                                              |       | 3,174                                                        |       | 5,424      |                            | 32,862 |   | 38,286 |   | 8,045 |   |
| 50 Tice Boulevard (O)         |       | 1984             |       | 1994         |       | 19,100                     |       | 4,500             |       | —                                              |       | 27,427                                                       |       | 4,500      |                            | 27,427 |   | 31,927 |   | 15,945 |   |

 

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| ** **                    | ** ** | ** **      | ** ** | ** **   | ** ** | ** **                | ** ** | **Initial Costs** | ** ** | **Costs  Capitalized  Subsequent  to Acquisition** | ** ** | **Gross Amount at Which  Carried at Close of  Period (a)** | ** ** | ** ** | ** **                     |
|-------------------------------|------------|-----------------|------------|--------------|------------|---------------------------|------------|-------------------|------------|----------------------------------------------------|------------|------------------------------------------------------------|------------|------------|--------------------------------|
| **Property  Location (b)**    | ** ** | **Year  Built** | ** ** | **Acquired** | ** ** | **Related  Encumbrances** | ** ** | **Land**          | ** ** | **Building and  Improvements**                     | ** ** | ** **                                                 | **Land**   | ** ** | **Building and  Improvements** | ** ** | **Total** | ** ** | **Accumulated  Depreciation** | ** ** |
|                          |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| **Burlington  County**        |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| ***Burlington***              |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| 3 Terri Lane (F)              |       | 1991            |       | 1998         |       | —                    |       | 652               |       | 3,433                                              |       | 1,235                                                      |       | 658        |                           | 4,662 |   | 5,320 |   | 1,048 |   |
| 5 Terri Lane (F)              |       | 1992            |       | 1998         |       | —                    |       | 564               |       | 3,792                                              |       | 2,026                                                      |       | 569        |                           | 5,813 |   | 6,382 |   | 1,559 |   |
| ***Moorestown***              | ** ** | ** **      | ** ** | ** **   | ** ** | ** **                | ** ** | ** **        | ** ** | ** **                                         | ** ** | ** **                                                 | ** ** | ** ** | ** **                     | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| 2 Commerce Drive  (F)         |       | 1986            |       | 1999         |       | —                    |       | 723               |       | 2,893                                              |       | 95                                                         |       | 723        |                           | 2,988 |   | 3,711 |   | 454 |   |
| 101 Commerce  Drive (F)       |       | 1988            |       | 1998         |       | —                    |       | 422               |       | 3,528                                              |       | 437                                                        |       | 426        |                           | 3,961 |   | 4,387 |   | 788 |   |
| 102 Commerce  Drive (F)       |       | 1987            |       | 1999         |       | —                    |       | 389               |       | 1,554                                              |       | 193                                                        |       | 389        |                           | 1,747 |   | 2,136 |   | 263 |   |
| 201 Commerce  Drive (F)       |       | 1986            |       | 1998         |       | —                    |       | 254               |       | 1,694                                              |       | 338                                                        |       | 258        |                           | 2,028 |   | 2,286 |   | 480 |   |
| 202 Commerce  Drive (F)       |       | 1988            |       | 1999         |       | —                    |       | 490               |       | 1,963                                              |       | 350                                                        |       | 490        |                           | 2,313 |   | 2,803 |   | 379 |   |
| 1 Executive Drive  (F)        |       | 1989            |       | 1998         |       | —                    |       | 226               |       | 1,453                                              |       | 418                                                        |       | 228        |                           | 1,869 |   | 2,097 |   | 404 |   |
| 2 Executive Drive  (F)        |       | 1988            |       | 2000         |       | —                    |       | 801               |       | 3,206                                              |       | 463                                                        |       | 801        |                           | 3,669 |   | 4,470 |   | 650 |   |
| 101 Executive  Drive (F)      |       | 1990            |       | 1998         |       | —                    |       | 241               |       | 2,262                                              |       | 167                                                        |       | 244        |                           | 2,426 |   | 2,670 |   | 554 |   |
| 102 Executive  Drive (F)      |       | 1990            |       | 1998         |       | —                    |       | 353               |       | 3,607                                              |       | 195                                                        |       | 357        |                           | 3,798 |   | 4,155 |   | 812 |   |
| 225 Executive  Drive (F)      |       | 1990            |       | 1998         |       | —                    |       | 323               |       | 2,477                                              |       | 183                                                        |       | 326        |                           | 2,657 |   | 2,983 |   | 649 |   |
| 97 Foster Road  (F)           |       | 1982            |       | 1998         |       | —                    |       | 208               |       | 1,382                                              |       | 145                                                        |       | 211        |                           | 1,524 |   | 1,735 |   | 357 |   |
| 1507 Lancer Drive  (F)        |       | 1995            |       | 1998         |       | —                    |       | 119               |       | 1,106                                              |       | 43                                                         |       | 119        |                           | 1,149 |   | 1,268 |   | 239 |   |
| 1510 Lancer Drive  (F)        |       | 1998            |       | 1998         |       | —                    |       | 732               |       | 2,928                                              |       | 41                                                         |       | 735        |                           | 2,966 |   | 3,701 |   | 556 |   |
| 840 North Lenola  Road (F)    |       | 1995            |       | 1998         |       | —                    |       | 329               |       | 2,366                                              |       | 527                                                        |       | 333        |                           | 2,889 |   | 3,222 |   | 649 |   |
| 844 North Lenola  Road (F)    |       | 1995            |       | 1998         |       | —                    |       | 239               |       | 1,714                                              |       | 260                                                        |       | 241        |                           | 1,972 |   | 2,213 |   | 450 |   |
| 915 North Lenola  Road (F)    |       | 1998            |       | 2000         |       | —                    |       | 508               |       | 2,034                                              |       | 271                                                        |       | 508        |                           | 2,305 |   | 2,813 |   | 431 |   |
| 1245 North Church  Street (F) |       | 1998            |       | 2001         |       | —                    |       | 691               |       | 2,810                                              |       | 17                                                         |       | 691        |                           | 2,827 |   | 3,518 |   | 333 |   |
| 1247 North Church  Street (F) |       | 1998            |       | 2001         |       | —                    |       | 805               |       | 3,269                                              |       | 176                                                        |       | 805        |                           | 3,445 |   | 4,250 |   | 386 |   |
| 1256 North Church  (F)        |       | 1984            |       | 1998         |       | —                    |       | 354               |       | 3,098                                              |       | 481                                                        |       | 357        |                           | 3,576 |   | 3,933 |   | 899 |   |
| 224 Strawbridge  Drive (O)    |       | 1984            |       | 1997         |       | —                    |       | 766               |       | 4,335                                              |       | 3,208                                                      |       | 766        |                           | 7,543 |   | 8,309 |   | 2,496 |   |
| 228 Strawbridge  Drive (O)    |       | 1984            |       | 1997         |       | —                    |       | 766               |       | 4,334                                              |       | 2,208                                                      |       | 767        |                           | 6,541 |   | 7,308 |   | 1,328 |   |
| 232 Strawbridge  Drive (O)    |       | 1986            |       | 2004         |       | —                    |       | 1,521             |       | 7,076                                              |       | 1,473                                                      |       | 1,521      |                           | 8,549 |   | 10,070 |   | 207 |   |
| 2 Twosome Drive  (F)          |       | 2000            |       | 2001         |       | —                    |       | 701               |       | 2,807                                              |       | 18                                                         |       | 701        |                           | 2,825 |   | 3,526 |   | 329 |   |
| 30 Twosome Drive  (F)         |       | 1997            |       | 1998         |       | —                    |       | 234               |       | 1,954                                              |       | 64                                                         |       | 236        |                           | 2,016 |   | 2,252 |   | 446 |   |
| 31 Twosome Drive  (F)         |       | 1998            |       | 2001         |       | —                    |       | 815               |       | 3,276                                              |       | 102                                                        |       | 815        |                           | 3,378 |   | 4,193 |   | 416 |   |
| 40 Twosome Drive  (F)         |       | 1996            |       | 1998         |       | —                    |       | 297               |       | 2,393                                              |       | 245                                                        |       | 301        |                           | 2,634 |   | 2,935 |   | 594 |   |
| 41 Twosome Drive  (F)         |       | 1998            |       | 2001         |       | —                    |       | 605               |       | 2,459                                              |       | 12                                                         |       | 605        |                           | 2,471 |   | 3,076 |   | 307 |   |
| 50 Twosome Drive  (F)         |       | 1997            |       | 1998         |       | —                    |       | 301               |       | 2,330                                              |       | 89                                                         |       | 304        |                           | 2,416 |   | 2,720 |   | 548 |   |
| ***West  Deptford***          |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| 1451 Metropolitan  Drive (F)  |       | 1996            |       | 1998         |       | —                    |       | 203               |       | 1,189                                              |       | 30                                                         |       | 206        |                           | 1,216 |   | 1,422 |   | 265 |   |

 

112

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| ** **                                | ** ** | ** **      | ** ** | ** **   | ** ** | ** **                | ** ** | **Initial Costs** | ** ** | **Costs  Capitalized  Subsequent  to Acquisition** | ** ** | **Gross Amount at Which  Carried at Close of  Period (a)** | ** ** | ** ** | ** **                     |
|-------------------------------------------|------------|-----------------|------------|--------------|------------|---------------------------|------------|-------------------|------------|----------------------------------------------------|------------|------------------------------------------------------------|------------|------------|--------------------------------|
| **Property  Location (b)**                | ** ** | **Year  Built** | ** ** | **Acquired** | ** ** | **Related  Encumbrances** | ** ** | **Land**          | ** ** | **Building and  Improvements**                     | ** ** | ** **                                                 | **Land**   | ** ** | **Building and  Improvements** | ** ** | **Total** | ** ** | **Accumulated  Depreciation** | ** ** |
|                                      |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| **Essex County**                          |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| ***Millburn***                            |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| 150 J.F. Kennedy Parkway (O)              |       | 1980            |       | 1997         |       | —                    |       | 12,606            |       | 50,425                                             |       | 8,502                                                      |       | 12,606     |                           | 58,927 |   | 71,533 |   | 12,158 |   |
| ***Roseland***                            |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| 101 Eisenhower Parkway (O)                |       | 1980            |       | 1994         |       | —                    |       | 228               |       | —                                             |       | 15,156                                                     |       | 228        |                           | 15,156 |   | 15,384 |   | 8,837 |   |
| 103 Eisenhower Parkway (O)                |       | 1985            |       | 1994         |       | —                    |       | —            |       | —                                             |       | 14,353                                                     |       | 2,300      |                           | 12,053 |   | 14,353 |   | 6,440 |   |
| 105 Eisenhower Parkway (O)                |       | 2001            |       | 2001         |       | —                    |       | 4,430             |       | 42,898                                             |       | 4,342                                                      |       | 3,835      |                           | 47,835 |   | 51,670 |   | 6,880 |   |
|                                      |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| **Hudson County**                         |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| ***Jersey City***                         |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| Harborside Financial Center  Plaza 1 (O)  |       | 1983            |       | 1996         |       | —                    |       | 3,923             |       | 51,013                                             |       | 11,675                                                     |       | 3,923      |                           | 62,688 |   | 65,252 |   | 11,726 |   |
| Harborside Financial Center  Plaza 2 (O)  |       | 1990            |       | 1996         |       | 72,321                    |       | 17,655            |       | 101,546                                            |       | 13,096                                                     |       | 15,039     |                           | 117,258 |   | 132,297 |   | 27,122 |   |
| Harborside Financial Center  Plaza 3 (O)  |       | 1990            |       | 1996         |       | 72,321                    |       | 17,655            |       | 101,878                                            |       | 12,766                                                     |       | 15,040     |                           | 117,259 |   | 132,299 |   | 27,122 |   |
| Harborside Financial Center  Plaza 4A (O) |       | 2000            |       | 2000         |       | —                    |       | 1,244             |       | 56,144                                             |       | 8,567                                                      |       | 1,244      |                           | 64,711 |   | 65,955 |   | 9,503 |   |
| Harborside Financial Center  Plaza 5 (O)  |       | 2002            |       | 2002         |       | —                    |       | 6,218             |       | 170,682                                            |       | 54,352                                                     |       | 5,705      |                           | 225,547 |   | 231,252 |   | 18,384 |   |
| 101 Hudson Street (O)                     |       | 1992            |       | 2004         |       | —                    |       | 45,530            |       | 271,376                                            |       | 226                                                        |       | 45,530     |                           | 271,602 |   | 317,132 |   | 7,902 |   |
|                                      |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| **Mercer County**                         |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| ***Hamilton Township***                   |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| 100 Horizon Drive (F)                     |       | 1989            |       | 1995         |       | —                    |       | 205               |       | 1,676                                              |       | 738                                                        |       | 222        |                           | 2,397 |   | 2,619 |   | 577 |   |
| 200 Horizon Drive (F)                     |       | 1991            |       | 1995         |       | —                    |       | 205               |       | 3,027                                              |       | 824                                                        |       | 255        |                           | 3,801 |   | 4,056 |   | 947 |   |
| 300 Horizon Drive (F)                     |       | 1989            |       | 1995         |       | —                    |       | 379               |       | 4,355                                              |       | 1,361                                                      |       | 429        |                           | 5,666 |   | 6,095 |   | 1,630 |   |
| 500 Horizon Drive (F)                     |       | 1990            |       | 1995         |       | —                    |       | 379               |       | 3,395                                              |       | 1,256                                                      |       | 394        |                           | 4,636 |   | 5,030 |   | 1,175 |   |
| 600 Horizon Drive (F)                     |       | 2002            |       | 2002         |       | —                    |       | —            |       | 7,549                                              |       | 248                                                        |       | 282        |                           | 7,515 |   | 7,797 |   | 579 |   |
| ***Princeton***                           |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| 103 Carnegie Center (O)                   |       | 1984            |       | 1996         |       | —                    |       | 2,566             |       | 7,868                                              |       | 1,461                                                      |       | 2,566      |                           | 9,329 |   | 11,895 |   | 2,271 |   |
| 100 Overlook Center (O)                   |       | 1988            |       | 1997         |       | —                    |       | 2,378             |       | 21,754                                             |       | 2,074                                                      |       | 2,378      |                           | 23,828 |   | 26,206 |   | 5,265 |   |
| 5 Vaughn Drive (O)                        |       | 1987            |       | 1995         |       | —                    |       | 657               |       | 9,800                                              |       | 1,498                                                      |       | 657        |                           | 11,298 |   | 11,955 |   | 3,239 |   |

 

113

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| ** **                             | ** ** | ** **      | ** ** | ** **   | ** ** | ** **                | ** ** | **Initial Costs** | ** ** | **Costs  Capitalized  Subsequent  to Acquisition** | ** ** | **Gross Amount at Which  Carried at Close of  Period (a)** | ** ** | ** ** | ** **                     |
|----------------------------------------|------------|-----------------|------------|--------------|------------|---------------------------|------------|-------------------|------------|----------------------------------------------------|------------|------------------------------------------------------------|------------|------------|--------------------------------|
| **Property  Location (b)**             | ** ** | **Year  Built** | ** ** | **Acquired** | ** ** | **Related  Encumbrances** | ** ** | **Land**          | ** ** | **Building and  Improvements**                     | ** ** | ** **                                                 | **Land**   | ** ** | **Building and  Improvements** | ** ** | **Total** | ** ** | **Accumulated  Depreciation** | ** ** |
| ** **                             | ** ** | ** **      | ** ** | ** **   | ** ** | ** **                | ** ** | ** **        | ** ** | ** **                                         | ** ** | ** **                                                 | ** ** | ** ** | ** **                     | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Middlesex County**                   |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| ***East Brunswick***                   |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| 377 Summerhill Road (O)                |       | 1977            |       | 1997         |       | —                    |       | 649               |       | 2,594                                              |       | 374                                                        |       | 649        |                           | 2,968 |   | 3,617 |   | 586 |   |
| ***Piscataway***                       |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| 30 Knightsbridge Road,  Building 3 (O) |       | 1977            |       | 2004         |       | —                    |       | 1,030             |       | 7,269                                              |       | 24                                                         |       | 1,030      |                           | 7,293 |   | 8,323 |   | 288 |   |
| 30 Knightsbridge Road,  Building 4 (O) |       | 1977            |       | 2004         |       | —                    |       | 1,433             |       | 10,121                                             |       | 34                                                         |       | 1,433      |                           | 10,155 |   | 11,588 |   | 402 |   |
| 30 Knightsbridge Road,  Building 5 (O) |       | 1977            |       | 2004         |       | —                    |       | 2,979             |       | 21,035                                             |       | 561                                                        |       | 2,979      |                           | 21,596 |   | 24,575 |   | 834 |   |
| 30 Knightsbridge Road,  Building 6 (O) |       | 1977            |       | 2004         |       | —                    |       | 448               |       | 3,161                                              |       | 277                                                        |       | 448        |                           | 3,438 |   | 3,886 |   | 125 |   |
| ***Plainsboro***                       |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| 500 College Road East (O)              |       | 1984            |       | 1998         |       | —                    |       | 614               |       | 20,626                                             |       | 754                                                        |       | 614        |                           | 21,380 |   | 21,994 |   | 4,206 |   |
| ***South Brunswick***                  |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| 3 Independence Way (O)                 |       | 1983            |       | 1997         |       | —                    |       | 1,997             |       | 11,391                                             |       | 675                                                        |       | 1,997      |                           | 12,066 |   | 14,063 |   | 2,470 |   |
| ***Woodbridge***                       |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| 581 Main Street (O)                    |       | 1991            |       | 1997         |       | —                    |       | 3,237             |       | 12,949                                             |       | 20,250                                                     |       | 8,115      |                           | 28,321 |   | 36,436 |   | 5,487 |   |
|                                   |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| **Monmouth County**                    |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| ***Middletown***                       |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| 23 Main Street (O)                     |       | 1977            |       | 2005         |       | 33,500                    |       | 4,336             |       | 19,544                                             |       | 5,825                                                      |       | 4,336      |                           | 25,369 |   | 29,705 |   | 402 |   |
| 2 Paragon Way (O)                      |       | 1989            |       | 2005         |       | 4,470                     |       | 999               |       | 4,619                                              |       | 17                                                         |       | 999        |                           | 4,636 |   | 5,635 |   | 125 |   |
| 3 Paragon Way (O)                      |       | 1991            |       | 2005         |       | 5,968                     |       | 1,423             |       | 6,041                                              |       | 27                                                         |       | 1,423      |                           | 6,068 |   | 7,491 |   | 102 |   |
| 4 Paragon Way (O)                      |       | 2002            |       | 2005         |       | —                    |       | 1,961             |       | 8,827                                              |       | 12                                                         |       | 1,961      |                           | 8,839 |   | 10,800 |   | 234 |   |
| One River Center, Building 1 (O)       |       | 1983            |       | 2004         |       | —                    |       | 3,070             |       | 17,414                                             |       | 4,115                                                      |       | 3,054      |                           | 21,545 |   | 24,599 |   | 631 |   |
| One River Center, Building 2 (O)       |       | 1983            |       | 2004         |       | —                    |       | 2,468             |       | 15,043                                             |       | 529                                                        |       | 2,452      |                           | 15,588 |   | 18,040 |   | 385 |   |
| One River Center, Building 3 (O)       |       | 1984            |       | 2004         |       | —                    |       | 4,051             |       | 24,790                                             |       | 656                                                        |       | 4,024      |                           | 25,473 |   | 29,497 |   | 674 |   |
| 100 Willowbrook Road (O)               |       | 1988            |       | 2005         |       | 5,606                     |       | 1,264             |       | 5,573                                              |       | 26                                                         |       | 1,264      |                           | 5,599 |   | 6,863 |   | 109 |   |
| ***Neptune***                          |       |            |       |         |       |                      |       |              |       |                                               |       |                                                       |       |       |                           |   |   |   |   |   |   |
| 3600 Route 66 (O)                      |       | 1989            |       | 1995         |       | —                    |       | 1,098             |       | 18,146                                             |       | 1,459                                                      |       | 1,098      |                           | 19,605 |   | 20,703 |   | 4,694 |   |

 

114

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| ** **                 | ** **   | ** ** | ** **   | ** **   | ** **   | ** **       | ** **   | ** **         | ** **   | ** **        | ** **   | ** **          | ** **   | **Gross  Amount at Which** | ** **   | ** **        | ** **   |
|----------------------------|--------------|------------|--------------|--------------|--------------|------------------|--------------|--------------------|--------------|-------------------|--------------|---------------------|--------------|----------------------------|--------------|-------------------|--------------|
| ** **                 | ** **   | ** ** | ** **   | ** **   | ** **   | ** **       | ** **   | ** **         | ** **   | ** **        | ** **   | **Costs**           | ** **   | **Carried  at Close of**   | ** **   | ** **        | ** **   |
| ** **                 | ** **   | ** ** | ** **   | ** **   | ** **   | ** **       | ** **   | **Initial  Costs** | ** **   | **Capitalized**   | ** **   | **Period  (a)**     | ** **   | ** **                 | ** **   |
| ** **                 | ** **   | **Year**   | ** **   | ** **   | ** **   | **Related**      | ** **   | ** **         | ** **   | **Building  and** | ** **   | **Subsequent**      | ** **   | ** **                 | ** **   | **Building  and** | ** **   | ** ** | ** ** | **Accumulated** | ** ** |
| **Property Location (b)**  | ** **   | **Built**  | ** **   | **Acquired** | ** **   | **Encumbrances** | ** **   | **Land**           | ** **   | **Improvements**  | ** **   | **to  Acquisition** | ** **   | **Land**                   | ** **   | **Improvements**  | ** **   | **Total** | ** ** | **Depreciation** | ** ** |
| ** **                 | ** **   |       | ** **   | ** **   | ** **   | ** **       | ** **   | ** **         | ** **   | ** **        | ** **   | ** **          | ** **   | ** **                 | ** **   | ** **        | ** **   | ** ** | ** ** | ** ** | ** ** |
| ***Wall  Township***       | *** *** | * *   | *** *** | * *     | *** *** |             | *** *** |               | *** *** |              | *** *** |                | *** *** |                       | *** *** |              | *** *** |   | *** *** |   | *** *** |
| 1305 Campus  Parkway (O)   | ** **   | 1988       | ** **   | 1995         | ** **   | —           | ** **   | 335                | ** **   | 2,560             | ** **   | 129                 | ** **   | 335                        | ** **   | 2,689             | ** **   | 3,024 | ** ** | 698 | ** ** |
| 1325 Campus  Parkway (F)   | ** **   | 1988       | ** **   | 1995         | ** **   | —           | ** **   | 270                | ** **   | 2,928             | ** **   | 1,292               | ** **   | 270                        | ** **   | 4,220             | ** **   | 4,490 | ** ** | 1,293 | ** ** |
| 1340 Campus  Parkway (F)   | ** **   | 1992       | ** **   | 1995         | ** **   | —           | ** **   | 489                | ** **   | 4,621             | ** **   | 794                 | ** **   | 489                        | ** **   | 5,415             | ** **   | 5,904 | ** ** | 1,400 | ** ** |
| 1345 Campus  Parkway (F)   | ** **   | 1995       | ** **   | 1997         | ** **   | —           | ** **   | 1,023              | ** **   | 5,703             | ** **   | 1,587               | ** **   | 1,024                      | ** **   | 7,289             | ** **   | 8,313 | ** ** | 1,743 | ** ** |
| 1350 Campus  Parkway (O)   | ** **   | 1990       | ** **   | 1995         | ** **   | —           | ** **   | 454                | ** **   | 7,134             | ** **   | 1,157               | ** **   | 454                        | ** **   | 8,291             | ** **   | 8,745 | ** ** | 2,102 | ** ** |
| 1433 Highway 34  (F)       | ** **   | 1985       | ** **   | 1995         | ** **   | —           | ** **   | 889                | ** **   | 4,321             | ** **   | 794                 | ** **   | 889                        | ** **   | 5,115             | ** **   | 6,004 | ** ** | 1,232 | ** ** |
| 1320 Wyckoff  Avenue (F)   | ** **   | 1986       | ** **   | 1995         | ** **   | —           | ** **   | 255                | ** **   | 1,285             | ** **   | 68                  | ** **   | 255                        | ** **   | 1,353             | ** **   | 1,608 | ** ** | 334 | ** ** |
| 1324 Wyckoff  Avenue (F)   | ** **   | 1987       | ** **   | 1995         | ** **   | —           | ** **   | 230                | ** **   | 1,439             | ** **   | 198                 | ** **   | 230                        | ** **   | 1,637             | ** **   | 1,867 | ** ** | 477 | ** ** |
| ** **                 | ** **   |       | ** **   |         | ** **   |             | ** **   |               | ** **   |              | ** **   |                | ** **   |                       | ** **   |              | ** **   |   | ** ** |   | ** ** |
| **Morris  County**         | ** **   |       | ** **   |         | ** **   |             | ** **   |               | ** **   |              | ** **   |                | ** **   |                       | ** **   |              | ** **   |   | ** ** |   | ** ** |
| ***Florham  Park***        | *** *** | * *   | *** *** | * *     | *** *** |             | *** *** |               | *** *** |              | *** *** |                | *** *** |                       | *** *** |              | *** *** |   | *** *** |   | *** *** |
| 325 Columbia  Parkway (O)  | ** **   | 1987       | ** **   | 1994         | ** **   | —           | ** **   | 1,564              | ** **   | —            | ** **   | 14,605              | ** **   | 1,564                      | ** **   | 14,605            | ** **   | 16,169 | ** ** | 6,336 | ** ** |
| ***Morris  Plains***       | *** *** | * *   | *** *** | * *     | *** *** |             | *** *** |               | *** *** |              | *** *** |                | *** *** |                       | *** *** |              | *** *** |   | *** *** |   | *** *** |
| 250 Johnson Road  (O)      | ** **   | 1977       | ** **   | 1997         | ** **   | —           | ** **   | 2,004              | ** **   | 8,016             | ** **   | 1,406               | ** **   | 2,004                      | ** **   | 9,422             | ** **   | 11,426 | ** ** | 1,996 | ** ** |
| 201 Littleton  Road (O)    | ** **   | 1979       | ** **   | 1997         | ** **   | —           | ** **   | 2,407              | ** **   | 9,627             | ** **   | 858                 | ** **   | 2,407                      | ** **   | 10,485            | ** **   | 12,892 | ** ** | 2,218 | ** ** |
| ***Morris  Township***     | *** *** | * *   | *** *** | * *     | *** *** |             | *** *** |               | *** *** |              | *** *** |                | *** *** |                       | *** *** |              | *** *** |   | *** *** |   | *** *** |
| 412 Mt. Kemble  Avenue (O) | ** **   | 1985       | ** **   | 2004         | ** **   | —           | ** **   | 4,360              | ** **   | 33,167            | ** **   | 0                   | ** **   | 4,360                      | ** **   | 33,167            | ** **   | 37,527 | ** ** | 1,319 | ** ** |
| ***Parsippany***           | *** *** | * *   | *** *** | * *     | *** *** |             | *** *** |               | *** *** |              | *** *** |                | *** *** |                       | *** *** |              | *** *** |   | *** *** |   | *** *** |
| 4 Campus Drive  (O)        | ** **   | 1983       | ** **   | 2001         | ** **   | —           | ** **   | 5,213              | ** **   | 20,984            | ** **   | 1,022               | ** **   | 5,213                      | ** **   | 22,006            | ** **   | 27,219 | ** ** | 2,723 | ** ** |
| 6 Campus Drive  (O)        | ** **   | 1983       | ** **   | 2001         | ** **   | —           | ** **   | 4,411              | ** **   | 17,796            | ** **   | 1,586               | ** **   | 4,411                      | ** **   | 19,382            | ** **   | 23,793 | ** ** | 2,610 | ** ** |
| 7 Campus Drive  (O)        | ** **   | 1982       | ** **   | 1998         | ** **   | —           | ** **   | 1,932              | ** **   | 27,788            | ** **   | 107                 | ** **   | 1,932                      | ** **   | 27,895            | ** **   | 29,827 | ** ** | 5,498 | ** ** |
| 8 Campus Drive  (O)        | ** **   | 1987       | ** **   | 1998         | ** **   | —           | ** **   | 1,865              | ** **   | 35,456            | ** **   | 3,914               | ** **   | 1,865                      | ** **   | 39,370            | ** **   | 41,235 | ** ** | 7,956 | ** ** |
| 9 Campus Drive  (O)        | ** **   | 1983       | ** **   | 2001         | ** **   | —           | ** **   | 3,277              | ** **   | 11,796            | ** **   | 16,873              | ** **   | 5,842                      | ** **   | 26,104            | ** **   | 31,946 | ** ** | 4,587 | ** ** |
| 4 Century Drive  (O)       | ** **   | 1981       | ** **   | 2004         | ** **   | —           | ** **   | 1,787              | ** **   | 9,575             | ** **   | 607                 | ** **   | 1,787                      | ** **   | 10,182            | ** **   | 11,969 | ** ** | 243 | ** ** |
| 5 Century Drive  (O)       | ** **   | 1981       | ** **   | 2004         | ** **   | —           | ** **   | 1,762              | ** **   | 9,341             | ** **   | 112                 | ** **   | 1,762                      | ** **   | 9,453             | ** **   | 11,215 | ** ** | 235 | ** ** |
| 6 Century Drive  (O)       | ** **   | 1981       | ** **   | 2004         | ** **   | —           | ** **   | 1,289              | ** **   | 6,848             | ** **   | 179                 | ** **   | 1,289                      | ** **   | 7,027             | ** **   | 8,316 | ** ** | 174 | ** ** |
| 2 Dryden Way (O)           | ** **   | 1990       | ** **   | 1998         | ** **   | —           | ** **   | 778                | ** **   | 420               | ** **   | 13                  | ** **   | 778                        | ** **   | 433               | ** **   | 1,211 | ** ** | 94 | ** ** |
| 4 Gatehall Drive  (O)      | ** **   | 1988       | ** **   | 2000         | ** **   | —           | ** **   | 8,452              | ** **   | 33,929            | ** **   | 1,920               | ** **   | 8,452                      | ** **   | 35,849            | ** **   | 44,301 | ** ** | 5,204 | ** ** |
| 2 Hilton Court  (O)        | ** **   | 1991       | ** **   | 1998         | ** **   | —           | ** **   | 1,971              | ** **   | 32,007            | ** **   | 2,194               | ** **   | 1,971                      | ** **   | 34,201            | ** **   | 36,172 | ** ** | 6,931 | ** ** |
| 1633 Littleton  Road (O)   | ** **   | 1978       | ** **   | 2002         | ** **   | —           | ** **   | 2,283              | ** **   | 9,550             | ** **   | 163                 | ** **   | 2,355                      | ** **   | 9,641             | ** **   | 11,996 | ** ** | 1,099 | ** ** |
| 600 Parsippany  Road (O)   | ** **   | 1978       | ** **   | 1994         | ** **   | —           | ** **   | 1,257              | ** **   | 5,594             | ** **   | 1,992               | ** **   | 1,257                      | ** **   | 7,586             | ** **   | 8,843 | ** ** | 2,316 | ** ** |

 

115

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| ** **                | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | ** **          | ** ** | **Gross  Amount at Which** | ** ** | ** **        | ** ** |
|---------------------------|------------|------------|------------|--------------|------------|------------------|------------|--------------------|------------|-------------------|------------|---------------------|------------|----------------------------|------------|-------------------|------------|
| ** **                | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | **Costs**           | ** ** | **Carried  at Close of**   | ** ** | ** **        | ** ** |
| ** **                | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | **Initial  Costs** | ** ** | **Capitalized**   | ** ** | **Period  (a)**     | ** ** | ** **                 | ** ** |
| ** **                | ** ** | **Year**   | ** ** | ** **   | ** ** | **Related**      | ** ** | ** **         | ** ** | **Building  and** | ** ** | **Subsequent**      | ** ** | ** **                 | ** ** | **Building  and** | ** ** | ** ** | ** ** | **Accumulated** | ** ** |
| **Property Location (b)** | ** ** | **Built**  | ** ** | **Acquired** | ** ** | **Encumbrances** | ** ** | **Land**           | ** ** | **Improvements**  | ** ** | **to  Acquisition** | ** ** | **Land**                   | ** ** | **Improvements**  | ** ** | **Total** | ** ** | **Depreciation** | ** ** |
| ** **                | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | ** **          | ** ** | ** **                 | ** ** | ** **        | ** ** | ** ** | ** ** | ** ** | ** ** |
| 1 Sylvan Way (O)          |       | 1989       |       | 1998         |       | —           |       | 1,689              |       | 24,699            |       | 394                 |       | 1,021                      |       | 25,761            |       | 26,782 |   | 6,177 |   |
| 5 Sylvan Way (O)          |       | 1989       |       | 1998         |       | —           |       | 1,160              |       | 25,214            |       | 2,040               |       | 1,161                      |       | 27,253            |       | 28,414 |   | 5,591 |   |
| 7 Sylvan Way (O)          |       | 1987       |       | 1998         |       | —           |       | 2,084              |       | 26,083            |       | 2,092               |       | 2,084                      |       | 28,175            |       | 30,259 |   | 5,701 |   |
| 5 Wood Hollow  Road (O)   |       | 1979       |       | 2004         |       | —           |       | 5,302              |       | 26,488            |       | 5,003               |       | 5,302                      |       | 31,491            |       | 36,793 |   | 1,158 |   |
| **Passaic  County**       |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Clifton***             |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 777 Passaic  Avenue (O)   |       | 1983       |       | 1994         |       | —           |       | —             |       | —            |       | 6,973               |       | 1,100                      |       | 5,873             |       | 6,973 |   | 3,208 |   |
| ***Totowa***              |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 1 Center Court  (F)       |       | 1999       |       | 1999         |       | —           |       | 270                |       | 1,824             |       | 713                 |       | 270                        |       | 2,537             |       | 2,807 |   | 805 |   |
| 2 Center Court  (F)       |       | 1998       |       | 1998         |       | —           |       | 191                |       | —            |       | 2,592               |       | 191                        |       | 2,592             |       | 2,783 |   | 914 |   |
| 11 Commerce Way  (F)      |       | 1989       |       | 1995         |       | —           |       | 586                |       | 2,986             |       | 267                 |       | 586                        |       | 3,253             |       | 3,839 |   | 983 |   |
| 20 Commerce Way  (F)      |       | 1992       |       | 1995         |       | —           |       | 516                |       | 3,108             |       | 59                  |       | 516                        |       | 3,167             |       | 3,683 |   | 827 |   |
| 29 Commerce Way  (F)      |       | 1990       |       | 1995         |       | —           |       | 586                |       | 3,092             |       | 1,146               |       | 586                        |       | 4,238             |       | 4,824 |   | 1,288 |   |
| 40 Commerce Way  (F)      |       | 1987       |       | 1995         |       | —           |       | 516                |       | 3,260             |       | 438                 |       | 516                        |       | 3,698             |       | 4,214 |   | 1,238 |   |
| 45 Commerce Way  (F)      |       | 1992       |       | 1995         |       | —           |       | 536                |       | 3,379             |       | 474                 |       | 536                        |       | 3,853             |       | 4,389 |   | 1,072 |   |
| 60 Commerce Way  (F)      |       | 1988       |       | 1995         |       | —           |       | 526                |       | 3,257             |       | 513                 |       | 526                        |       | 3,770             |       | 4,296 |   | 1,057 |   |
| 80 Commerce Way  (F)      |       | 1996       |       | 1996         |       | —           |       | 227                |       | —            |       | 1,678               |       | 227                        |       | 1,678             |       | 1,905 |   | 798 |   |
| 100 Commerce Way  (F)     |       | 1996       |       | 1996         |       | —           |       | 226                |       | —            |       | 1,677               |       | 226                        |       | 1,677             |       | 1,903 |   | 798 |   |
| 120 Commerce Way  (F)     |       | 1994       |       | 1995         |       | —           |       | 228                |       | —            |       | 1,299               |       | 228                        |       | 1,299             |       | 1,527 |   | 326 |   |
| 140 Commerce Way  (F)     |       | 1994       |       | 1995         |       | —           |       | 229                |       | —            |       | 1,299               |       | 229                        |       | 1,299             |       | 1,528 |   | 327 |   |
| 999 Riverview  Drive (O)  |       | 1988       |       | 1995         |       | —           |       | 476                |       | 6,024             |       | 2,137               |       | 1,102                      |       | 7,535             |       | 8,637 |   | 1,889 |   |
| ** **                | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | ** **          | ** ** | ** **                 | ** ** | ** **        | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Somerset  County**      |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Basking  Ridge***      |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 106 Allen Road  (O)       |       | 2000       |       | 2000         |       | —           |       | 3,853              |       | 14,465            |       | 3,519               |       | 4,093                      |       | 17,744            |       | 21,837 |   | 3,539 |   |
| 222 Mt. Airy Road  (O)    |       | 1986       |       | 1996         |       | —           |       | 775                |       | 3,636             |       | 2,132               |       | 775                        |       | 5,768             |       | 6,543 |   | 964 |   |
| 233 Mt. Airy Road  (O)    |       | 1987       |       | 1996         |       | —           |       | 1,034              |       | 5,033             |       | 1,646               |       | 1,034                      |       | 6,679             |       | 7,713 |   | 1,818 |   |
| ***Bridgewater***         |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 721 Route 202/206  (O)    |       | 1989       |       | 1997         |       | —           |       | 6,730              |       | 26,919            |       | 2,541               |       | 6,730                      |       | 29,460            |       | 36,190 |   | 5,751 |   |
|                      |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Union  County**         |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Clark***               |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 100 Walnut Avenue  (O)    |       | 1985       |       | 1994         |       | —           |       | —             |       | —            |       | 16,765              |       | 1,822                      |       | 14,943            |       | 16,765 |   | 7,533 |   |

 

116

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| ** **                   | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | ** **          | ** ** | **Gross  Amount at Which** | ** ** | ** **        | ** ** |
|------------------------------|------------|------------|------------|--------------|------------|------------------|------------|--------------------|------------|-------------------|------------|---------------------|------------|----------------------------|------------|-------------------|------------|
| ** **                   | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | **Costs**           | ** ** | **Carried  at Close of**   | ** ** | ** **        | ** ** |
| ** **                   | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | **Initial  Costs** | ** ** | **Capitalized**   | ** ** | **Period  (a)**     | ** ** | ** **                 | ** ** |
| ** **                   | ** ** | **Year**   | ** ** | ** **   | ** ** | **Related**      | ** ** | ** **         | ** ** | **Building  and** | ** ** | **Subsequent**      | ** ** | ** **                 | ** ** | **Building  and** | ** ** | ** ** | ** ** | **Accumulated** | ** ** |
| **Property Location (b)**    | ** ** | **Built**  | ** ** | **Acquired** | ** ** | **Encumbrances** | ** ** | **Land**           | ** ** | **Improvements**  | ** ** | **to  Acquisition** | ** ** | **Land**                   | ** ** | **Improvements**  | ** ** | **Total** | ** ** | **Depreciation** | ** ** |
| ** **                   | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | ** **          | ** ** | ** **                 | ** ** | ** **        | ** ** | ** ** | ** ** | ** ** | ** ** |
| ***Cranford***               |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 6 Commerce Drive  (O)        |       | 1973       |       | 1994         |       | —           |       | 250                |       | —            |       | 2,887               |       | 250                        |       | 2,887             |       | 3,137 |   | 1,762 |   |
| 11 Commerce Drive  (O)       |       | 1981       |       | 1994         |       | —           |       | 470                |       | —            |       | 5,701               |       | 470                        |       | 5,701             |       | 6,171 |   | 3,246 |   |
| 12 Commerce Drive  (O)       |       | 1967       |       | 1997         |       | —           |       | 887                |       | 3,549             |       | 1,537               |       | 887                        |       | 5,086             |       | 5,973 |   | 1,243 |   |
| 14 Commerce Drive  (O)       |       | 1971       |       | 2003         |       | —           |       | 1,283              |       | 6,344             |       | 31                  |       | 1,283                      |       | 6,375             |       | 7,658 |   | 359 |   |
| 20 Commerce Drive  (O)       |       | 1990       |       | 1994         |       | —           |       | 2,346              |       | —            |       | 21,212              |       | 2,346                      |       | 21,212            |       | 23,558 |   | 8,538 |   |
| 25 Commerce Drive  (O)       |       | 1971       |       | 2002         |       | —           |       | 1,520              |       | 6,186             |       | 214                 |       | 1,520                      |       | 6,400             |       | 7,920 |   | 1,304 |   |
| 65 Jackson Drive  (O)        |       | 1984       |       | 1994         |       | —           |       | 541                |       | —            |       | 6,269               |       | 542                        |       | 6,268             |       | 6,810 |   | 3,133 |   |
| ***New  Providence***        |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 890 Mountain Road  (O)       |       | 1977       |       | 1997         |       | —           |       | 2,796              |       | 11,185            |       | 4,873               |       | 3,765                      |       | 15,089            |       | 18,854 |   | 3,038 |   |
|                         |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **NEW YORK**                 |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Dutchess  County**         |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Fishkill***               |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 300 South Lake  Drive (O)    |       | 1987       |       | 1997         |       | —           |       | 2,258              |       | 9,031             |       | 1,507               |       | 2,258                      |       | 10,538            |       | 12,796 |   | 2,309 |   |
|                         |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Rockland  County**         |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Suffern***                |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 400 Rella  Boulevard (O)     |       | 1988       |       | 1995         |       | —           |       | 1,090              |       | 13,412            |       | 3,479               |       | 1,090                      |       | 16,891            |       | 17,981 |   | 5,068 |   |
|                         |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Westchester  County**      |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Elmsford***               |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 11 Clearbrook  Road (F)      |       | 1974       |       | 1997         |       | —           |       | 149                |       | 2,159             |       | 240                 |       | 149                        |       | 2,399             |       | 2,548 |   | 558 |   |
| 75 Clearbrook  Road (F)      |       | 1990       |       | 1997         |       | —           |       | 2,314              |       | 4,716             |       | 56                  |       | 2,314                      |       | 4,772             |       | 7,086 |   | 1,054 |   |
| 100 Clearbrook  Road (O)     |       | 1975       |       | 1997         |       | —           |       | 220                |       | 5,366             |       | 1,158               |       | 220                        |       | 6,524             |       | 6,744 |   | 1,540 |   |
| 125 Clearbrook  Road (F)     |       | 2002       |       | 2002         |       | —           |       | 1,055              |       | 3,676             |       | (51                 | )          | 1,055                      |       | 3,625             |       | 4,680 |   | 607 |   |
| 150 Clearbrook  Road (F)     |       | 1975       |       | 1997         |       | —           |       | 497                |       | 7,030             |       | 734                 |       | 497                        |       | 7,764             |       | 8,261 |   | 1,735 |   |
| 175 Clearbrook  Road (F)     |       | 1973       |       | 1997         |       | —           |       | 655                |       | 7,473             |       | 805                 |       | 655                        |       | 8,278             |       | 8,933 |   | 1,942 |   |
| 200 Clearbrook  Road (F)     |       | 1974       |       | 1997         |       | —           |       | 579                |       | 6,620             |       | 894                 |       | 579                        |       | 7,514             |       | 8,093 |   | 1,810 |   |
| 250 Clearbrook  Road (F)     |       | 1973       |       | 1997         |       | —           |       | 867                |       | 8,647             |       | 1,004               |       | 867                        |       | 9,651             |       | 10,518 |   | 2,275 |   |
| 50 Executive  Boulevard (F)  |       | 1969       |       | 1997         |       | —           |       | 237                |       | 2,617             |       | 97                  |       | 237                        |       | 2,714             |       | 2,951 |   | 607 |   |
| 77 Executive  Boulevard (F)  |       | 1977       |       | 1997         |       | —           |       | 34                 |       | 1,104             |       | 126                 |       | 34                         |       | 1,230             |       | 1,264 |   | 295 |   |
| 85 Executive  Boulevard (F)  |       | 1968       |       | 1997         |       | —           |       | 155                |       | 2,507             |       | 208                 |       | 155                        |       | 2,715             |       | 2,870 |   | 588 |   |
| 101 Executive  Boulevard (O) |       | 1971       |       | 1997         |       | —           |       | 267                |       | 5,838             |       | 873                 |       | 267                        |       | 6,711             |       | 6,978 |   | 1,530 |   |

 

117

----

 
| ** **                   | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | ** **          | ** ** | **Gross  Amount at Which** | ** ** | ** **        | ** ** |
|------------------------------|------------|------------|------------|--------------|------------|------------------|------------|--------------------|------------|-------------------|------------|---------------------|------------|----------------------------|------------|-------------------|------------|
| ** **                   | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | **Costs**           | ** ** | **Carried  at Close of**   | ** ** | ** **        | ** ** |
| ** **                   | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | **Initial  Costs** | ** ** | **Capitalized**   | ** ** | **Period  (a)**     | ** ** | ** **                 | ** ** |
| ** **                   | ** ** | **Year**   | ** ** | ** **   | ** ** | **Related**      | ** ** | ** **         | ** ** | **Building  and** | ** ** | **Subsequent**      | ** ** | ** **                 | ** ** | **Building  and** | ** ** | ** ** | ** ** | **Accumulated** | ** ** |
| **Property Location (b)**    | ** ** | **Built**  | ** ** | **Acquired** | ** ** | **Encumbrances** | ** ** | **Land**           | ** ** | **Improvements**  | ** ** | **to  Acquisition** | ** ** | **Land**                   | ** ** | **Improvements**  | ** ** | **Total** | ** ** | **Depreciation** | ** ** |
|                         |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 300 Executive  Boulevard (F) |       | 1970       |       | 1997         |       | —           |       | 460                |       | 3,609             |       | 153                 |       | 460                        |       | 3,762             |       | 4,222 |   | 848 |   |
| 350 Executive  Boulevard (F) |       | 1970       |       | 1997         |       | —           |       | 100                |       | 1,793             |       | 150                 |       | 100                        |       | 1,943             |       | 2,043 |   | 483 |   |
| 399 Executive  Boulevard (F) |       | 1962       |       | 1997         |       | —           |       | 531                |       | 7,191             |       | 103                 |       | 531                        |       | 7,294             |       | 7,825 |   | 1,643 |   |
| 400 Executive  Boulevard (F) |       | 1970       |       | 1997         |       | —           |       | 2,202              |       | 1,846             |       | 409                 |       | 2,202                      |       | 2,255             |       | 4,457 |   | 588 |   |
| 500 Executive  Boulevard (F) |       | 1970       |       | 1997         |       | —           |       | 258                |       | 4,183             |       | 661                 |       | 258                        |       | 4,844             |       | 5,102 |   | 1,229 |   |
| 525 Executive  Boulevard (F) |       | 1972       |       | 1997         |       | —           |       | 345                |       | 5,499             |       | 579                 |       | 345                        |       | 6,078             |       | 6,423 |   | 1,405 |   |
| 700 Executive  Boulevard (L) |       | N/A        |       | 1997         |       | —           |       | 970                |       | —            |       | 0                   |       | 970                        |       | —            |       | 970 |   | — |   |
| 3 Odell Plaza (O)            |       | 1984       |       | 2003         |       | —           |       | 1,322              |       | 4,777             |       | 2,301               |       | 1,322                      |       | 7,078             |       | 8,400 |   | 497 |   |
| 5 Skyline Drive  (F)         |       | 1980       |       | 2001         |       | —           |       | 2,219              |       | 8,916             |       | 551                 |       | 2,219                      |       | 9,467             |       | 11,686 |   | 1,330 |   |
| 6 Skyline Drive  (F)         |       | 1980       |       | 2001         |       | —           |       | 740                |       | 2,971             |       | 6                   |       | 740                        |       | 2,977             |       | 3,717 |   | 638 |   |
| 555 Taxter Road  (O)         |       | 1986       |       | 2000         |       | —           |       | 4,285              |       | 17,205            |       | 4,832               |       | 4,285                      |       | 22,037            |       | 26,322 |   | 3,001 |   |
| 565 Taxter Road  (O)         |       | 1988       |       | 2000         |       | —           |       | 4,285              |       | 17,205            |       | 2,634               |       | 4,233                      |       | 19,891            |       | 24,124 |   | 2,863 |   |
| 570 Taxter Road  (O)         |       | 1972       |       | 1997         |       | —           |       | 438                |       | 6,078             |       | 840                 |       | 438                        |       | 6,918             |       | 7,356 |   | 1,820 |   |
| 1 Warehouse Lane  (I)        |       | 1957       |       | 1997         |       | —           |       | 3                  |       | 268               |       | 215                 |       | 3                          |       | 483               |       | 486 |   | 97 |   |
| 2 Warehouse Lane  (I)        |       | 1957       |       | 1997         |       | —           |       | 4                  |       | 672               |       | 189                 |       | 4                          |       | 861               |       | 865 |   | 232 |   |
| 3 Warehouse Lane  (I)        |       | 1957       |       | 1997         |       | —           |       | 21                 |       | 1,948             |       | 508                 |       | 21                         |       | 2,456             |       | 2,477 |   | 619 |   |
| 4 Warehouse Lane  (I)        |       | 1957       |       | 1997         |       | —           |       | 84                 |       | 13,393            |       | 2,346               |       | 85                         |       | 15,738            |       | 15,823 |   | 3,513 |   |
| 5 Warehouse Lane  (I)        |       | 1957       |       | 1997         |       | —           |       | 19                 |       | 4,804             |       | 1,165               |       | 19                         |       | 5,969             |       | 5,988 |   | 1,429 |   |
| 6 Warehouse Lane  (I)        |       | 1982       |       | 1997         |       | —           |       | 10                 |       | 4,419             |       | 307                 |       | 10                         |       | 4,726             |       | 4,736 |   | 1,030 |   |
| 1 Westchester  Plaza (F)     |       | 1967       |       | 1997         |       | —           |       | 199                |       | 2,023             |       | 149                 |       | 199                        |       | 2,172             |       | 2,371 |   | 488 |   |
| 2 Westchester  Plaza (F)     |       | 1968       |       | 1997         |       | —           |       | 234                |       | 2,726             |       | 124                 |       | 234                        |       | 2,850             |       | 3,084 |   | 632 |   |
| 3 Westchester  Plaza (F)     |       | 1969       |       | 1997         |       | —           |       | 655                |       | 7,936             |       | 462                 |       | 655                        |       | 8,398             |       | 9,053 |   | 1,964 |   |
| 4 Westchester  Plaza (F)     |       | 1969       |       | 1997         |       | —           |       | 320                |       | 3,729             |       | 53                  |       | 320                        |       | 3,782             |       | 4,102 |   | 860 |   |
| 5 Westchester  Plaza (F)     |       | 1969       |       | 1997         |       | —           |       | 118                |       | 1,949             |       | 194                 |       | 118                        |       | 2,143             |       | 2,261 |   | 543 |   |
| 6 Westchester  Plaza (F)     |       | 1968       |       | 1997         |       | —           |       | 164                |       | 1,998             |       | 160                 |       | 164                        |       | 2,158             |       | 2,322 |   | 551 |   |
| 7 Westchester  Plaza (F)     |       | 1972       |       | 1997         |       | —           |       | 286                |       | 4,321             |       | 164                 |       | 286                        |       | 4,485             |       | 4,771 |   | 993 |   |
| 8 Westchester  Plaza (F)     |       | 1971       |       | 1997         |       | —           |       | 447                |       | 5,262             |       | 545                 |       | 447                        |       | 5,807             |       | 6,254 |   | 1,363 |   |
| ***Hawthorne***              |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 200 Saw Mill  River Road (F) |       | 1965       |       | 1997         |       | —           |       | 353                |       | 3,353             |       | 314                 |       | 353                        |       | 3,667             |       | 4,020 |   | 858 |   |
| 1 Skyline Drive  (O)         |       | 1980       |       | 1997         |       | —           |       | 66                 |       | 1,711             |       | 294                 |       | 66                         |       | 2,005             |       | 2,071 |   | 447 |   |
| 2 Skyline Drive  (O)         |       | 1987       |       | 1997         |       | —           |       | 109                |       | 3,128             |       | 396                 |       | 109                        |       | 3,524             |       | 3,633 |   | 899 |   |
| 4 Skyline Drive  (F)         |       | 1987       |       | 1997         |       | —           |       | 363                |       | 7,513             |       | 1,088               |       | 363                        |       | 8,601             |       | 8,964 |   | 1,943 |   |

 

118

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| ** **                         | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | ** **          | ** ** | **Gross  Amount at Which** | ** ** | ** **        | ** ** |
|------------------------------------|------------|------------|------------|--------------|------------|------------------|------------|--------------------|------------|-------------------|------------|---------------------|------------|----------------------------|------------|-------------------|------------|
| ** **                         | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | **Costs**           | ** ** | **Carried  at Close of**   | ** ** | ** **        | ** ** |
| ** **                         | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | **Initial  Costs** | ** ** | **Capitalized**   | ** ** | **Period  (a)**     | ** ** | ** **                 | ** ** |
| ** **                         | ** ** | **Year**   | ** ** | ** **   | ** ** | **Related**      | ** ** | ** **         | ** ** | **Building  and** | ** ** | **Subsequent**      | ** ** | ** **                 | ** ** | **Building  and** | ** ** | ** ** | ** ** | **Accumulated** | ** ** |
| **Property Location (b)**          | ** ** | **Built**  | ** ** | **Acquired** | ** ** | **Encumbrances** | ** ** | **Land**           | ** ** | **Improvements**  | ** ** | **to  Acquisition** | ** ** | **Land**                   | ** ** | **Improvements**  | ** ** | **Total** | ** ** | **Depreciation** | ** ** |
|                               |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 7 Skyline Drive  (O)               |       | 1987       |       | 1998         |       | —           |       | 330                |       | 13,013            |       | 1,293               |       | 330                        |       | 14,306            |       | 14,636 |   | 2,761 |   |
| 8 Skyline Drive  (F)               |       | 1985       |       | 1997         |       | —           |       | 212                |       | 4,410             |       | 2,194               |       | 212                        |       | 6,604             |       | 6,816 |   | 2,160 |   |
| 10 Skyline Drive  (F)              |       | 1985       |       | 1997         |       | —           |       | 134                |       | 2,799             |       | 79                  |       | 134                        |       | 2,878             |       | 3,012 |   | 632 |   |
| 11 Skyline Drive  (F)              |       | 1989       |       | 1997         |       | —           |       | —             |       | 4,788             |       | 374                 |       | —                     |       | 5,162             |       | 5,162 |   | 1,261 |   |
| 12 Skyline Drive  (F)              |       | 1999       |       | 1999         |       | —           |       | 1,562              |       | 3,254             |       | 1,594               |       | 1,320                      |       | 5,090             |       | 6,410 |   | 1,509 |   |
| 14 Skyline Drive  (L)              |       | N/A        |       | 2002         |       | —           |       | 964                |       | —            |       | 16                  |       | 980                        |       | —            |       | 980 |   | — |   |
| 15 Skyline Drive  (F)              |       | 1989       |       | 1997         |       | —           |       | —             |       | 7,449             |       | 284                 |       | —                     |       | 7,733             |       | 7,733 |   | 1,857 |   |
| 16 Skyline Drive  (L)              |       | N/A        |       | 2002         |       | —           |       | 850                |       | —            |       | 31                  |       | 881                        |       | —            |       | 881 |   | — |   |
| 17 Skyline Drive  (O)              |       | 1989       |       | 1997         |       | —           |       | —             |       | 7,269             |       | 391                 |       | —                     |       | 7,660             |       | 7,660 |   | 1,664 |   |
| 19 Skyline Drive  (O)              |       | 1982       |       | 1997         |       | —           |       | 2,355              |       | 34,254            |       | 3,182               |       | 2,356                      |       | 37,435            |       | 39,791 |   | 9,898 |   |
| ***Tarrytown***                    |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 200 White Plains  Road (O)         |       | 1982       |       | 1997         |       | —           |       | 378                |       | 8,367             |       | 1,083               |       | 378                        |       | 9,450             |       | 9,828 |   | 2,182 |   |
| 220 White Plains  Road (O)         |       | 1984       |       | 1997         |       | —           |       | 367                |       | 8,112             |       | 964                 |       | 367                        |       | 9,076             |       | 9,443 |   | 2,103 |   |
| 230 White Plains  Road (R)         |       | 1984       |       | 1997         |       | —           |       | 124                |       | 1,845             |       | —              |       | 124                        |       | 1,845             |       | 1,969 |   | 411 |   |
| ***White  Plains***                |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 1 Barker Avenue  (O)               |       | 1975       |       | 1997         |       | —           |       | 208                |       | 9,629             |       | 960                 |       | 207                        |       | 10,590            |       | 10,797 |   | 2,474 |   |
| 3 Barker Avenue  (O)               |       | 1983       |       | 1997         |       | —           |       | 122                |       | 7,864             |       | 1,852               |       | 122                        |       | 9,716             |       | 9,838 |   | 2,443 |   |
| 50 Main Street  (O)                |       | 1985       |       | 1997         |       | —           |       | 564                |       | 48,105            |       | 5,403               |       | 564                        |       | 53,508            |       | 54,072 |   | 12,944 |   |
| 11 Martine Avenue  (O)             |       | 1987       |       | 1997         |       | —           |       | 127                |       | 26,833            |       | 4,755               |       | 127                        |       | 31,588            |       | 31,715 |   | 8,155 |   |
| 1 Water Street  (O)                |       | 1979       |       | 1997         |       | —           |       | 211                |       | 5,382             |       | 918                 |       | 211                        |       | 6,300             |       | 6,511 |   | 1,487 |   |
| ***Yonkers***                      |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 100 Corporate  Boulevard (F)       |       | 1987       |       | 1997         |       | —           |       | 602                |       | 9,910             |       | 749                 |       | 602                        |       | 10,659            |       | 11,261 |   | 2,551 |   |
| 200 Corporate  Boulevard South (F) |       | 1990       |       | 1997         |       | —           |       | 502                |       | 7,575             |       | 440                 |       | 502                        |       | 8,015             |       | 8,517 |   | 1,660 |   |
| 250 Corporate  Boulevard South (L) |       | N/A        |       | 2002         |       | —           |       | 1,028              |       | —            |       | 111                 |       | 1,139                      |       | —            |       | 1,139 |   | — |   |
| 1 Enterprise  Boulevard (L)        |       | N/A        |       | 1997         |       | —           |       | 1,379              |       | —            |       | 1                   |       | 1,380                      |       | —            |       | 1,380 |   | — |   |
| 1 Executive  Boulevard (O)         |       | 1982       |       | 1997         |       | —           |       | 1,104              |       | 11,904            |       | 2,022               |       | 1,105                      |       | 13,925            |       | 15,030 |   | 3,413 |   |
| 2 Executive Plaza  (R)             |       | 1986       |       | 1997         |       | —           |       | 89                 |       | 2,439             |       | 3                   |       | 89                         |       | 2,442             |       | 2,531 |   | 544 |   |
| 3 Executive Plaza  (O)             |       | 1987       |       | 1997         |       | —           |       | 385                |       | 6,256             |       | 1,619               |       | 385                        |       | 7,875             |       | 8,260 |   | 2,094 |   |
| 4 Executive Plaza  (F)             |       | 1986       |       | 1997         |       | —           |       | 584                |       | 6,134             |       | 1,424               |       | 584                        |       | 7,558             |       | 8,142 |   | 1,757 |   |
| 6 Executive Plaza  (F)             |       | 1987       |       | 1997         |       | —           |       | 546                |       | 7,246             |       | 260                 |       | 546                        |       | 7,506             |       | 8,052 |   | 1,710 |   |

 

119

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| ** **                         | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | ** **          | ** ** | **Gross  Amount at Which** | ** ** | ** **        | ** ** |
|------------------------------------|------------|------------|------------|--------------|------------|------------------|------------|--------------------|------------|-------------------|------------|---------------------|------------|----------------------------|------------|-------------------|------------|
| ** **                         | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | **Costs**           | ** ** | **Carried  at Close of**   | ** ** | ** **        | ** ** |
| ** **                         | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | **Initial  Costs** | ** ** | **Capitalized**   | ** ** | **Period  (a)**     | ** ** | ** **                 | ** ** |
| ** **                         | ** ** | **Year**   | ** ** | ** **   | ** ** | **Related**      | ** ** | ** **         | ** ** | **Building  and** | ** ** | **Subsequent**      | ** ** | ** **                 | ** ** | **Building  and** | ** ** | ** ** | ** ** | **Accumulated** | ** ** |
| **Property Location (b)**          | ** ** | **Built**  | ** ** | **Acquired** | ** ** | **Encumbrances** | ** ** | **Land**           | ** ** | **Improvements**  | ** ** | **to  Acquisition** | ** ** | **Land**                   | ** ** | **Improvements**  | ** ** | **Total** | ** ** | **Depreciation** | ** ** |
|                               |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 1 Odell Plaza (F)                  |       | 1980       |       | 1997         |       | —           |       | 1,206              |       | 6,815             |       | 668                 |       | 1,206                      |       | 7,483             |       | 8,689 |   | 1,769 |   |
| 5 Odell Plaza (F)                  |       | 1983       |       | 1997         |       | —           |       | 331                |       | 2,988             |       | 227                 |       | 331                        |       | 3,215             |       | 3,546 |   | 730 |   |
| 7 Odell Plaza (F)                  |       | 1984       |       | 1997         |       | —           |       | 419                |       | 4,418             |       | 301                 |       | 419                        |       | 4,719             |       | 5,138 |   | 1,051 |   |
|                               |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **PENNSYLVANIA**                   |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Chester  County**                |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Berwyn***                       |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 1000 Westlakes  Drive (O)          |       | 1989       |       | 1997         |       | —           |       | 619                |       | 9,016             |       | 551                 |       | 619                        |       | 9,567             |       | 10,186 |   | 2,197 |   |
| 1055 Westlakes  Drive (O)          |       | 1990       |       | 1997         |       | —           |       | 1,951              |       | 19,046            |       | 3,557               |       | 1,951                      |       | 22,603            |       | 24,554 |   | 5,391 |   |
| 1205 Westlakes  Drive (O)          |       | 1988       |       | 1997         |       | —           |       | 1,323              |       | 20,098            |       | 1,341               |       | 1,323                      |       | 21,439            |       | 22,762 |   | 4,807 |   |
| 1235 Westlakes  Drive (O)          |       | 1986       |       | 1997         |       | —           |       | 1,417              |       | 21,215            |       | 2,084               |       | 1,418                      |       | 23,298            |       | 24,716 |   | 5,191 |   |
|                               |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Delaware  County**               |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Lester***                       |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 100 Stevens Drive  (O)             |       | 1986       |       | 1996         |       | —           |       | 1,349              |       | 10,018            |       | 2,817               |       | 1,349                      |       | 12,835            |       | 14,184 |   | 3,234 |   |
| 200 Stevens Drive  (O)             |       | 1987       |       | 1996         |       | —           |       | 1,644              |       | 20,186            |       | 4,607               |       | 1,644                      |       | 24,793            |       | 26,437 |   | 6,148 |   |
| 300 Stevens Drive  (O)             |       | 1992       |       | 1996         |       | —           |       | 491                |       | 9,490             |       | 1,646               |       | 491                        |       | 11,136            |       | 11,627 |   | 2,715 |   |
| ***Media***                        |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 1400 Providence  Rd, Center I (O)  |       | 1986       |       | 1996         |       | —           |       | 1,042              |       | 9,054             |       | 1,873               |       | 1,042                      |       | 10,927            |       | 11,969 |   | 2,938 |   |
| 1400 Providence  Rd, Center II (O) |       | 1990       |       | 1996         |       | —           |       | 1,543              |       | 16,464            |       | 2,520               |       | 1,544                      |       | 18,983            |       | 20,527 |   | 4,979 |   |
|                               |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Montgomery  County**             |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Bala  Cynwyd***                 |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 150 Monument Road  (O)             |       | 1981       |       | 2004         |       | —           |       | 2,845              |       | 14,780            |       | 944                 |       | 2,845                      |       | 15,724            |       | 18,569 |   | 375 |   |
| ***Blue  Bell***                   |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 4 Sentry Parkway  (O)              |       | 1982       |       | 2003         |       | —           |       | 1,749              |       | 7,721             |       | 189                 |       | 1,749                      |       | 7,910             |       | 9,659 |   | 458 |   |
| 16 Sentry Parkway  (O)             |       | 1988       |       | 2002         |       | —           |       | 3,377              |       | 13,511            |       | 729                 |       | 3,377                      |       | 14,240            |       | 17,617 |   | 1,776 |   |
| 18 Sentry Parkway  (O)             |       | 1988       |       | 2002         |       | —           |       | 3,515              |       | 14,062            |       | 933                 |       | 3,515                      |       | 14,995            |       | 18,510 |   | 1,764 |   |
| ***King  of Prussia***             |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 2200 Renaissance  Blvd (O)         |       | 1985       |       | 2002         |       | 18,174           |       | 5,347              |       | 21,453            |       | 2,160               |       | 5,347                      |       | 23,613            |       | 28,960 |   | 4,129 |   |

 

120

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| ** **                       | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | ** **          | ** ** | **Gross  Amount at Which** | ** ** | ** **        | ** ** |
|----------------------------------|------------|------------|------------|--------------|------------|------------------|------------|--------------------|------------|-------------------|------------|---------------------|------------|----------------------------|------------|-------------------|------------|
| ** **                       | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | **Costs**           | ** ** | **Carried  at Close of**   | ** ** | ** **        | ** ** |
| ** **                       | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | **Initial  Costs** | ** ** | **Capitalized**   | ** ** | **Period  (a)**     | ** ** | ** **                 | ** ** |
| ** **                       | ** ** | **Year**   | ** ** | ** **   | ** ** | **Related**      | ** ** | ** **         | ** ** | **Building  and** | ** ** | **Subsequent**      | ** ** | ** **                 | ** ** | **Building  and** | ** ** | ** ** | ** ** | **Accumulated** | ** ** |
| **Property Location (b)**        | ** ** | **Built**  | ** ** | **Acquired** | ** ** | **Encumbrances** | ** ** | **Land**           | ** ** | **Improvements**  | ** ** | **to  Acquisition** | ** ** | **Land**                   | ** ** | **Improvements**  | ** ** | **Total** | ** ** | **Depreciation** | ** ** |
|                             |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Lower  Providence***          |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 1000 Madison  Avenue (O)         |       | 1990       |       | 1997         |       | —           |       | 1,713              |       | 12,559            |       | 895                 |       | 1,714                      |       | 13,453            |       | 15,167 |   | 2,859 |   |
| ***Plymouth  Meeting***          |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 1150 Plymouth  Meeting Mall (O)  |       | 1970       |       | 1997         |       | —           |       | 125                |       | 499               |       | 29,527              |       | 6,219                      |       | 23,932            |       | 30,151 |   | 5,046 |   |
| Five Sentry  Parkway East (O)    |       | 1984       |       | 1996         |       | —           |       | 642                |       | 7,992             |       | 514                 |       | 642                        |       | 8,506             |       | 9,148 |   | 1,945 |   |
| Five Sentry  Parkway West (O)    |       | 1984       |       | 1996         |       | —           |       | 268                |       | 3,334             |       | 85                  |       | 268                        |       | 3,419             |       | 3,687 |   | 783 |   |
|                             |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **CONNETICUT**                   |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Fairfield  County**            |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Greenwich***                  |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 500 West Putnam  Avenue (O)      |       | 1973       |       | 1998         |       | 25,000           |       | 3,300              |       | 16,734            |       | 1,623               |       | 3,300                      |       | 18,357            |       | 21,657 |   | 4,065 |   |
| ***Norwalk***                    |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 40 Richards  Avenue (O)          |       | 1985       |       | 1998         |       | —           |       | 1,087              |       | 18,399            |       | 2,882               |       | 1,087                      |       | 21,281            |       | 22,368 |   | 4,404 |   |
| ***Shelton***                    |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 1000 Bridgeport  Avenue (O)      |       | 1986       |       | 1997         |       | —           |       | 773                |       | 14,934            |       | 1,333               |       | 744                        |       | 16,296            |       | 17,040 |   | 3,919 |   |
| ***Stamford***                   |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 1266 East Main  Street (O)       |       | 1984       |       | 2002         |       | 18,427           |       | 6,638              |       | 26,567            |       | 1,127               |       | 6,638                      |       | 27,694            |       | 34,332 |   | 3,231 |   |
| 419 West Avenue  (F)             |       | 1986       |       | 1997         |       | —           |       | 4,538              |       | 9,246             |       | 1,266               |       | 4,538                      |       | 10,512            |       | 15,050 |   | 2,412 |   |
| 500 West Avenue  (F)             |       | 1988       |       | 1997         |       | —           |       | 415                |       | 1,679             |       | 162                 |       | 415                        |       | 1,841             |       | 2,256 |   | 444 |   |
| 550 West Avenue  (F)             |       | 1990       |       | 1997         |       | —           |       | 1,975              |       | 3,856             |       | 16                  |       | 1,975                      |       | 3,872             |       | 5,847 |   | 863 |   |
| 600 West Avenue  (F)             |       | 1999       |       | 1999         |       | —           |       | 2,305              |       | 2,863             |       | 833                 |       | 2,305                      |       | 3,696             |       | 6,001 |   | 567 |   |
| 650 West Avenue  (F)             |       | 1998       |       | 1998         |       | —           |       | 1,328              |       | —            |       | 3,929               |       | 1,328                      |       | 3,929             |       | 5,257 |   | 1,387 |   |
|                             |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **DISTRICT  OF COLUMBIA**        |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Washington,**                  |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 1201 Connecticut  Avenue, NW (O) |       | 1940       |       | 1999         |       | —           |       | 14,228             |       | 18,571            |       | 1,912               |       | 14,228                     |       | 20,483            |       | 34,711 |   | 3,731 |   |
| 1400 L Street, NW  (O)           |       | 1987       |       | 1998         |       | —           |       | 13,054             |       | 27,423            |       | 1,839               |       | 13,054                     |       | 29,262            |       | 42,316 |   | 5,513 |   |
|                             |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **MARYLAND**                     |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Prince  George’s County** |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Lanham***                     |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 4200 Parliament  Place (O)       |       | 1989       |       | 1998         |       | —           |       | 2,114              |       | 13,546            |       | 562                 |       | 1,393                      |       | 14,829            |       | 16,222 |   | 3,328 |   |

 

121

----

 
| ** **                        | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | ** **          | ** ** | **Gross  Amount at Which** | ** ** | ** **        | ** ** |
|-----------------------------------|------------|------------|------------|--------------|------------|------------------|------------|--------------------|------------|-------------------|------------|---------------------|------------|----------------------------|------------|-------------------|------------|
| ** **                        | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | **Costs**           | ** ** | **Carried  at Close of**   | ** ** | ** **        | ** ** |
| ** **                        | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | **Initial  Costs** | ** ** | **Capitalized**   | ** ** | **Period  (a)**     | ** ** | ** **                 | ** ** |
| ** **                        | ** ** | **Year**   | ** ** | ** **   | ** ** | **Related**      | ** ** | ** **         | ** ** | **Building  and** | ** ** | **Subsequent**      | ** ** | ** **                 | ** ** | **Building  and** | ** ** | ** ** | ** ** | **Accumulated** | ** ** |
| **Property Location (b)**         | ** ** | **Built**  | ** ** | **Acquired** | ** ** | **Encumbrances** | ** ** | **Land**           | ** ** | **Improvements**  | ** ** | **to  Acquisition** | ** ** | **Land**                   | ** ** | **Improvements**  | ** ** | **Total** | ** ** | **Depreciation** | ** ** |
|                              |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **COLORADO**                      |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Arapahoe  County**              | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | ** **          | ** ** | ** **                 | ** ** | ** **        | ** ** | ** ** | ** ** | ** ** | ** ** |
| ***Denver***                      |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 400 South  Colorado Boulevard (O) |       | 1983       |       | 1998         |       | —           |       | 1,461              |       | 10,620            |       | 1,946               |       | 1,461                      |       | 12,566            |       | 14,027 |   | 2,627 |   |
| ***Englewood***                   |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 9359 East Nichols  Avenue (O)     |       | 1997       |       | 1998         |       | —           |       | 1,155              |       | 8,171             |       | 594                 |       | 1,155                      |       | 8,765             |       | 9,920 |   | 1,625 |   |
| 5350 South Roslyn  Street (O)     |       | 1982       |       | 1998         |       | —           |       | 862                |       | 6,831             |       | (2,170              | )          | 559                        |       | 4,964             |       | 5,523 |   | 826 |   |
|                              |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Boulder  County**               |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Broomfield***                  |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 105 South  Technology Court (O)   |       | 1997       |       | 1998         |       | —           |       | 653                |       | 4,936             |       | (2,378              | )          | 653                        |       | 2,558             |       | 3,211 |   | 365 |   |
| 303 South  Technology Court A (O) |       | 1997       |       | 1998         |       | —           |       | 623                |       | 3,892             |       | (1,399              | )          | 623                        |       | 2,493             |       | 3,116 |   | 325 |   |
| 303 South  Technology Court B (O) |       | 1997       |       | 1998         |       | —           |       | 623                |       | 3,892             |       | (1,399              | )          | 623                        |       | 2,493             |       | 3,116 |   | 325 |   |
| ***Louisville***                  |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 1172 Century  Drive (O)           |       | 1996       |       | 1998         |       | —           |       | 707                |       | 4,647             |       | 274                 |       | 707                        |       | 4,921             |       | 5,628 |   | 628 |   |
| 248 Centennial  Parkway (O)       |       | 1996       |       | 1998         |       | —           |       | 708                |       | 4,647             |       | 275                 |       | 708                        |       | 4,922             |       | 5,630 |   | 629 |   |
| 285 Century Place  (O)            |       | 1997       |       | 1998         |       | —           |       | 889                |       | 10,133            |       | (3,877              | )          | 891                        |       | 6,254             |       | 7,145 |   | 603 |   |
|                              |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Denver  County**                |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Denver***                      |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 8181 East Tufts  Avenue (O)       |       | 2001       |       | 2001         |       | —           |       | 2,342              |       | 32,029            |       | 2,371               |       | 2,342                      |       | 34,400            |       | 36,742 |   | 5,742 |   |
|                              |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Douglas  County**               |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Englewood***                   |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 67 Inverness  Drive East (O)      |       | 1996       |       | 1998         |       | —           |       | 1,034              |       | 5,516             |       | (2,859              | )          | 1,034                      |       | 2,657             |       | 3,691 |   | 364 |   |
| 384 Inverness  Drive South (O)    |       | 1985       |       | 1998         |       | —           |       | 703                |       | 5,653             |       | (2,337              | )          | 703                        |       | 3,316             |       | 4,019 |   | 491 |   |
| 400 Inverness  Drive (O)          |       | 1997       |       | 1998         |       | —           |       | 1,584              |       | 19,878            |       | (4,483              | )          | 1,584                      |       | 15,395            |       | 16,979 |   | 1,959 |   |
| 5975 South Quebec  Street (O)     |       | 1996       |       | 1998         |       | —           |       | 855                |       | 11,551            |       | 1,954               |       | 857                        |       | 13,503            |       | 14,360 |   | 3,226 |   |

 

122

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| ** **                                           | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | ** **          | ** ** | **Gross  Amount at Which** | ** ** | ** **        | ** ** |
|------------------------------------------------------|------------|------------|------------|--------------|------------|------------------|------------|--------------------|------------|-------------------|------------|---------------------|------------|----------------------------|------------|-------------------|------------|
| ** **                                           | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** **        | ** ** | **Costs**           | ** ** | **Carried  at Close of**   | ** ** | ** **        | ** ** |
| ** **                                           | ** ** | ** ** | ** ** | ** **   | ** ** | ** **       | ** ** | **Initial  Costs** | ** ** | **Capitalized**   | ** ** | **Period  (a)**     | ** ** | ** **                 | ** ** |
| ** **                                           | ** ** | **Year**   | ** ** | ** **   | ** ** | **Related**      | ** ** | ** **         | ** ** | **Building  and** | ** ** | **Subsequent**      | ** ** | ** **                 | ** ** | **Building  and** | ** ** | ** ** | ** ** | **Accumulated** | ** ** |
| **Property Location (b)**                            | ** ** | **Built**  | ** ** | **Acquired** | ** ** | **Encumbrances** | ** ** | **Land**           | ** ** | **Improvements**  | ** ** | **to  Acquisition** | ** ** | **Land**                   | ** ** | **Improvements**  | ** ** | **Total** | ** ** | **Depreciation** | ** ** |
|                                                 |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Parker***                                         |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 9777 Pyramid  Court (O)                              |       | 1995       |       | 1998         |       | —           |       | 1,304              |       | 13,189            |       | 2,324               |       | 1,880                      |       | 14,937            |       | 16,817 |   | 3,022 |   |
|                                                 |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **El Paso  County**                                  |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Colorado  Springs***                              |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 8415 Explorer (O)                                    |       | 1998       |       | 1999         |       | —           |       | 347                |       | 2,507             |       | 2,599               |       | 347                        |       | 5,106             |       | 5,453 |   | 521 |   |
| 1975 Research  Parkway (O)                           |       | 1997       |       | 1998         |       | —           |       | 1,397              |       | 13,221            |       | (371                | )          | 1,611                      |       | 12,636            |       | 14,247 |   | 1,716 |   |
| 2375 Telstar  Drive (O)                              |       | 1998       |       | 1999         |       | —           |       | 348                |       | 2,507             |       | 2,599               |       | 348                        |       | 5,106             |       | 5,454 |   | 521 |   |
|                                                 |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Jefferson  County**                                |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***Lakewood***                                       |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 141 Union  Boulevard (O)                             |       | 1985       |       | 1998         |       | —           |       | 774                |       | 6,891             |       | (954                | )          | 775                        |       | 5,936             |       | 6,711 |   | 871 |   |
|                                                 |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **CALIFORNIA**                                       |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **San  Francisco County**                            |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| ***San  Francisco***                                 |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| 795 Folsom Street  (O)                               |       | 1977       |       | 1999         |       | —           |       | 9,348              |       | 24,934            |       | 5,915               |       | 9,348                      |       | 30,849            |       | 40,197 |   | 6,885 |   |
| 760 Market Street  (O)                               |       | 1908       |       | 1997         |       | —           |       | 5,588              |       | 22,352            |       | 40,417              |       | 13,499                     |       | 54,858            |       | 68,357 |   | 10,853 |   |
|                                                 |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Projects  Under Development and Developable Land** |       |       |       |         |       | —           |       | 90,655             |       | 6,805             |       | —              |       | 90,655                     |       | 6,805             |       | 97,460 |   | — |   |
|                                                 |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| **Furniture,  Fixtures and Equipment**               |       |       |       |         |       | —           |       | —             |       | —            |       | 7,432               |       | —                     |       | 7,432             |       | 7,432 |   | 5,759 |   |
|                                                 |       |       |       |         |       |             |       |               |       |              |       |                |       |                       |       |              |       |   |   |   |   |
| TOTALS                                               |       |       |       |         |       | $                | 415,431    |               | $          | 616,051           |       | $                   | 3,267,049  |                       | $          | 608,652           |       | $ | 637,653 |   | $ | 3,854,099 |   | $ | 4,491,752 |   | $ | 722,980 |   |
|                                                      |            |            |            |              |            |                  |            |                    |            |                   |            |                     |            |                            |            |                   |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

----

| (a)    | The aggregate cost for federal income tax purposes  at December 31, 2005 was approximately $2.9 billion. |
|--------|----------------------------------------------------------------------------------------------------------|
|   |                                                                                                     |
| (b)    | Legend of Property Codes:                                                                                |
|   | (O)=Office Property                                                                                      | (R)=Stand-alone Retail Property |
|   | (F)=Office/Flex Property                                                                                 | (L)=Land Lease |
|   | (I)=Industrial/Warehouse Property                                                                        |

 

123

----

 

**MACK-CALI REALTY, L.P.**

**NOTE TO SCHEDULE III**

 

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

 
| ** **                                                                   | ** ** | **2005** | ** ** | **2004** | ** ** | **2003**  | ** ** |
|------------------------------------------------------------------------------|------------|----------|------------|----------|------------|-----------|------------|
| **Rental Properties**                                                        |       |     |       |     |       |      |       |
| Balance at beginning of year                                                 |       | $        | 4,160,959  |     | $          | 3,954,632 |       | $ | 3,857,657 |   |
| Additions                                                                    |       | 485,680  |       | 340,472  |       | 115,882   |       |
| Rental property  held for sale –  before accumulated  depreciation |       | —   |       | (21,929  | )          | —    |       |
| Properties sold                                                              |       | (120,755 | )          | (112,179 | )          | (16,951   | )          |
| Retirements/disposals                                                        |       | (34,132  | )          | (37      | )          | (1,956    | )          |
| Balance at end of year                                                       |       | $        | 4,491,752  |     | $          | 4,160,959 |       | $ | 3,954,632 |   |
|                                                                         |       |     |       |     |       |      |       |
| **Accumulated Depreciation**                                                 |       |     |       |     |       |      |       |
| Balance at beginning of year                                                 |       | $        | 641,626    |     | $          | 546,007   |       | $ | 445,569 |   |
| Depreciation  expense                                                        |       | 128,814  |       | 111,975  |       | 103,483   |       |
| Rental property  held for sale                                               |       | —   |       | (1,550   | )          | —    |       |
| Properties sold                                                              |       | (16,691  | )          | (14,797  | )          | (2,462    | )          |
| Retirements/disposals                                                        |       | (30,769  | )          | (9       | )          | (583      | )          |
| Balance at end of year                                                       |       | $        | 722,980    |     | $          | 641,626   |       | $ | 546,007 |   |

 

124

----

 

**MACK-CALI REALTY, L.P.**

 

**Signatures**

 

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

 

 
|                    | Mack-Cali Realty, L.P            |                |
|-------------------------|----------------------------------|---------------------|
|                    | (Registrant)                     |
|                    | By: Mack-Cali Realty Corporation |
|                    |                             | its General Partner |
|                    |                             |
|                    |                             |
| Date: February 22, 2006 | /s/ Barry  Lefkowitz             |                |
|                    | Barry Lefkowitz                  |
|                    | Executive Vice President and     |
|                    |   Chief  Financial Officer  |
|                         |                                  |                     |  |

 

 

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

 
| **Name**                   | ** ** | **Title**                     | ** ** | **Date**          |
|----------------------------|------------|-------------------------------|------------|-------------------|
|                       |       |                          |       |              |
| /s/  William L. Mack       |       | Chairman of the  Board        |       | February 22, 2006 |
| William L. Mack            |       |                          |       |              |
|                       |       |                          |       |              |
| /s/  Mitchell E. Hersh     |       | President and Chief Executive |       | February 22, 2006 |
| Mitchell E. Hersh          |       | Officer and  Director         |       |              |
|                       |       |                          |       |              |
| /s/  Barry Lefkowitz       |       | Executive Vice President and  |       | February 22, 2006 |
| Barry Lefkowitz            |       | Chief Financial  Officer      |       |              |
|                       |       |                          |       |              |
| /s/  Martin S. Berger      |       | Director                      |       | February 22, 2006 |
| Martin S. Berger           |       |                          |       |              |
|                       |       |                          |       |              |
| /s/  Alan S. Bernikow      |       | Director                      |       | February 22, 2006 |
| Alan S. Bernikow           |       |                          |       |              |
|                       |       |                          |       |              |
| /s/  John R. Cali          |       | Director                      |       | February 22, 2006 |
| John R. Cali               |       |                          |       |              |
|                       |       |                          |       |              |
| /s/  Kenneth M. Duberstein |       | Director                      |       | February 22, 2006 |
| Kenneth M. Duberstein      |       |                          |       |              |
|                       |       |                          |       |              |
| /s/  Nathan Gantcher       |       | Director                      |       | February 22, 2006 |
| Nathan Gantcher            |       |                          |       |              |

 

125

----

 
| **Name**                 | ** ** | **Title** | ** ** | **Date**          |
|--------------------------|------------|-----------|------------|-------------------|
|                     |       |      |       |              |
| /s/  David S. Mack       |       | Director  |       | February 22, 2006 |
| David S. Mack            |       |      |       |              |
|                     |       |      |       |              |
| /s/  Alan G. Philibosian |       | Director  |       | February 22, 2006 |
| Alan G. Philibosian      |       |      |       |              |
|                     |       |      |       |              |
| /s/  Irvin D. Reid       |       | Director  |       | February 22, 2006 |
| Irvin D. Reid            |       |      |       |              |
|                     |       |      |       |              |
| /s/  Vincent Tese        |       | Director  |       | February 22, 2006 |
| Vincent Tese             |       |      |       |              |
|                     |       |      |       |              |
| /s/  Roy J. Zuckerberg   |       | Director  |       | February 22, 2006 |
| Roy J. Zuckerberg        |       |      |       |              |

 

126

----

 

**MACK-CALI REALTY, L.P.**

 

## **EXHIBIT INDEX**

 
| **Exhibit  Number** |   | **Exhibit  Title**                                                                                                                                                                                                                                                                                                                  |
|---------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                                                                                                                                                                                                                |
| 3.1                 |   | Restated  Charter of Mack-Cali Realty Corporation dated June 11, 2001 (filed as Exhibit  3.1 to the Operating Partnership’s Form 10-Q dated June 30, 2001 and  incorporated herein by reference).                                                                                                                              |
|                |   |                                                                                                                                                                                                                                                                                                                                |
| 3.2                 |   | Amended  and Restated Bylaws of Mack-Cali Realty Corporation dated June 10, 1999  (filed as Exhibit 3.2 to the Corporation’s Form 8-K dated June 10, 1999 and  incorporated herein by reference).                                                                                                                              |
|                |   |                                                                                                                                                                                                                                                                                                                                |
| 3.3                 |   | Amendment  No. 1 to the Amended and Restated Bylaws of Mack-Cali Realty Corporation  dated March 4, 2003, (filed as Exhibit 3.3 to the Operating Partnership’s  Form 10-Q dated March 31, 2003 and incorporated herein by reference).                                                                                          |
|                |   |                                                                                                                                                                                                                                                                                                                                |
| 3.4                 |   | Second  Amended and Restated Agreement of Limited Partnership of Mack-Cali Realty,  L.P. dated December 11, 1997 (filed as Exhibit 10.110 to the Corporation’s  Form 8-K dated December 11, 1997 and incorporated herein by reference).                                                                                        |
|                |   |                                                                                                                                                                                                                                                                                                                                |
| 3.5                 |   | Amendment  No. 1 to the Second Amended and Restated Agreement of Limited Partnership of  Mack-Cali Realty, L.P. dated August 21, 1998 (filed as Exhibit 3.1 to the  Corporation’s and the Operating Partnership’s Registration Statement on Form  S-3, Registration No. 333-57103, and incorporated herein by reference). |
|                |   |                                                                                                                                                                                                                                                                                                                                |
| 3.6                 |   | Second  Amendment to the Second Amended and Restated Agreement of Limited Partnership  of Mack-Cali Realty, L.P. dated July 6, 1999 (filed as Exhibit 10.1 to the  Operating Partnership’s Form 8-K dated July 6, 1999 and incorporated herein  by reference).                                                                 |
|                |   |                                                                                                                                                                                                                                                                                                                                |
| 3.7                 |   | Third  Amendment to the Second Amended and Restated Agreement of Limited Partnership  of Mack-Cali Realty, L.P. dated September 30, 2003 (filed as Exhibit 3.7 to  the Operating Partnership’s Form 10-Q dated September 30, 2003 and  incorporated herein by reference).                                                      |
|                |   |                                                                                                                                                                                                                                                                                                                                |
| 3.8                 |   | Certificate  of Designation of Series B Preferred Operating Partnership Units of Limited  Partnership Interest of Mack-Cali Realty, L.P. (filed as Exhibit 10.101 to  the Corporation’s Form 8-K dated December 11, 1997 and incorporated herein by  reference).                                                               |
|                |   |                                                                                                                                                                                                                                                                                                                                |
| 3.9                 |   | Articles  Supplementary for the 8% Series C Cumulative Redeemable Perpetual Preferred  Stock dated March 11, 2003 (filed as Exhibit 3.1 to the Corporation’s Form  8-K dated March 14, 2003 and incorporated herein by reference).                                                                                             |
|                |   |                                                                                                                                                                                                                                                                                                                                |
| 3.10                |   | Certificate  of Designation for the 8% Series C Cumulative Redeemable Perpetual Preferred  Operating Partnership Units dated March 14, 2003 (filed as Exhibit 3.2 to the  Operating Partnership’s Form 8-K dated March 14, 2003 and incorporated herein  by reference).                                                        |
|                |   |                                                                                                                                                                                                                                                                                                                                |
| 4.1                 |   | Amended  and Restated Shareholder Rights Agreement, dated as of March 7, 2000, between  Mack-Cali Realty Corporation and EquiServe Trust Company, N.A., as Rights  Agent (filed as Exhibit 4.1 to the Operating Partnership’s Form 8-K dated  March 7, 2000 and incorporated herein by reference).                             |

 

127

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| **Exhibit  Number** |       | **Exhibit  Title**                                                                                                                                                                                                                                                                                                 |
|---------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                | ** ** |                                                                                                                                                                                                                                                                                                               |
| 4.2                 |       | Amendment  No. 1 to the Amended and Restated Shareholder Rights Agreement, dated as of  June 27, 2000, by and among Mack-Cali Realty Corporation and EquiServe Trust  Company, N.A. (filed as Exhibit 4.1 to the Operating Partnership’s Form 8-K  dated June 27, 2000 and incorporated herein by reference). |
|                |       |                                                                                                                                                                                                                                                                                                               |
| 4.3                 |       | Indenture  dated as of March 16, 1999, by and among Mack-Cali Realty, L.P., as issuer,  Mack-Cali Realty Corporation, as guarantor, and Wilmington Trust Company, as  trustee (filed as Exhibit 4.1 to the Operating Partnership’s Form 8-K dated  March 16, 1999 and incorporated herein by reference).      |
|                |       |                                                                                                                                                                                                                                                                                                               |
| 4.4                 |       | Supplemental  Indenture No. 1 dated as of March 16, 1999, by and among Mack-Cali Realty,  L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit  4.2 to the Operating Partnership’s Form 8-K dated March 16, 1999 and incorporated  herein by reference).                               |
|                |       |                                                                                                                                                                                                                                                                                                               |
| 4.5                 |       | Supplemental  Indenture No. 2 dated as of August 2, 1999, by and among Mack-Cali Realty,  L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit  4.4 to the Operating Partnership’s Form 10-Q dated June 30, 1999 and  incorporated herein by reference).                               |
|                |       |                                                                                                                                                                                                                                                                                                               |
| 4.6                 |       | Supplemental  Indenture No. 3 dated as of December 21, 2000, by and among Mack-Cali Realty,  L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit  4.2 to the Operating Partnership’s Form 8-K dated December 21, 2000 and  incorporated herein by reference).                         |
|                |       |                                                                                                                                                                                                                                                                                                               |
| 4.7                 |       | Supplemental  Indenture No. 4 dated as of January 29, 2001, by and among Mack-Cali Realty,  L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit  4.2 to the Operating Partnership’s Form 8-K dated January 29, 2001 and  incorporated herein by reference).                           |
|                |       |                                                                                                                                                                                                                                                                                                               |
| 4.8                 |       | Supplemental  Indenture No. 5 dated as of December 20, 2002, by and between Mack-Cali  Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as  Exhibit 4.2 to the Operating Partnership’s Form 8-K dated December 20, 2002  and incorporated herein by reference).                       |
|                |       |                                                                                                                                                                                                                                                                                                               |
| 4.9                 |       | Supplemental  Indenture No. 6 dated as of March 14, 2003, by and between Mack-Cali Realty,  L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit  4.2 to the Operating Partnership’s Form 8-K dated March 14, 2003 and  incorporated herein by reference).                             |
|                |       |                                                                                                                                                                                                                                                                                                               |
| 4.10                |       | Supplemental  Indenture No. 7 dated as of June 12, 2003, by and between Mack-Cali Realty,  L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit  4.2 to the Operating Partnership’s Form 8-K dated June 12, 2003 and  incorporated herein by reference).                               |
|                |       |                                                                                                                                                                                                                                                                                                               |
| 4.11                |       | Supplemental  Indenture No. 8 dated as of February 9, 2004, by and between Mack-Cali  Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as  Exhibit 4.2 to the Operating Partnership’s Form 8-K dated February 9, 2004  and incorporated herein by reference).                         |
|                |       |                                                                                                                                                                                                                                                                                                               |
| 4.12                |       | Supplemental  Indenture No. 9 dated as of March 22, 2004, by and between Mack-Cali Realty,  L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit  4.2 to the Operating Partnership’s Form 8-K dated March 22, 2004 and  incorporated herein by reference).                             |

 

128

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| **Exhibit  Number** |       | **Exhibit  Title**                                                                                                                                                                                                                                                                                                        |
|---------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                | ** ** |                                                                                                                                                                                                                                                                                                                      |
| 4.13                |       | Supplemental  Indenture No. 10 dated as of January 25, 2005, by and between Mack-Cali  Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as  Exhibit 4.2 to the Operating Partnership’s Form 8-K dated January 25, 2005  and incorporated herein by reference).                               |
|                |       |                                                                                                                                                                                                                                                                                                                      |
| 4.14                |       | Supplemental  Indenture No. 11 dated as of April 15, 2005, by and between Mack-Cali Realty,  L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit  4.2 to the Operating Partnership’s Form 8-K dated April 15, 2005 and  incorporated herein by reference).                                   |
|                |       |                                                                                                                                                                                                                                                                                                                      |
| 4.15                |       | Supplemental  Indenture No. 12 dated as of November 30, 2005, by and between Mack-Cali  Realty, L.P., as issuer, and Wilmington Trust Company, as trustee (filed as  Exhibit 4.2 to the Operating Partnership’s Form 8-K dated November 30, 2005  and incorporated herein by reference).                             |
|                |       |                                                                                                                                                                                                                                                                                                                      |
| 4.16                |       | Supplemental  Indenture No. 13 dated as of January 24, 2006, by and between Mack-Cali Realty,  L.P., as issuer, and Wilmington Trust Company, as trustee (filed as Exhibit  4.2 to the Operating Partnership’s Form 8-K dated January 18, 2006 and  incorporated herein by reference).                               |
| ** **          | ** ** | ** **                                                                                                                                                                                                                                                                                                                |
| 4.17                |       | Deposit  Agreement dated March 14, 2003 by and among Mack-Cali Realty Corporation,  EquiServe Trust Company, N.A., and the holders from time to time of the  Depositary Receipts described therein (filed as Exhibit 4.1 to the  Corporation’s Form 8-K dated March 14, 2003 and incorporated herein by  reference). |
|                |       |                                                                                                                                                                                                                                                                                                                      |
| 10.1                |       | Amended  and Restated Employment Agreement dated as of July 1, 1999 between Mitchell  E. Hersh and Mack-Cali Realty Corporation (filed as Exhibit 10.2 to the  Operating Partnership’s Form 10-Q dated June 30, 1999 and incorporated herein  by reference).                                                         |
|                |       |                                                                                                                                                                                                                                                                                                                      |
| 10.2                |       | Second  Amended and Restated Employment Agreement dated as of July 1, 1999 between  Barry Lefkowitz and Mack-Cali Realty Corporation (filed as Exhibit 10.6 to  the Operating Partnership’s Form 10-Q dated June 30, 1999 and incorporated  herein by reference).                                                    |
|                |       |                                                                                                                                                                                                                                                                                                                      |
| 10.3                |       | Second  Amended and Restated Employment Agreement dated as of July 1, 1999 between  Roger W. Thomas and Mack-Cali Realty Corporation (filed as Exhibit 10.7 to  the Operating Partnership’s Form 10-Q dated June 30, 1999 and incorporated  herein by reference).                                                    |
|                |       |                                                                                                                                                                                                                                                                                                                      |
| 10.4                |       | Employment  Agreement dated as of December 5, 2000 between Michael Grossman and Mack-Cali  Realty Corporation (filed as Exhibit 10.5 to the Operating Partnership’s Form  10-K for the year ended December 31, 2000 and incorporated herein by  reference).                                                          |
|                |       |                                                                                                                                                                                                                                                                                                                      |
| 10.5                |       | Restricted  Share Award Agreement dated as of July 1, 1999 between Mitchell E. Hersh and  Mack-Cali Realty Corporation (filed as Exhibit 10.8 to the Operating  Partnership’s Form 10-Q dated June 30, 1999 and incorporated herein by reference).                                                                   |
|                |       |                                                                                                                                                                                                                                                                                                                      |
| 10.6                |       | Restricted  Share Award Agreement dated as of July 1, 1999 between Barry Lefkowitz and  Mack-Cali Realty Corporation (filed as Exhibit 10.12 to the Operating  Partnership’s Form 10-Q dated June 30, 1999 and incorporated herein by  reference).                                                                   |
|                |       |                                                                                                                                                                                                                                                                                                                      |
| 10.7                |       | Restricted  Share Award Agreement dated as of July 1, 1999 between Roger W. Thomas and  Mack-Cali Realty Corporation (filed as Exhibit 10.13 to the Operating  Partnership’s Form 10-Q dated June 30, 1999 and incorporated herein by  reference).                                                                   |

 

129

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| **Exhibit  Number** |       | **Exhibit  Title**                                                                                                                                                                                                                                                                                |
|---------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |       |                                                                                                                                                                                                                                                                                              |
| 10.8                |       | Restricted  Share Award Agreement dated as of March 12, 2001 between Roger W. Thomas and  Mack-Cali Realty Corporation (filed as Exhibit 10.10 to the Operating Partnership’s  Form 10-Q dated March 31, 2001 and incorporated herein by reference).                                         |
| ** **          | ** ** | ** **                                                                                                                                                                                                                                                                                        |
| 10.9                |       | Restricted  Share Award Agreement dated as of March 12, 2001 between Michael Grossman and  Mack-Cali Realty Corporation (filed as Exhibit 10.11 to the Operating Partnership’s  Form 10-Q dated March 31, 2001 and incorporated herein by reference).                                        |
|                |       |                                                                                                                                                                                                                                                                                              |
| 10.10               |       | Restricted  Share Award Agreement effective as of January 2, 2003 by and between  Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to  the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by  reference).                                     |
| ** **          | ** ** | ** **                                                                                                                                                                                                                                                                                        |
| 10.11               |       | Tax  Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali  Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the  Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by  reference).                                               |
|                |       |                                                                                                                                                                                                                                                                                              |
| 10.12               |       | First  Amendment effective as of January 2, 2003 to the Restricted Share Award  Agreement dated July 1, 1999 between Mack-Cali Realty Corporation and  Mitchell E. Hersh (filed as Exhibit 10.3 to the Corporation’s Form 8-K dated  January 2, 2003 and incorporated herein by reference).  |
|                |       |                                                                                                                                                                                                                                                                                              |
| 10.13               |       | Restricted  Share Award Agreement effective as of January 2, 2003 by and between  Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.7 to  the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by  reference).                                       |
|                |       |                                                                                                                                                                                                                                                                                              |
| 10.14               |       | Tax  Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali  Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.8 to the  Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by  reference).                                                 |
|                |       |                                                                                                                                                                                                                                                                                              |
| 10.15               |       | First  Amendment effective as of January 2, 2003 to the Restricted Share Award  Agreement dated July 1, 1999 between Mack-Cali Realty Corporation and Barry  Lefkowitz (filed as Exhibit 10.9 to the Corporation’s Form 8-K dated January  2, 2003 and incorporated herein by reference).    |
|                |       |                                                                                                                                                                                                                                                                                              |
| 10.16               |       | Restricted  Share Award Agreement effective as of January 2, 2003 by and between  Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.10 to  the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by  reference).                                      |
|                |       |                                                                                                                                                                                                                                                                                              |
| 10.17               |       | Tax  Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali  Realty Corporation and Roger W. Thomas (filed as Exhibit 10.11 to the  Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by  reference).                                                |
|                |       |                                                                                                                                                                                                                                                                                              |
| 10.18               |       | First  Amendment effective as of January 2, 2003 to the Restricted Share Award  Agreement dated July 1, 1999 between Mack-Cali Realty Corporation and Roger  W. Thomas (filed as Exhibit 10.12 to the Corporation’s Form 8-K dated January  2, 2003 and incorporated herein by reference).   |
|                |       |                                                                                                                                                                                                                                                                                              |
| 10.19               |       | First  Amendment effective as of January 2, 2003 to the Restricted Share Award  Agreement dated March 12, 2001 between Mack-Cali Realty Corporation and Roger  W. Thomas (filed as Exhibit 10.13 to the Corporation’s Form 8-K dated January  2, 2003 and incorporated herein by reference). |

 

130

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| **Exhibit  Number** |       | **Exhibit  Title**                                                                                                                                                                                                                                                                                      |
|---------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **          |       |                                                                                                                                                                                                                                                                                                    |
| 10.20               |       | Restricted  Share Award Agreement effective as of January 2, 2003 by and between  Mack-Cali Realty Corporation and Michael A. Grossman (filed as Exhibit 10.14  to the Corporation’s Form 8-K dated January 2, 2003 and incorporated herein  by reference).                                        |
| ** **          | ** ** | ** **                                                                                                                                                                                                                                                                                              |
| 10.21               |       | Tax  Gross Up Agreement effective as of January 2, 2003 by and between Mack-Cali  Realty Corporation and Michael A. Grossman (filed as Exhibit 10.15 to the  Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by  reference).                                                  |
|                |       |                                                                                                                                                                                                                                                                                                    |
| 10.22               |       | Restricted  Share Award Agreement dated December 6, 1999 by and between Mack-Cali Realty  Corporation and Michael A. Grossman (filed as Exhibit 10.16 to the  Corporation’s Form 8-K dated January 2, 2003 and incorporated herein by reference).                                                  |
|                |       |                                                                                                                                                                                                                                                                                                    |
| 10.23               |       | First  Amendment effective as of January 2, 2003 to the Restricted Share Award  Agreement dated December 6, 1999 between Mack-Cali Realty Corporation and  Michael A. Grossman (filed as Exhibit 10.17 to the Corporation’s Form 8-K  dated January 2, 2003 and incorporated herein by reference). |
|                |       |                                                                                                                                                                                                                                                                                                    |
| 10.24               |       | First  Amendment effective as of January 2, 2003 to the Restricted Share Award  Agreement dated March 12, 2001 between Mack-Cali Realty Corporation and  Michael A. Grossman (filed as Exhibit 10.18 to the Corporation’s Form 8-K  dated January 2, 2003 and incorporated herein by reference).   |
|                |       |                                                                                                                                                                                                                                                                                                    |
| 10.25               |       | Restricted  Share Award Agreement effective as of December 2, 2003 by and between  Mack-Cali Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.1 to  the Corporation’s Form 8-K dated December 2, 2003 and incorporated herein by  reference).                                         |
|                |       |                                                                                                                                                                                                                                                                                                    |
| 10.26               |       | Tax  Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali  Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the  Corporation’s Form 8-K dated December 2, 2003 and incorporated herein by  reference).                                                   |
|                |       |                                                                                                                                                                                                                                                                                                    |
| 10.27               |       | Restricted  Share Award Agreement effective as of December 2, 2003 by and between  Mack-Cali Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to  the Corporation’s Form 8-K dated December 2, 2003 and incorporated herein by  reference).                                           |
|                |       |                                                                                                                                                                                                                                                                                                    |
| 10.28               |       | Tax  Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali  Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.6 to the Corporation’s  Form 8-K dated December 2, 2003 and incorporated herein by reference).                                                      |
|                |       |                                                                                                                                                                                                                                                                                                    |
| 10.29               |       | Restricted  Share Award Agreement effective as of December 2, 2003 by and between  Mack-Cali Realty Corporation and Roger W. Thomas (filed as Exhibit 10.7 to  the Corporation’s Form 8-K dated December 2, 2003 and incorporated herein by  reference).                                           |
|                |       |                                                                                                                                                                                                                                                                                                    |
| 10.30               |       | Tax  Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali  Realty Corporation and Roger W. Thomas (filed as Exhibit 10.8 to the  Corporation’s Form 8-K dated December 2, 2003 and incorporated herein by  reference).                                                     |
|                |       |                                                                                                                                                                                                                                                                                                    |
| 10.31               |       | Restricted  Share Award Agreement effective as of December 2, 2003 by and between  Mack-Cali Realty Corporation and Michael Grossman (filed as Exhibit 10.9 to  the Corporation’s Form 8-K dated December 2, 2003 and incorporated herein by  reference).                                          |

 

131

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| **Exhibit  Number** |   | **Exhibit  Title**                                                                                                                                                                                                                                                  |
|---------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                                                                                                                                                |
| 10.32               |   | Tax  Gross Up Agreement effective as of December 2, 2003 by and between Mack-Cali Realty  Corporation and Michael Grossman (filed as Exhibit 10.10 to the Corporation’s  Form 8-K dated December 2, 2003 and incorporated herein by reference).                |
|                |   |                                                                                                                                                                                                                                                                |
| 10.33               |   | Restricted  Share Award Agreement effective December 7, 2004 by and between Mack-Cali Realty  Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Corporation’s  Form 8-K dated December 7, 2004 and incorporated herein by reference).            |
|                |   |                                                                                                                                                                                                                                                                |
| 10.34               |   | Tax  Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty  Corporation and Mitchell E. Hersh (filed as Exhibit 10.3 to the Corporation’s  Form 8-K dated December 7, 2004 and incorporated herein by reference).                      |
|                |   |                                                                                                                                                                                                                                                                |
| 10.35               |   | Restricted  Share Award Agreement effective December 7, 2004 by and between Mack-Cali  Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.4 to the  Corporation’s Form 8-K dated December 7, 2004 and incorporated herein by  reference).             |
|                |   |                                                                                                                                                                                                                                                                |
| 10.36               |   | Tax  Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty  Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Corporation’s  Form 8-K dated December 7, 2004 and incorporated herein by reference).                        |
|                |   |                                                                                                                                                                                                                                                                |
| 10.37               |   | Restricted  Share Award Agreement effective December 7, 2004 by and between Mack-Cali  Realty Corporation and Roger W. Thomas (filed as Exhibit 10.6 to the  Corporation’s Form 8-K dated December 7, 2004 and incorporated herein by  reference).             |
|                |   |                                                                                                                                                                                                                                                                |
| 10.38               |   | Tax  Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty  Corporation and Roger W. Thomas (filed as Exhibit 10.7 to the Corporation’s  Form 8-K dated December 7, 2004 and incorporated herein by reference).                        |
|                |   |                                                                                                                                                                                                                                                                |
| 10.39               |   | Restricted  Share Award Agreement effective December 7, 2004 by and between Mack-Cali  Realty Corporation and Michael A. Grossman (filed as Exhibit 10.8 to the  Corporation’s Form 8-K dated December 7, 2004 and incorporated herein by  reference).         |
|                |   |                                                                                                                                                                                                                                                                |
| 10.40               |   | Tax  Gross Up Agreement effective December 7, 2004 by and between Mack-Cali Realty  Corporation and Michael A. Grossman (filed as Exhibit 10.9 to the  Corporation’s Form 8-K dated December 7, 2004 and incorporated herein by  reference).                   |
|                |   |                                                                                                                                                                                                                                                                |
| 10.41               |   | Restricted  Share Award Agreement effective December 6, 2005 by and between Mack-Cali  Realty Corporation and Mitchell E. Hersh (filed as Exhibit 10.2 to the Operating  Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by  reference). |
|                |   |                                                                                                                                                                                                                                                                |
| 10.42               |   | Tax  Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty  Corporation and Mitchell E. Hersh (filed as Exhibit 10.3 to the Operating  Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by  reference).           |
|                |   |                                                                                                                                                                                                                                                                |
| 10.43               |   | Restricted  Share Award Agreement effective December 6, 2005 by and between Mack-Cali  Realty Corporation and Barry Lefkowitz (filed as Exhibit 10.4 to the Operating  Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by  reference).   |
|                |   |                                                                                                                                                                                                                                                                |
| 10.44               |   | Tax  Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty  Corporation and Barry Lefkowitz (filed as Exhibit 10.5 to the Operating  Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by  reference).             |

 

132

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| **Exhibit  Number** |   | **Exhibit  Title**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|---------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.45               |   | Restricted  Share Award Agreement effective December 6, 2005 by and between Mack-Cali  Realty Corporation and Roger W. Thomas (filed as Exhibit 10.6 to the Operating  Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by  reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.46               |   | Tax  Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty  Corporation and Roger W. Thomas (filed as Exhibit 10.7 to the Operating  Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by  reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.47               |   | Restricted  Share Award Agreement effective December 6, 2005 by and between Mack-Cali  Realty Corporation and Michael A. Grossman (filed as Exhibit 10.8 to the Operating  Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by  reference).                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.48               |   | Tax  Gross Up Agreement effective December 6, 2005 by and between Mack-Cali Realty  Corporation and Michael A. Grossman (filed as Exhibit 10.9 to the Operating  Partnership’s Form 8-K dated December 6, 2005 and incorporated herein by  reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.49               |   | Amended  and Restated Revolving Credit Agreement dated as of September 27, 2002, among  Mack-Cali Realty, L.P. and JPMorgan Chase Bank, Fleet National Bank and Other  Lenders Which May Become Parties Thereto with JPMorgan Chase Bank, as  administrative agent, swing lender and fronting bank, Fleet National Bank and  Commerzbank AG, New York and Grand Cayman branches as syndication agents,  Bank of America, N.A. and Wells Fargo Bank, National Association, as  documentation agents, and J.P. Morgan Securities Inc. and Fleet Securities,  Inc, as arrangers (filed as Exhibit 10.1 to the Operating Partnership’s Form  8-K dated September 27, 2002 and incorporated herein by reference). |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.50               |   | Second  Amended and Restated Revolving Credit Agreement among Mack-Cali Realty, L.P.,  JPMorgan Chase Bank, N.A., Bank of America, N.A., and other lending  institutions that are or may become a party to the Second Amended and  Restated Revolving Credit Agreement dated as of November 23, 2004 (filed as  Exhibit 10.1 to the Operating Partnership’s Form 8-K dated November 23, 2004  and incorporated herein by reference).                                                                                                                                                                                                                                                                         |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.51               |   | Extension  and Modification Agreement dated as of September 16, 2005 by and among  Mack-Cali Realty, L.P., JPMorgan Chase Bank, N.A., as administrative agent,  and the several Lenders Party thereto (filed as Exhibit 10.1 to the Operating  Partnership’s Form 8-K dated September 16, 2005 and incorporated herein by  reference).                                                                                                                                                                                                                                                                                                                                                                       |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.52               |   | Amended  and Restated Master Loan Agreement dated as of November 12, 2004 among  Mack-Cali Realty, L.P., and Affiliates of Mack-Cali Realty Corporation and  Mack-Cali Realty, L.P., as Borrowers, Mack-Cali Realty Corporation and  Mack-Cali Realty L.P., as Guarantors and The Prudential Insurance Company of  America, as Lender (filed as Exhibit 10.1 to the Operating Partnership’s Form  8-K dated November 12, 2004 and incorporated herein by reference).                                                                                                                                                                                                                                         |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.53               |   | Contribution  and Exchange Agreement among The MK Contributors, The MK Entities, The  Patriot Contributors, The Patriot Entities, Patriot American Management and  Leasing Corp., Cali Realty, L.P. and Cali Realty Corporation, dated September  18, 1997 (filed as Exhibit 10.98 to the Corporation’s Form 8-K dated  September 19, 1997 and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                            |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.54               |   | First  Amendment to Contribution and Exchange Agreement, dated as of December 11,  1997, by and among the Company and the Mack Group (filed as Exhibit 10.99 to  the Corporation’s Form 8-K dated December 11, 1997 and incorporated herein by  reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

 

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| **Exhibit  Number** |   | **Exhibit  Title**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|---------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.55               |   | Employee  Stock Option Plan of Mack-Cali Realty Corporation (filed as Exhibit 10.1 to  the Corporation’s Post-Effective Amendment No. 1 to Form S-8, Registration  No. 333-44443, and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.56               |   | Director  Stock Option Plan of Mack-Cali Realty Corporation (filed as Exhibit 10.2 to  the Corporation’s Post-Effective Amendment No. 1 to Form S-8, Registration  No. 333-44443, and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.57               |   | 2000  Employee Stock Option Plan (filed as Exhibit 10.1 to the Corporation’s  Registration Statement on Form S-8, Registration No. 333-52478, and  incorporated herein by reference), as amended by the First Amendment to the  2000 Employee Stock Option Plan (filed as Exhibit 10.17 to the Corporation’s  Form 10-Q dated June 30, 2002 and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.58               |   | Amended  and Restated 2000 Director Stock Option Plan (filed as Exhibit 10.2 to the  Corporation’s Post-Effective Amendment No. 1 to Registration Statement on  Form S-8, Registration No. 333-100244, and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.59               |   | Mack-Cali  Realty Corporation 2004 Incentive Stock Plan (filed as Exhibit 10.1 to the  Corporation’s Registration Statement on Form S-8, Registration No.  333-116437, and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.60               |   | Deferred  Compensation Plan for Directors (filed as Exhibit 10.1 to the Corporation’s  Registration Statement on Form S-8, Registration No. 333-80081, and  incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.61               |   | Form  of Indemnification Agreement by and between Mack-Cali Realty Corporation and  each of William L. Mack, John J. Cali, Mitchell E. Hersh, John R. Cali, David  S. Mack, Martin S. Berger, Alan S. Bernikow, Kenneth M. Duberstein, Martin D.  Gruss, Nathan Gantcher, Vincent Tese, Roy J. Zuckerberg, Alan G. Philibosian,  Irvin D. Reid, Robert F. Weinberg, Barry Lefkowitz, Roger W. Thomas, Michael  A. Grossman, Anthony Krug, Dean Cingolani, Anthony DeCaro Jr., Mark Durno,  William Fitzpatrick, John Kropke, Nicholas Mitarotonda, Jr., Michael Nevins, Virginia  Sobol, Albert Spring, Daniel Wagner, Deborah Franklin, John Marazzo,  Christopher DeLorenzo, Jeffrey Warner, Diane Chayes and James Corrigan (filed  as Exhibit 10.28 to the Operating Partnership’s Form 10-Q dated September 30,  2002 and incorporated herein by reference). |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.62               |   | Indemnification  Agreement dated October 22, 2002 by and between Mack-Cali Realty Corporation  and John Crandall (filed as Exhibit 10.29 to the Operating Partnership’s Form  10-Q dated September 30, 2002 and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.63               |   | Second Amendment to  Contribution and Exchange Agreement, dated as of June 27, 2000, between RMC  Development Company, LLC f/k/a Robert Martin Company, LLC, Robert Martin  Eastview North Company, L.P., the Company and the Operating Partnership  (filed as Exhibit 10.44 to the Operating Partnership’s Form 10-K dated  December 31, 2002 and incorporated herein by reference.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.64               |   | Limited  Partnership Agreement of Meadowlands Mills/Mack-Cali Limited Partnership by  and between Meadowlands Mills Limited Partnership, Mack-Cali Meadowlands  Entertainment L.L.C. and Mack-Cali Meadowlands Special L.L.C. dated November  25, 2003 (filed as Exhibit 10.1 to the Corporation’s Form 8-K dated December  3, 2003 and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

 

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| **Exhibit  Number** |   | **Exhibit  Title**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|---------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.65               |   | Redevelopment  Agreement by and between the New Jersey Sports and Exposition Authority and  Meadowlands Mills/Mack-Cali Limited Partnership dated December 3, 2003 (filed  as Exhibit 10.2 to the Corporation’s Form 8-K dated December 3, 2003 and  incorporated herein by reference).                                                                                                                                                                                                                                                                    |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.66               |   | First  Amendment to Redevelopment Agreement by and between the New Jersey Sports and  Exposition Authority and Meadowlands Mills/Mack-Cali Limited Partnership  dated October 5, 2004 (filed as Exhibit 10.54 to the Corporation’s Form 10-Q  dated September 30, 2004 and incorporated herein by reference).                                                                                                                                                                                                                                              |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.67               |   | Letter  Agreement by and between Mack-Cali Realty Corporation and The Mills  Corporation dated October 5, 2004 (filed as Exhibit 10.55 to the  Corporation’s Form 10-Q dated September 30, 2004 and incorporated herein by  reference).                                                                                                                                                                                                                                                                                                                    |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.68               |   | First  Amendment to Limited Partnership Agreement of Meadowlands Mills/Mack-Cali  Limited Partnership by and between Meadowlands Mills Limited Partnership,  Mack-Cali Meadowlands Entertainment L.L.C. and Mack-Cali Meadowlands Special  L.L.C. dated as of June 30, 2005 (filed as Exhibit 10.66 to the Operating  Partnership’s Form 10-Q dated June 30, 2005 and incorporated herein by  reference).                                                                                                                                                  |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.69*              |   | Contribution  and Exchange Agreement by and between Mack-Cali Realty, L.P. and Tenth  Springhill Lake Associates L.L.L.P., Eleventh Springhill Lake Associates  L.L.L.P., Twelfth Springhill Lake Associates L.L.L.P., Fourteenth Springhill  Lake Associates L.L.L.P., each a Maryland limited liability limited  partnership, Greenbelt Associates, a Maryland general partnership, and  Sixteenth Springhill Lake Associates L.L.L.P., a Maryland limited liability  limited partnership, and certain other natural persons, dated as of November  21, 2005. |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 21.1*               |   | Subsidiaries  of the Operating Partnership.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 23.1*               |   | Consent  of PricewaterhouseCoopers LLP, independent registered public accounting firm.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 31.1*               |   | Certification  of the Corporation’s President and Chief Executive Officer, Mitchell E.  Hersh, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                  |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 31.2*               |   | Certification  of the Corporation’s Chief Financial Officer, Barry Lefkowitz, pursuant to  Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 32.1*               |   | Certification  of the Corporation’s President and Chief Executive Officer, Mitchell E.  Hersh, and the Corporation’s Chief Financial Officer, Barry Lefkowitz,  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                            |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 99.1                |   | Mack-Cali  Realty Corporation Corporate Governance Principles, as amended and restated  (filed as Exhibit 99.2 to the Operating Partnership’s Form 8-K dated  September 13, 2005 and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                    |

 

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*filed herewith

 

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