UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~June~~September 30, 2016

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

For the transition period from to

Commission File Number: ~~333~~ 1-~~57103~~13274 Mack-Cali Realty Corporation

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

Mack-Cali Realty Corporation

Mack-Cali Realty, L.P.

(Exact ~~Name~~name of ~~Registrant~~registrant as specified in its charter)

Delaware		22-3315804
Maryland (Mack-Cali Realty Corporation)		22-3305147 (Mack-Cali Realty Corporation)
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No)
Delaware (Mack-Cali Realty, L.P.)		22-3315804 (Mack-Cali Realty, L.P.)
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

343 Thornall Street, Edison, New Jersey		08837-2206
Harborside 3, 210 Hudson St., Ste. 400, Jersey City, New Jersey		07311
(Address of principal executive offices)		(Zip ~~code~~Code)

(732) 590-~~1000~~1010

(Registrant’s telephone number, including area code)

Not Applicable

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

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

~~Indicate~~Mack-Cali byRealty ~~check~~Corporation ~~mark~~YES ~~whether~~x ~~the~~NO ~~registrant~~o ~~has~~Mack-Cali ~~submitted electronically and posted on its corporate Web site~~Realty, ~~if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232~~L.~~405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)~~P. YES x NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Mack-Cali Realty Corporation		YES x NO ¨
Mack-Cali Realty, L.P.		YES x NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Mack-Cali Realty Corporation: Large accelerated filer x Accelerated filer o¨ Non-accelerated filer o¨ Smaller reporting company ¨ Mack-Cali Realty, L.P.: Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨ (Do not check if a smaller reporting company) ~~Smaller reporting company o~~

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ~~YES o NO x~~

Mack-Cali Realty Corporation		YES ¨ NO x
Mack-Cali Realty, L.P.		YES ¨ NO x

As of October 21, 2016, there were 89,688,470 shares of Mack-Cali Realty Corporation’s Common Stock, par value $0.01 per share, outstanding.

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

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended September 30, 2016 of Mack-Cali Realty Corporation and Mack-Cali Realty, L.P. Unless stated otherwise or the context otherwise requires, references to the “Operating Partnership” mean Mack-Cali Realty, L.P., a Delaware limited partnership, and references to the “General Partner” mean Mack-Cali Realty Corporation, a Maryland corporation and real estate investment trust (“REIT”), and its subsidiaries, including the Operating Partnership. References to the “Company,” “we,” “us” and “our” mean collectively the General Partner, the Operating Partnership and those entities/subsidiaries consolidated by the General Partner.

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

As of September 30, 2016, the General Partner owned an approximate 89.5 percent common unit interest in the Operating Partnership. The remaining approximate 10.5 percent common unit interest is owned by limited partners. The limited partners of the Operating Partnership are (1) persons who contributed their interests in properties to the Operating Partnership in exchange for common units (each, a “Common Unit”) or preferred units of limited partnership interest in the Operating Partnership or (2) recipients of long term incentive plan units of the Operating Partnership pursuant to the General Partner’s executive compensation plans.

A Common Unit of the Operating Partnership and a share of common stock of the General Partner (the “Common Stock”) have substantially the same economic characteristics in as much as they effectively share equally in the net income or loss of the Company. The General Partner owns a number of common units of the Operating Partnership equal to the number of issued and outstanding shares of the General Partner’s common stock. Common unitholders (other than the General Partner) have the right to redeem their Common Units, subject to certain restrictions under the Seconded Amended and Restated Agreement of Limited Partnership of the Operating Partnership, as amended (the “Partnership Agreement”) and agreed upon at the time of issuance of the units that may restrict such right for a period of time, generally one year from issuance. The redemption is required to be satisfied in shares of Common Stock of the General Partner, cash, or a combination thereof, calculated as follows: one share of the General Partner’s Common Stock, or cash equal to the fair market value of a share of the General Partner’s Common Stock at the time of redemption, for each Common Unit. The General Partner, in its sole discretion, determines the form of redemption of Common Units (i.e., whether a common unitholder receives Common Stock of the General Partner, cash, or any combination thereof). If the General Partner elects to satisfy the redemption with shares of Common Stock of the General Partner as opposed to cash, the General Partner is obligated to issue shares of its Common Stock to the redeeming unitholder. Regardless of the rights described above, the common unitholders may not put their units for cash to the Company or the General Partner under any circumstances. With each such redemption, the General Partner’s percentage ownership in the Operating Partnership will increase. In addition, whenever the General Partner issues shares of its Common Stock other than to acquire Common Units, the General Partner must contribute any net proceeds it receives to the Operating Partnership and the Operating Partnership must issue to the General Partner an equivalent number of Common Units. This structure is commonly referred to as an umbrella partnership REIT, or UPREIT.

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

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

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

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

The Company believes it is important to understand the few differences between the General Partner and the Operating Partnership in the context of how they operate as a consolidated company. The financial results of the Operating Partnership are consolidated into the financial statements of the General Partner. The General Partner does not have any other significant assets, liabilities or operations, other than its interests in the Operating Partnership, nor does the Operating Partnership have employees of its

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own. The Operating Partnership, not the General Partner, generally executes all significant business relationships other than transactions involving the securities of the General Partner. The Operating Partnership holds substantially all of the assets of the General Partner, including ownership interests in joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by the General Partner, which are contributed to the capital of the Operating Partnership in consideration of common or preferred units in the Operating Partnership, as applicable, the Operating Partnership generates all remaining capital required by the Company’s business. These sources include working capital, net cash provided by operating activities, borrowings under the Company’s unsecured revolving credit facility and unsecured term loan facility, the issuance of secured and unsecured debt and equity securities and proceeds received from the disposition of properties and joint ventures.

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

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

· Item 1. Financial Statements (unaudited), which includes the following specific disclosures for the General Partner and the Operating Partnership:

· Note 15. Mack-Cali Realty Corporation’s Stockholders’ Equity and Mack-Cali Realty, L.P.’s Partners’ Capital; and

· Note 16. Noncontrolling Interests in Subsidiaries.

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

Item 2. Liquidity and Capital Resources includes separate reconciliations of amounts to each entity’s financial statements, where applicable;

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

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MACK-CALI REALTY CORPORATION

MACK-CALI REALTY, L.P.

FORM 10-Q

INDEX

			Page
Part I	Financial Information
	Item 1.	Financial Statements (unaudited):	35
		Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015	4
		Mack-Cali Realty Corporation
		Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015	5
		Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015	6
		Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2016 and 2015	6
		Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015	7
		Consolidated Statement of Changes in Equity for the six months ended June 30, 2016	7
		Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2016 and 2015	8
		Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015	8
		Consolidated Statement of Changes in Equity for the nine months ended September 30, 2016	9
		Notes to Consolidated Financial Statements	9
		Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015	10
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
		Mack-Cali Realty, L.P.
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	60
		Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015	11
	Item 4.	Controls and Procedures	61
		Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015	12
		Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2016 and 2015	13
		Consolidated Statement of Changes in Equity for the nine months ended September 30, 2016	14
		Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015	15
		Mack-Cali Realty Corporation and Mack-Cali Realty, L.P.
		Notes to Consolidated Financial Statements	16
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	50
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	71
	Item 4.	Controls and Procedures	71
Part II	Other Information
	Item 1.	Legal Proceedings	62
		Mack-Cali Realty Corporation and Mack-Cali Realty, L.P.
	Item 1A.	Risk Factors	62
	Item 1.	Legal Proceedings	73
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
	Item 1A.	Risk Factors	73
	Item 3.	Defaults Upon Senior Securities	62
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	73
	Item 4.	Mine Safety Disclosures	62
	Item 3.	Defaults Upon Senior Securities	73
	Item 5.	Other Information	62
	Item 4.	Mine Safety Disclosures	73
	Item 6.	Exhibits	62
	Item 5.	Other Information	73
Signatures			63
	Item 6.	Exhibits	73
Exhibit Index			64
Signatures			74
Exhibit Index			75

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MACK-CALI REALTY CORPORATION

MACK-CALI REALTY, L.P.

Part I — Financial Information

Item 1. Financial Statements

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

The aforementioned financial statements should be read in conjunction with the notes to the aforementioned financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in Mack-Cali Realty Corporation’s and Mack-Cali Realty, L.P.’s Annual ~~Report~~Reports on Form 10-K for the fiscal year ended December 31, 2015.

The results of operations for the three and ~~six~~nine-month periods ended ~~June~~September 30, 2016 are not necessarily indicative of the results to be expected for the entire fiscal year or any other period.

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

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

	September 30,			December 31,
	2016			2015
ASSETS
Rental property
Land and leasehold interests	$	667,095		$	735,696
Buildings and improvements	3,821,332			3,648,238
Tenant improvements	361,301			408,617
Furniture, fixtures and equipment	19,622			15,167
	4,869,350			4,807,718
Less — accumulated depreciation and amortization	(1,351,825		)	(1,464,482		)
	3,517,525			3,343,236
Rental property held for sale, net	102,798			—
Net investment in rental property	3,620,323			3,343,236
Cash and cash equivalents	21,555			37,077
Investments in unconsolidated joint ventures	319,807			303,457
Unbilled rents receivable, net	105,547			120,246
Deferred charges, goodwill and other assets, net	303,654			203,850
Restricted cash	54,784			35,343
Accounts receivable, net of allowance for doubtful accounts of $1,308 and $1,407	9,949			10,754
Total assets	$	4,435,619		$	4,053,963

LIABILITIES AND EQUITY
Senior unsecured notes, net	$	951,275		$	1,263,782
Unsecured term loan, net	347,830			—
Revolving credit facility	95,000			155,000
Mortgages, loans payable and other obligations, net	1,061,204			726,611
Dividends and distributions payable	15,233			15,582
Accounts payable, accrued expenses and other liabilities	185,326			135,057
Rents received in advance and security deposits	48,314			49,739
Accrued interest payable	17,613			24,484
Total liabilities	2,721,795			2,370,255
Commitments and contingencies

Equity:
Mack-Cali Realty Corporation stockholders’ equity:
Common stock, $0.01 par value, 190,000,000 shares authorized, 89,647,337 and 89,583,950 shares outstanding	897			896
Additional paid-in capital	2,574,999			2,570,392
Dividends in excess of net earnings	(1,053,910		)	(1,115,612		)
Accumulated other comprehensive loss	(6,739		)	—
Total Mack-Cali Realty Corporation stockholders’ equity	1,515,247			1,455,676

Noncontrolling interests in subsidiaries:
Operating Partnership	177,440			170,891
Consolidated joint ventures	21,137			57,141
Total noncontrolling interests in subsidiaries	198,577			228,032

Total equity	1,713,824			1,683,708

Total liabilities and equity	$	4,435,619		$	4,053,963

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

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
REVENUES
Base rents	$	129,523		$	119,707		$	380,133		$	364,746
Escalations and recoveries from tenants	16,177			15,050			45,248			49,291
Real estate services	6,650			7,510			19,931			22,555
Parking income	3,443			2,749			10,131			8,141
Other income	1,724			1,142			4,224			3,707
Total revenues	157,517			146,158			459,667			448,440

EXPENSES
Real estate taxes	20,606			19,143			66,250			63,005
Utilities	14,127			13,172			38,658			44,146
Operating services	25,553			24,535			76,309			78,607
Real estate services expenses	6,361			6,673			19,418			19,520
General and administrative	14,007			13,670			39,011			36,558
Acquisition-related costs	815			—			2,854			111
Depreciation and amortization	48,117			44,099			134,639			127,266
Impairments	—			164,176			—			164,176
Total expenses	129,586			285,468			377,139			533,389
Operating income (loss)	27,931			(139,310		)	82,528			(84,949		)

OTHER (EXPENSE) INCOME
Interest expense	(24,233		)	(24,689		)	(72,158		)	(78,677		)
Interest and other investment income (loss)	1,262			5			739			563
Equity in earnings (loss) of unconsolidated joint ventures	21,790			3,135			19,622			(2,723		)
Gain on change of control of interests	—			—			15,347			—
Realized gains (losses) and unrealized losses on disposition of rental property, net	(17,053		)	18,718			68,664			53,261
Gain on sale of investment in unconsolidated joint venture	—			—			5,670			6,448
Loss from extinguishment of debt, net	(19,302		)	—			(6,882		)	—
Total other income (expense)	(37,536		)	(2,831		)	31,002			(21,128		)
Net income (loss)	(9,605		)	(142,141		)	113,530			(106,077		)
Noncontrolling interest in consolidated joint ventures	65			(281		)	460			582
Noncontrolling interest in Operating Partnership	999			15,530			(11,947		)	11,461
Net income (loss) available to common shareholders	$	(8,541	)	$	(126,892	)	$	102,043		$	(94,034	)

Basic earnings per common share:
Net income (loss) available to common shareholders	$	(0.10	)	$	(1.42	)	$	1.14		$	(1.05	)

Diluted earnings per common share:
Net income (loss) available to common shareholders	$	(0.10	)	$	(1.42	)	$	1.13		$	(1.05	)

Basic weighted average shares outstanding	89,755			89,249			89,739			89,229

Diluted weighted average shares outstanding	100,253			100,172			100,486			100,236

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

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015

Net income (loss)	$	(9,605	)	$	(142,141	)	$	113,530		$	(106,077	)
Other comprehensive income (loss):
Net unrealized gain (loss) on derivative instruments for interest rate swaps	1,725			—			(7,528		)	—
Comprehensive income (loss)	$	(7,880	)	$	(142,141	)	$	106,002		$	(106,077	)
Comprehensive (income) loss attributable to noncontrolling interest in consolidated joint ventures	65			(281		)	460			582
Comprehensive (income) loss attributable to noncontrolling interest in Operating Partnership	818			15,530			(11,158		)	11,461
Comprehensive income (loss) attributable to common shareholders	$	(6,997	)	$	(126,892	)	$	95,304		$	(94,034	)

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

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

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

											Accumulated
					Additional			Dividends in			Other			Noncontrolling
	Common Stock				Paid-In			Excess of			Comprehensive			Interests			Total
	Shares		Par Value		Capital			Net Earnings			Income (Loss)			in Subsidiaries			Equity
Balance at January 1, 2016	89,584		$	896	$	2,570,392		$	(1,115,612	)	$	—		$	228,032		$	1,683,708
Net income	—		—		—			102,043			—			11,487			113,530
Common stock dividends	—		—		—			(40,341		)	—			—			(40,341		)
Unit distributions	—		—		—			—			—			(4,947		)	(4,947		)
Acquisition/increase in noncontrolling interest in consolidated joint ventures	—		—		414			—			—			(35,544		)	(35,130		)
Redemption of common units for common stock	19		—		308			—			—			(308		)	—
Shares issued under Dividend
Reinvestment and Stock Purchase Plan	1		—		23			—			—			—			23
Directors’ deferred compensation plan	—		—		285			—			—			—			285
Stock compensation	47		1		2,787			—			—			1,511			4,299
Cancellation of restricted stock	(4	)	—		(75		)	—			—			—			(75		)
Other comprehensive income (loss)	—		—		—			—			(6,739		)	(789		)	(7,528		)
Rebalancing of ownership percentage between parent and subsidiaries	—		—		865			—			—			(865		)	—
Balance at September 30, 2016	89,647		$	897	$	2,574,999		$	(1,053,910	)	$	(6,739	)	$	198,577		$	1,713,824

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

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MACK-CALI REALTY CORPORATION AND SUBSIDIARIES

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

	Nine Months Ended
	September 30,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	113,530		$	(106,077	)
Adjustments to reconcile net income to net cash provided by Operating activities:
Depreciation and amortization, including related intangible assets	134,756			128,422
Amortization of directors deferred compensation stock units	285			297
Amortization of stock compensation	4,299			1,500
Amortization of deferred financing costs	3,583			2,846
Amortization of debt discount and mark-to-market	1,417			2,791
Equity in (earnings) loss of unconsolidated joint ventures	(19,622		)	2,723
Distributions of cumulative earnings from unconsolidated joint ventures	4,833			3,145
Gain on change of control of interests	(15,347		)	—
Realized (gains) losses and unrealized losses on disposition of rental property, net	(68,664		)	(53,261		)
Gain on sale of investments in unconsolidated joint ventures	(5,670		)	(6,448		)
Gain from extinguishment of debt	(12,420		)	—
Impairments	—			164,176
Changes in operating assets and liabilities:
(Increase) decrease in unbilled rents receivable, net	(9,860		)	17
Increase in deferred charges, goodwill and other assets	(11,173		)	(23,387		)
Decrease (increase) in accounts receivable, net	424			(603		)
Increase (decrease) in accounts payable, accrued expenses and other liabilities	(12,656		)	5,298
Decrease in rents received in advance and security deposits	(1,425		)	(4,502		)
(Decrease) increase in accrued interest payable	(1,500		)	7,751

Net cash provided by operating activities	$	104,790		$	124,688

CASH FLOWS FROM INVESTING ACTIVITIES
Rental property acquisitions and related intangibles	$	(405,808	)	$	(6,057	)
Rental property additions and improvements	(94,017		)	(59,700		)
Development of rental property and other related costs	(150,592		)	(49,959		)
Proceeds from the sales of rental property	409,101			81,049
Proceeds from the sale of investments in unconsolidated joint ventures	6,420			6,448
Repayment of notes receivable	375			7,750
Acquisition of noncontrolling interests	(37,946		)	—
Investment in unconsolidated joint ventures	(31,318		)	(68,468		)
Distributions in excess of cumulative earnings from unconsolidated joint ventures	20,906			4,329
Increase in restricted cash	(287		)	(5,823		)

Net cash used in investing activities	$	(283,166	)	$	(90,431	)

CASH FLOW FROM FINANCING ACTIVITIES
Borrowings from revolving credit facility	$	793,000		$	179,000
Repayment of revolving credit facility	(853,000		)	(144,000		)
Repayment of senior unsecured notes	(314,755		)	—
Borrowings from unsecured term loan	350,000			—
Proceeds from mortgages and loans payable	426,613			6,193
Repayment of mortgages, loans payable and other obligations	(187,969		)	(29,307		)
Payment of financing costs	(7,050		)	(98		)
Contributions from noncontrolling interests	1,065			251
Payment of dividends and distributions	(45,050		)	(44,979		)

Net cash provided by (used in) financing activities	$	162,854		$	(32,940	)

Net (decrease) increase in cash and cash equivalents	$	(15,522	)	$	1,317
Cash and cash equivalents, beginning of period	37,077			29,549

Cash and cash equivalents, end of period	$	21,555		$	30,866

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

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MACK-CALI REALTY, L.P. AND SUBSIDIARIES

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

	June 30,			December 31,
	September 30,			December 31,
	2016			2015
ASSETS
Rental property
Land and leasehold interests	$	~~709~~667,~~335~~095		$	735,696
Buildings and improvements	3,~~691~~821,~~074~~332			3,648,238
Tenant improvements	~~371~~361,~~920~~301			408,617
Furniture, fixtures and equipment	1719,~~997~~622			15,167
	4,790,326			4,807,718
	4,869,350			4,807,718
Less — accumulated depreciation and amortization	(1,~~393~~351,~~073~~825		)	(1,464,482		)
	3,397,253			3,343,236
	3,517,525			3,343,236
Rental property held for sale, net	73102,~~190~~798			—
Net investment in rental property	3,~~470~~620,~~443~~323			3,343,236
Cash and cash equivalents	2921,~~457~~555			37,077
Investments in unconsolidated joint ventures	~~315~~319,~~200~~807			303,457
Unbilled rents receivable, net	~~104~~105,~~523~~547			120,246
Deferred charges, goodwill and other assets, net	~~253~~303,~~233~~654			203,850
Restricted cash	3454,~~891~~784			35,343
Accounts receivable, net of allowance for doubtful accounts of $1,225 and $1,407	5,793			10,754
Accounts receivable, net of allowance for doubtful accounts of $1,308 and $1,407	9,949			10,754
Total assets	$	4,~~213~~435,~~540~~619		$	4,053,963
LIABILITIES AND EQUITY
Senior unsecured notes, net	$	1951,~~064,942~~275		$	1,263,782
Unsecured term loan, net	347,~~590~~830			—
Revolving credit facility	7595,000			155,000
Mortgages, loans payable and other obligations, net	~~769~~1,~~423~~061,204			726,611
Distributions payable	15,~~144~~233			15,582
Accounts payable, accrued expenses and other liabilities	~~141~~185,~~664~~326			135,057
Rents received in advance and security deposits	4948,~~180~~314			49,739
Accrued interest payable	1517,~~917~~613			24,484
Total liabilities	2,~~478~~721,~~860~~795			2,370,255
Commitments and contingencies
Partners’ Capital:
General Partner, 89,650,590 and 89,583,950 common units outstanding	1,485,377			1,399,419
General Partner, 89,647,337 and 89,583,950 common units outstanding	1,464,864			1,399,419
Limited partners, 10,497,946 and 10,516,844 common units outstanding	~~236~~234,~~384~~562			227,148
Accumulated other comprehensive loss	(86,~~283~~739		)	—
Total Mack-Cali Realty, L.P. partners’ capital	1,~~713~~692,~~478~~687			1,626,567
Noncontrolling interests in consolidated joint ventures	21,~~202~~137			57,141
Total equity	1,~~734~~713,~~680~~824			1,683,708
Total liabilities and equity	$	4,~~213~~435,~~540~~619		$	4,053,963

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

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MACK-CALI REALTY, L.P. AND SUBSIDIARIES

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

	Three Months Ended						~~Six~~Nine Months Ended
	June 30,						June 30,
	September 30,						September 30,
	2016			2015			2016			2015
REVENUES
Base rents	$	~~124~~129,~~223~~523		$	~~121~~119,~~246~~707		$	~~250~~380,~~610~~133		$	~~245~~364,~~039~~746
Escalations and recoveries from tenants	1416,~~110~~177			15,~~842~~050			2945,~~071~~248			3449,~~241~~291
Real estate services	6,~~469~~650			7,~~401~~510			1319,~~281~~931			1522,~~045~~555
Parking income	3,~~532~~443			2,~~850~~749			610,~~688~~131			58,~~392~~141
Other income	~~893~~1,724			1,~~228~~142			24,~~500~~224			23,~~565~~707
Total revenues	~~149~~157,~~227~~517			~~148~~146,~~567~~158			~~302~~459,~~150~~667			~~302~~448,~~282~~440
EXPENSES
Real estate taxes	2220,~~418~~606			2119,~~410~~143			4566,~~644~~250			4363,~~862~~005
Utilities	1014,~~953~~127			13,~~399~~172			2438,~~531~~658			3044,~~974~~146
Operating services	2425,~~024~~553			2524,~~844~~535			5076,~~756~~309			5478,~~072~~607
Real estate services expenses	6,~~211~~361			6,~~208~~673			1319,~~057~~418			1219,~~847~~520
General and administrative	1214,~~755~~007			1113,~~877~~670			2539,~~004~~011			2236,~~888~~558
Acquisition-related costs	~~2,039~~815			~~111~~—			2,~~039~~854			111
Depreciation and amortization	4348,~~459~~117			4244,~~365~~099			86134,~~522~~639			83127,~~167~~266
Total expenses	121,859			121,214			247,553			247,921
Impairments	—			164,176			—			164,176
Operating income	27,368			27,353			54,597			54,361
Total expenses	129,586			285,468			377,139			533,389
Operating income (loss)	27,931			(139,310		)	82,528			(84,949		)
OTHER (EXPENSE) INCOME
Interest expense	(2224,~~932~~233		)	(2624,~~773~~689		)	(4772,~~925~~158		)	(5378,~~988~~677		)
Interest and other investment income (loss)	~~146~~1,262			~~291~~5			~~(523~~739		)	~~558~~563
Equity in earnings (loss) of unconsolidated joint ventures	~~(614~~21,790		)	(23,~~329~~135		)	(219,~~168~~622		)	(52,~~858~~723		)
Gain on change of control of interests	~~5,191~~—			—			15,347			—
Realized gains (losses) and unrealized losses on disposition of rental property, net	27(17,~~117~~053		)	3418,~~399~~718			8568,~~717~~664			3453,~~543~~261
Gain on sale of investment in unconsolidated joint venture	~~5,670~~—			~~6,448~~—			5,670			6,448
Gain from extinguishment of debt	12,420			—			12,420			—
Loss from extinguishment of debt, net	(19,302		)	—			(6,882		)	—
Total other income (expense)	26(37,~~998~~536		)	12(2,~~036~~831		)	6831,~~538~~002			(1821,~~297~~128		)
Net income	54,366			39,389			123,135			36,064
Net income (loss)	(9,605		)	(142,141		)	113,530			(106,077		)
Noncontrolling interest in consolidated joint ventures	~~(311~~65		)	~~373~~(281		)	~~395~~460			~~863~~582
Net income available to common unitholders	$	54,055		$	39,762		$	123,530		$	36,927
Net income (loss) available to common unitholders	$	(9,540	)	$	(142,422	)	$	113,990		$	(105,495	)
Basic earnings per common unit:
Net income available to common unitholders	$	0.54		$	0.40		$	1.23		$	0.37
Net income (loss) available to common unitholders	$	(0.10	)	$	(1.42	)	$	1.14		$	(1.05	)
Diluted earnings per common unit:
Net income available to common unitholders	$	0.54		$	0.40		$	1.23		$	0.37
Net income (loss) available to common unitholders	$	(0.10	)	$	(1.42	)	$	1.13		$	(1.05	)
Basic weighted average units outstanding	100,~~239~~253			100,~~272~~172			100,~~235~~241			100,~~269~~236
Diluted weighted average units outstanding	100,~~401~~253			100,~~314~~172			100,~~359~~486			100,~~313~~236

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

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MACK-CALI REALTY, L.P. AND SUBSIDIARIES

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

	Three Months Ended						~~Six~~Nine Months Ended
	June 30,						June 30,
	September 30,						September 30,
	2016			2015			2016			2015
Net income	$	54,366		$	39,389		$	123,135		$	36,064
Net income (loss)	$	(9,605	)	$	(142,141	)	$	113,530		$	(106,077	)
Other comprehensive income (loss):
Net unrealized loss on derivative instruments for interest rate swaps	(2,913		)	—			(9,253		)	—
Net unrealized gain (loss) on derivative instruments for interest rate swaps	1,725			—			(7,528		)	—
Comprehensive income	$	51,453		$	39,389		$	113,882		$	36,064
Comprehensive income (loss)	$	(7,880	)	$	(142,141	)	$	106,002		$	(106,077	)
Comprehensive income (loss) attributable to noncontrolling interest in consolidated joint ventures	(311		)	373			395			863
Comprehensive (income) loss attributable to noncontrolling interest in consolidated joint ventures	65			(281		)	460			582
Comprehensive income (loss) attributable to common unitholders	$	51(7,~~142~~815	)	$	39(142,~~762~~422	)	$	~~114~~106,~~277~~462		$	36(105,~~927~~495	)

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

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MACK-CALI REALTY, L.P. AND SUBSIDIARIES

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

											Accumulated			Noncontrolling
					General Partner			Limited Partner			Other			Interest
	General Partner		Limited Partner		Common			Common			Comprehensive			in Consolidated
	Common Units		Common Units		Unitholders			Unitholders			Income (Loss)			Joint Ventures			Total Equity
Balance at January 1, 2016	89,584		10,517		$	1,399,419		$	227,148		$	—		$	57,141		$	1,683,708
Net income	—		—		~~110~~102,~~584~~043			1211,~~946~~947			—			(~~395~~460		)	~~123~~113,~~135~~530
Distributions	—		—		(2640,~~894~~341		)	(34,~~274~~947		)	—			—			(3045,~~168~~288		)
Acquisition/increase in noncontrolling interest	—		—		414			—			—			(35,544		)	(35,130		)
Redemption of limited partner common units for shares of general partner common units	19		(19	)	308			(308		)	—			—			—
Shares issued under Dividend Reinvestment and Stock Purchase Plan	1		—		1223			—			—			—			1223
Directors’ deferred compensation plan	—		—		~~198~~285			—			—			—			~~198~~285
Cancellation of restricted shares	—(4	)	—		(75		)	—			—			—			(75		)
Stock compensation	47		—		12,~~411~~788			~~842~~1,511			—			—			24,~~253~~299
Other comprehensive income (loss)	—		—		—			(~~970~~789		)	(86,~~283~~739		)				(97,~~253~~528		)
Balance at June 30, 2016	89,651		10,498		$	1,485,377		$	236,384		$	(8,283	)	$	21,202		$	1,734,680
Balance at September 30, 2016	89,647		10,498		$	1,464,864		$	234,562		$	(6,739	)	$	21,137		$	1,713,824

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

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MACK-CALI REALTY, L.P. AND SUBSIDIARIES

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

	Six Months Ended
	Nine Months Ended
	June 30,
	September 30,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	123,135		$	36,064
Net income (loss)	$	113,530		$	(106,077	)
Adjustments to reconcile net income to net cash provided by
Operating activities:
Depreciation and amortization, including related intangible assets	87134,~~168~~756			83128,~~930~~422
Amortization of directors deferred compensation stock units	~~198~~285			~~197~~297
Amortization of stock compensation	24,~~253~~299			~~805~~1,500
Amortization of deferred financing costs	23,~~349~~583			12,~~901~~846
Amortization of debt discount and mark-to-market	1,~~126~~417			2,~~018~~791
Equity in (earnings) loss of unconsolidated joint ventures	2(19,~~168~~622		)	52,~~858~~723
Distributions of cumulative earnings from unconsolidated joint ventures	24,~~415~~833			23,~~698~~145
Gain on change of control of interests	(15,347		)	—
Realized (gains) losses and unrealized losses on disposition of rental property, net	(8568,~~717~~664		)	(3453,~~543~~261		)
Gain on sale of investments in unconsolidated joint ventures	(5,670		)	(6,448		)
Gain from extinguishment of debt	(12,420		)	—
Impairments	—			164,176
Changes in operating assets and liabilities:
(Increase) decrease in unbilled rents receivable, net	(69,~~745~~860		)	~~801~~17
Increase in deferred charges, goodwill and other assets	(2511,~~470~~173		)	(1423,~~802~~387		)
Decrease (increase) in accounts receivable, net	~~4,580~~424			(~~3,561~~603		)
Increase (decrease) in accounts payable, accrued expenses and other liabilities	(512,~~433~~656		)	15,~~478~~298
Decrease in rents received in advance and security deposits	(~~559~~1,425		)	(34,~~053~~502		)
(Decrease) increase in accrued interest payable	(31,~~196~~500		)	67,~~342~~751
Net cash provided by operating activities	$	64104,~~835~~790		$	79124,~~685~~688
CASH FLOWS FROM INVESTING ACTIVITIES
Rental property acquisitions and related intangibles	$	(~~217~~405,~~006~~808	)	$	(46,057	)
Rental property additions and improvements	(5194,~~638~~017		)	(4259,~~881~~700		)
Development of rental property and other related costs	(77150,~~386~~592		)	(2749,~~869~~959		)
Proceeds from the sales of rental property	~~326~~409,~~899~~101			8081,~~581~~049
Proceeds from the sale of investments in unconsolidated joint ventures	6,420			6,448
Repayment of notes receivable	~~250~~375			7,750
Acquisition of noncontrolling interests	(37,946		)	—
Investment in unconsolidated joint ventures	(2331,~~657~~318		)	(4968,~~305~~468		)
Distributions in excess of cumulative earnings from unconsolidated joint ventures	320,~~189~~906			14,~~985~~329
Decrease (increase) in restricted cash	452			(7,808		)
Increase in restricted cash	(287		)	(5,823		)
Net cash used in investing activities	$	(70283,~~423~~166	)	$	(3590,~~156~~431	)
CASH FLOW FROM FINANCING ACTIVITIES
Borrowings from revolving credit facility	$	~~355~~793,000		$	~~129~~179,000
Repayment of revolving credit facility	(~~435~~853,000		)	(~~129~~144,000		)
Repayment of senior unsecured notes	(~~200~~314,~~000~~755		)	—
Borrowings from unsecured term loan	350,000			—
Proceeds from mortgages and loans payable	~~106~~426,~~906~~613			26,~~897~~193
Repayment of mortgages, loans payable and other obligations	(~~143~~187,~~322~~969		)	(2729,~~251~~307		)
Payment of financing costs	(67,~~656~~050		)	(98		)
Contributions from noncontrolling interests	1,065			~~158~~251
Payment of distributions	(3045,~~025~~050		)	(2944,~~971~~979		)
Net cash used in financing activities	$	(2,032	)	$	(54,265	)
Net cash provided by (used in) financing activities	$	162,854		$	(32,940	)
Net decrease in cash and cash equivalents	$	(7,620	)	$	(9,736	)
Net (decrease) increase in cash and cash equivalents	$	(15,522	)	$	1,317
Cash and cash equivalents, beginning of period	37,077			29,549
Cash and cash equivalents, end of period	$	2921,~~457~~555		$	1930,~~813~~866

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

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MACK-CALI REALTY CORPORATION, MACK-CALI REALTY, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION

Mack-Cali Realty Corporation, a Maryland corporation, together with its subsidiaries (collectively, the “General Partner”) is a fully-integrated self-administered, self-managed real estate investment trust (“REIT”). The General Partner controls Mack-Cali Realty, L.P., a Delaware limited partnership, together with its subsidiaries (collectively, the “~~Company” or “~~Operating Partnership”), ~~was~~as ~~formed~~its onsole ~~May 31,~~general ~~1994~~partner toand ~~conduct~~owned ~~the~~an ~~business~~89.5 ofpercent ~~providing~~common ~~leasing,~~unit ~~management,~~interest ~~acquisition,~~in ~~development,~~the ~~construction~~Operating ~~and~~Partnership ~~tenant-related~~as ~~services~~of ~~for~~both ~~its~~September 30, ~~sole~~2016 ~~general~~and ~~partner~~December 31, ~~Mack-Cali~~2015. The ~~Realty~~General ~~Corporation~~Partner’s (“business is the ~~Corporation”~~ownership orof ~~“General~~interests ~~Partner”). The~~in ~~Company,~~and ~~through~~operation ~~its~~of ~~operating~~the ~~divisions~~Operating Partnership and ~~subsidiaries,~~all ~~including~~of the ~~Mack-Cali~~General ~~property-owning~~Partner’s ~~partnerships~~expenses ~~and~~are ~~limited~~incurred ~~liability~~for ~~companies~~the ~~(collectively,~~benefit of the ~~“Property~~Operating ~~Partnerships”)~~Partnership. The General Partner is reimbursed by the ~~entity~~Operating ~~through~~Partnership ~~which~~for all ofexpenses it incurs relating to the ~~General~~ownership ~~Partner’s~~and ~~operations~~operation ~~are~~of ~~conducted~~the Operating Partnership.

The ~~General~~Operating ~~Partner~~Partnership isconducts athe ~~fully-integrated~~business ~~self-administered~~of providing leasing, ~~self-managed~~management, ~~real~~acquisition, ~~estate~~development, ~~investment~~construction ~~trust~~and ~~(“REIT”).~~tenant-related ~~The~~services for its General Partner. The ~~controls~~Operating ~~the~~Partnership, ~~Company~~through as its ~~sole~~operating ~~general~~divisions ~~partner~~ and ~~owned~~subsidiaries, anincluding ~~89.5~~the ~~percent~~Mack-Cali property-owning partnerships and 89limited liability companies, is the entity through which all of the General Partner’s operations are conducted.5 Unless ~~percent~~stated ~~common~~otherwise ~~unit~~or ~~interest~~the incontext requires, the “Company” asrefers ofto ~~June 30,~~the ~~2016~~General Partner and ~~December 31,~~its ~~2015~~subsidiaries, ~~respectively~~including the Operating Partnership and its subsidiaries.

~~The~~As ~~General~~of ~~Partner’s~~September 30, ~~business~~2016, is the ~~ownership~~Company ofowned or had interests in ~~and~~263 ~~operation~~properties, consisting of ~~the~~136 ~~Company~~office and 110 flex properties, totaling approximately 29.0 million square feet, leased to approximately 1,800 commercial tenants, and ~~all~~17 ofmulti-family ~~the~~rental ~~General~~properties ~~Partner’s~~containing ~~expenses~~5,214 ~~are~~residential ~~incurred~~units, ~~for~~plus developable land (collectively, the ~~benefit~~“Properties”). The Properties are comprised of 136 office buildings totaling approximately 23.7 million square feet (which include 36 buildings, aggregating approximately 5.6 million square feet owned by unconsolidated joint ventures in which the Company has investment interests), 94 office/flex buildings totaling approximately 4. ~~The~~8 ~~General~~million ~~Partner~~square isfeet, ~~reimbursed~~six industrial/warehouse buildings totaling approximately 387,400 square feet, 17 multi-family properties totaling 5,214 apartments (which include ten properties aggregating 3,587 apartments owned by unconsolidated joint ventures in which the Company ~~for~~has ~~all~~investment ~~expenses~~interests), itsix ~~incurs~~parking/retail ~~relating~~properties tototaling approximately 130,100 square feet (which include two buildings aggregating 81,700 square feet owned by unconsolidated joint ventures in which the ~~ownership~~Company has investment interests), one hotel (which is owned by an unconsolidated joint venture in which the Company has an investment interest) and ~~operation~~three parcels of land leased to others. The Properties are located in seven states, primarily in the ~~Company~~Northeast, plus the District of Columbia.

As of June 30, 2016, the Company owned or had interests in 269 properties, consisting of 142 office and 109 flex properties, totaling approximately 29.1 million square feet, leased to approximately 1,700 commercial tenants, and 18 multi-family rental properties containing 5,434 residential units, plus developable land (collectively, the “Properties”). The Properties are comprised of 142 office buildings totaling approximately 23.8 million square feet (which include 36 buildings, aggregating approximately 5.6 million square feet owned by unconsolidated joint ventures in which the Company has investment interests), 94 office/flex buildings totaling approximately 4.8 million square feet, six industrial/warehouse buildings totaling approximately 387,400 square feet, 18 multi-family properties totaling 5,434 apartments (which include ten properties aggregating 3,587 apartments owned by unconsolidated joint ventures in which the Company has investment interests), five parking/retail properties totaling approximately 121,700 square feet (which include two buildings aggregating 81,700 square feet owned by unconsolidated joint ventures in which the Company has investment interests), one hotel (which is owned by an unconsolidated joint venture in which the Company has an investment interest) and three parcels of land leased to others. The Properties are located in seven states, primarily in the Northeast, plus the District of Columbia.

BASIS OF PRESENTATION

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

Accounting Standards Codification (“ASC”) 810, Consolidation, provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIEs. Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and substantially all of the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the variable interest entity’s performance: and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE.

On January 1, 2016, the Company adopted accounting guidance under ASC 810, Consolidation, modifying the analysis it must perform to determine whether it should consolidate certain types of legal entities. The guidance does not amend the existing disclosure requirements for variable interest entities or voting interest model entities. The guidance, however, modified the requirements to qualify under the voting interest model. Under the revised guidance, the Operating Partnership will be a variable interest entity of the parent company, Mack-Cali Realty Corporation. As the Operating Partnership is already consolidated in the balance sheets of Mack-Cali Realty Corporation, the identification of this entity as a variable interest entity has no impact on the

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~~balance sheets of Mack-Cali Realty Corporation, the identification of this entity as a variable interest entity has no impact on the~~ consolidated financial statements of Mack-Cali Realty Corporation. There were no other legal entities qualifying under the scope of the revised guidance that were consolidated as a result of the adoption.

As of ~~June~~September 30, 2016 and December 31, 2015, the Company’s investments in consolidated real estate joint ventures, which are variable interest entities in which the Company is deemed to be the primary beneficiary have total real estate assets of $~~180~~193.1 million and $273.4 million, respectively, mortgages of $6070.51 million and $89.5 million, respectively, and other liabilities of $20.27 million and $17.5 million, respectively.

The financial statements have been prepared in conformity with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on management’s historical experience that are believed to be reasonable at the time. However, because future events and their effects cannot be determined with certainty, the determination of estimates requires the exercise of judgment.

Actual results could differ from those estimates. Certain reclassifications have been made to prior period amounts in order to conform with current period presentation.

2. SIGNIFICANT ACCOUNTING POLICIES

Rental

Property Rental properties are stated at cost less accumulated depreciation and amortization. Costs directly related to the acquisition, development and construction of rental properties are capitalized. Acquisition-—related costs are expensed as incurred. Capitalized development and construction costs include pre-construction costs essential to the development of the property, development and construction costs, interest, property taxes, insurance, salaries and other project costs incurred during the period of development. Capitalized development and construction salaries and related costs approximated $0.87 million and $10.29 million for the three months ended ~~June~~September 30, 2016 and 2015, respectively, and $1.39 million and $23.5 million for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively. Included in total rental property is construction, tenant improvement and development in-progress of $~~226.7~~301 million and $88.7 million as of ~~June~~September 30, 2016 and December 31, 2015, respectively. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. Fully-depreciated assets are removed from the accounts.

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

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

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

Upon acquisition of rental property, the Company estimates the fair value of acquired tangible assets, consisting of land, building and improvements, and identified intangible assets and liabilities assumed, generally consisting of the fair value of (i) above and below -market leases, (ii) in-place leases and (iii) tenant relationships. The Company allocates the purchase price to the assets acquired and liabilities assumed based on their fair values. The Company records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed differ from the purchase consideration of a transaction.

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~~their fair values. The Company records goodwill or a gain on bargain purchase (if any) if the net assets acquired/liabilities assumed differ from the purchase consideration of a transaction.~~ In estimating the fair value of the tangible and intangible assets acquired, the Company considers information obtained about each property as a result of its due diligence and marketing and leasing activities, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs net of depreciation, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

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

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

On a periodic basis, management assesses whether there are any indicators that the value of the Company’s rental properties held for use may be impaired. In addition to identifying any specific circumstances which may affect a property or properties, management considers other criteria for determining which properties may require assessment for potential impairment. The criteria considered by management include reviewing low leased percentages, significant near-term lease expirations, current and historical operating and/or cash flow losses, near-term mortgage debt maturities or other factors that might impact the Company’s intent and ability to hold the property. A property’s value is impaired only if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property is less than the carrying value of the property. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying value of the property over the fair value of the property. The Company’s estimates of aggregate future cash flows expected to be generated by each property are based on a number of assumptions. These assumptions are generally based on management’s experience in its local real estate markets and the effects of current market conditions. The assumptions are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and costs to operate each property. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analyses may not be achieved, and actual losses or impairments may be realized in the future.

Rental Property

Held for Sale When assets are identified by management as held for sale, the Company discontinues depreciating the assets and estimates the sales price, net of selling costs, of such assets. The Company generally considers assets to be held for sale when the transaction has received appropriate corporate authority, and there are no significant contingencies relating to the sale. If, in management’s opinion, the estimated net sales price, net of selling costs, of the assets which have been identified as held for sale is less than the ~~net~~carrying ~~book~~ value of the assets, a valuation allowance is established.

11If circumstances arise that previously were considered unlikely and, as a result, the Company decides not to sell a property previously classified as held for sale, the property is reclassified as held and used. A property that is reclassified is measured and recorded individually at the lower of (a) its carrying value before the property was

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

Investments in

Unconsolidated

Joint Ventures The Company accounts for its investments in unconsolidated joint ventures under the equity method of accounting. The Company applies the equity method by initially recording these investments at cost, as Investments in Unconsolidated Joint Ventures, subsequently adjusted for equity in earnings and cash contributions and distributions. The outside basis portion of the Company’s joint ventures is amortized over the anticipated useful lives of the underlying ventures’ tangible and intangible assets acquired and liabilities assumed. Generally, the Company would discontinue applying the equity method when the investment (and any advances) is reduced to zero and would not provide for additional losses unless the Company has guaranteed obligations of the venture or is otherwise committed to providing further financial support for the investee. If the venture subsequently generates income, the Company only recognizes its share of such income to the extent it exceeds its share of previously unrecognized losses.

If the venture subsequently makes distributions and the Company does not have an implied or actual commitment to support the operations of the venture, including a general partner interest in the investee, the Company will not record a basis less than zero, rather such amounts will be recorded as equity in earnings of unconsolidated joint ventures.

On a periodic basis, management assesses whether there are any indicators that the value of the Company’s investments in unconsolidated joint ventures may be impaired. An investment is impaired only if management’s estimate of the value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying value of the investment over the value of the investment. The Company’s estimates of value for each investment (particularly in real estate joint ventures) are based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for space, competition for tenants, changes in market rental rates, and operating costs. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the values estimated by management in its impairment analyses may not be realized, and actual losses or impairment may be realized in the future. See Note 4: Investments in Unconsolidated Joint Ventures.

Cash and Cash

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

Deferred

Financing Costs Costs incurred in obtaining financing are capitalized and amortized over the term of the related indebtedness. Deferred financing costs are presented in the balance sheet as a direct deduction from the carrying value of the debt liability to which they relate, except deferred financing costs related to the revolving credit facility, which are presented in deferred charges, goodwill and other assets. In all cases, amortization of such costs is included in interest expense and was $1,~~180~~234,000 and $~~948~~945,000 for the three months ended ~~June~~September 30, 2016 and 2015, respectively, and $23,~~349~~583,000 and $12,~~901~~846,000 for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively. If a financing obligation is extinguished early, any unamortized deferred financing costs are written off and included in gains (losses) from ~~early~~ extinguishment of debt. NoIncluded ~~such~~in loss from extinguishment of debt, net of gains, of $19.3 million and $6.9 million for the three and nine months ended September 30, 2016, respectively, were unamortized deferred financing costs which were written off of $346,000 for both the ~~six~~three and nine months ended ~~June~~September 30, 2016 ~~and 2015~~.

Deferred

Leasing Costs Costs incurred in connection with commercial leases are capitalized and amortized on a straight-line basis over the terms of the related leases and included in depreciation and amortization. Unamortized deferred leasing costs are charged to amortization expense upon early termination of the lease. Certain employees of the ~~Corporation~~Company are compensated for providing leasing services to the Properties. The portion of such compensation related to commercial leases, which is capitalized and amortized, and included in deferred charges, goodwill and other assets, net, was approximately $~~870~~790,000 and $~~846~~922,000 for the three months ended ~~June~~September 30, 2016 and 2015, respectively, and $12,~~650~~440,000 and $12,~~816~~738,000 for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively.

12Goodwill Goodwill represents the excess of the purchase price over the fair value of net tangible and intangible assets acquired in a business combination. Goodwill is allocated to various reporting units, as applicable. Each of the Company’s segments consists of a reporting unit. Goodwill is not amortized. Management performs an annual impairment test for goodwill during the fourth quarter and between annual tests, management evaluates the

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Goodwill Goodwill represents the excess of the purchase price over the fair value of net tangible and intangible assets acquired in a business combination. Goodwill is allocated to various reporting units, as applicable. Each of the Company’s segments consists of a reporting unit. Goodwill is not amortized. Management performs an annual impairment test for goodwill during the fourth quarter and between annual tests, management evaluates the recoverability of goodwill whenever events or changes in circumstances indicate that the carrying value of goodwill may not be fully recoverable. In its impairment tests of goodwill, management first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, based on this assessment, management determines that the fair value of the reporting unit is not less than its carrying value, then performing the additional two-step impairment test is unnecessary. If the carrying value of goodwill exceeds its fair value, an impairment charge is recognized.

Derivative

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

Revenue

Recognition Base rental revenue is recognized on a straight-line basis over the terms of the respective leases. Unbilled rents receivable represents the cumulative amount by which straight-line rental revenue exceeds rents currently billed in accordance with the lease agreements.

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

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

Real estate services revenue includes property management, development, construction and leasing commission fees and other services, and payroll and related costs reimbursed from clients. Fee income derived from the Company’s unconsolidated joint ventures (which are capitalized by such ventures) are recognized to the extent attributable to the unaffiliated ownership interests.

Parking income includes income from parking spaces leased to tenants and others.

Other income includes income from tenants for additional services arranged for by the Company and income from tenants for early lease terminations.

Allowance for

Doubtful Accounts Management performs a detailed review of amounts due from tenants to determine if an allowance for doubtful accounts is required based on factors affecting the collectability of the accounts receivable balances. The factors considered by management in determining which individual tenant receivable balances, or aggregate receivable balances, require a collectability allowance include the age of the receivable, the tenant’s payment history, the nature of the charges, any communications regarding the charges and other related information. Management’s estimate of the allowance for doubtful accounts requires management to exercise significant judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income.

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judgment about the timing, frequency and severity of collection losses, which affects the allowance and net income.

Income and

Other Taxes The ~~Company~~General isPartner ahas ~~partnership,~~elected ~~and,~~to be taxed as a ~~result,~~REIT ~~all~~under ~~income~~Sections ~~and~~856 ~~losses~~through 860 of the ~~partnership~~Internal ~~are~~Revenue ~~allocated~~Code toof 1986, as amended (the ~~partners~~“Code”). As ~~for~~a ~~inclusion~~REIT, inthe ~~their~~General ~~respective~~Partner ~~tax~~generally ~~returns. Accordingly,~~will nonot ~~provision~~be orsubject ~~benefit~~to ~~for~~corporate federal income ~~taxes~~tax ~~has~~(including ~~been~~alternative ~~made~~minimum intax) ~~the~~on ~~accompanying~~net ~~financial~~income ~~statements.~~that it currently distributes to

Certain of the Company’s corporate subsidiaries are taxable REIT subsidiaries (each a “TRS”). In general, a TRS of the Company may perform additional services for tenants of the Company and generally may engage in any real estate or non-real estate related business (except for the operation or management of health care facilities or lodging facilities or the providing to any person, under a franchise, license or otherwise, rights to any brand name under which any lodging facility or health care facility is operated). A TRS is subject to corporate federal income tax. The Company has conducted business through its TRS entities for certain property management, development, construction and other related services, as well as to hold a joint venture interest in a hotel and other matters.20

AsTable of June 30, 2016, the Company had a deferred tax asset related to its TRS activity with a balance of approximately $23.0 million which has been fully reserved for through a valuation allowance. If the Corporation fails to qualify as a REIT in any taxable year, the Corporation will be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate tax rates. The Corporation is subject to certain state and local taxes.Contents

its shareholders, provided that the General Partner satisfies certain organizational and operational requirements including the requirement to distribute at least 90 percent of its REIT taxable income (determined by excluding any net capital gains) to its shareholders. If and to the extent the General Partner retains and does not distribute any net capital gains, the General Partner will be required to pay federal, state and local taxes, as applicable, on such net capital gains at the rate applicable to capital gains of a corporation.

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

The Company has elected to treat certain of its corporate subsidiaries as taxable REIT subsidiaries (each a “TRS”). In general, a TRS of the Company may perform additional services for tenants of the Company and generally may engage in any real estate or non-real estate related business (except for the operation or management of health care facilities or lodging facilities or the providing to any person, under a franchise, license or otherwise, rights to any brand name under which any lodging facility or health care facility is operated). A TRS is subject to corporate federal income tax. The Company has conducted business through its TRS entities for certain property management, development, construction and other related services, as well as to hold a joint venture interest in a hotel and other matters.

As of September 30, 2016, the Company had a deferred tax asset related to its TRS activity with a balance of approximately $21.8 million which has been fully reserved for through a valuation allowance. If the General Partner fails to qualify as a REIT in any taxable year, the General Partner will be subject to federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate tax rates. The General Partner is subject to certain state and local taxes.

Pursuant to the amended provisions related to uncertain tax provisions of ASC 740, Income Taxes, the Company recognized no material adjustments regarding its tax accounting treatment. The Company expects to recognize interest and penalties related to uncertain tax positions, if any, as income tax expense, which is included in general and administrative expense.

In the normal course of business, the Company or one of its subsidiaries is subject to examination by federal, state and local jurisdictions in which it operates, where applicable. As of ~~June~~September 30, 2016, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations are generally from the year 2011 forward.

Earnings

Per Unit The Company presents both basic and diluted earnings per unit (“EPU”). Basic EPU excludes dilution and is computed by dividing net income available to common unitholders by the weighted average number of units outstanding for the period. Diluted EPU reflects the potential dilution that could occur if securities or other contracts to issue common units were exercised or converted into common units, where such exercise or conversion would result in a lower EPU amount from continuing operations amount. Units whose issuance is contingent upon the satisfaction of certain conditions shall be considered outstanding and included in the computation of diluted EPU as follows (i) if all necessary conditions have been satisfied by the end of the period (the events have occurred), those units shall be included as of the beginning of the period in which the conditions were satisfied (or as of the date of the grant, if later) or (ii) if all necessary conditions have not been satisfied by the end of the period, the number of contingently issuable units included in diluted EPU shall be based on the number of units, if any, that would be issuable if the end of the reporting period were the end of the contingency period (for example, the number of units that would be issuable based on current period earnings or period-end market price) and if the result would be dilutive. Those contingently issuable units shall be included in the denominator of diluted EPU as of the beginning of the period (or as of the date of the grant, if later).Share

or Unit The Company presents both basic and diluted earnings per share or unit (“EPS or EPU”). Basic EPS or EPU excludes dilution and is computed by dividing net income available to common shareholders or unitholders by the weighted average number of shares or units outstanding for the period. Diluted EPS or EPU reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower EPS or EPU from continuing operations amount. Shares or Units whose issuance is contingent upon the satisfaction of certain conditions shall be considered outstanding and included in the computation of diluted EPS or EPU as follows (i) if all necessary conditions have been satisfied by the end of the period (the events have occurred), those shares or units shall be included as of the beginning of the period in which the conditions were satisfied (or as of the date of the grant, if later) or (ii) if all necessary conditions have not been satisfied by the end of the period, the number of contingently issuable shares or units included in diluted EPS or EPU shall be based on the number of shares or units, if any, that would be issuable if the end of the reporting period were the end of the contingency period (for example, the number of shares or units that would be issuable based on current period earnings or period-end market price) and if the result would be dilutive. Those contingently issuable shares or units shall be included in the denominator of diluted EPS or EPU as of the beginning of the period (or as of the date of the grant, if later).

Dividends and

Distributions

Payable The dividends and distributions payable at ~~June~~September 30, 2016 represents dividends payable to common shareholders (89,647,443 shares) and distributions payable to noncontrolling interest unitholders of the Operating Partnership (~~100~~10,~~148~~497,~~587~~946 common units and 657,373 LTIP units) for all such holders of record as of ~~July~~October 65, 2016 with respect to the ~~second~~third quarter 2016. The ~~second~~third quarter 2016 ~~unit~~common ~~distributions~~stock ofdividends ~~$0.15 per unit were approved by the Corporation’s Board of Directors on June 1, 2016~~ and ~~paid on July 15, 2016.~~

The distributions payable at December 31, 2015 represents distributions payable to common unitholders (100,100,852 common units) for all such holders of record as of January 6, 2016 with respect to the fourth 21

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~~quarter 2015. The fourth quarter 2015 common~~ unit distributions of $0.15 per common share and unit were approved by the ~~Corporation~~General Partner’s Board of Directors on ~~December~~September 827, ~~2015~~2016 and paid on ~~January~~October 1514, 2016.

The dividends and distributions payable at December 31, 2015 represents dividends payable to common shareholders (89,584,008 shares) and distributions payable to noncontrolling interest common unitholders of the Operating Partnership (10,516,844 common units) for all such holders of record as of January 6, 2016 with respect to the fourth quarter 2015. The fourth quarter 2015 common stock dividends and common unit distributions of $0.15 per common share and unit were approved by the General Partner’s Board of Directors on December 8, 2015 and paid on January 15, 2016.

Costs Incurred

For Stock

Issuances Costs incurred in connection with the ~~Corporation~~Company’s stock issuances are reflected as a reduction of ~~General~~additional ~~Partner’s~~paid-in capital.

Stock

Compensation The Company accounts for stock compensation in accordance with the provisions of ASC 718, Compensation-Stock Compensation. These provisions require that the estimated fair value of restricted stock (“Restricted Stock Awards”), restricted stock units (“RSUs”), performance share units (“PSUs”), long-term incentive plan awards and stock options at the grant date be amortized ratably into expense over the appropriate vesting period. The Company recorded stock compensation expense of $12,~~469~~046,000 and $~~492~~695,000 for the three months ended ~~June~~September 30, 2016 and 2015, respectively, and $24,~~253~~299,000 and $~~805~~1,500,000 for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively.

Other

Comprehensive

Income (Loss) Other comprehensive income (loss) includes items that are recorded in equity, such as effective portions of derivatives designated as cash flow hedges or unrealized holding gains or losses on marketable securities available for sale.

Fair Value

Hierarchy The standard Fair Value Measurements specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). The following summarizes the fair value hierarchy:

· Level 1: Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

· Level 2: Quoted prices for identical assets and liabilities in markets that are inactive, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly, such as interest rates and yield curves that are observable at commonly quoted intervals and

· Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Discontinued

Operations In April 2014, the Financial Accounting Standards Board (“FASB”) issued guidance related to the reporting of discontinued operation and disclosures of disposals of components of an entity. This guidance defines a discontinued operation as a component or group of components disposed or classified as held for sale and represents a strategic shift that has (or will have) a major effect on an entity’s operations and final result; the guidance states that a strategic shift could include a disposal of a major geographical area of operations, a major line of business, a major equity method investment or other major parts of an entity. The guidance also provides for additional disclosure requirements in connection with both discontinued operations and other dispositions not qualifying as discontinued operations. The guidance is effective for all companies for annual and interim periods beginning on or after December 15, 2014. The guidance applies prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. The Company adopted this standard effective with the interim period beginning January 1, 2014. Prior to January 1, 2014, properties identified as held for sale and/or disposed of were presented in discontinued operations.

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dispositions not qualifying as discontinued operations. The guidance is effective for all companies for annual and interim periods beginning on or after December 15, 2014. The guidance applies prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. The Company adopted this standard effective with the interim period beginning January 1, 2014. Prior to January 1, 2014, properties identified as held for sale and/or disposed of were presented in discontinued operations.

Impact Of

Recently-Issued

Accounting

Standards In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In adopting ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. Additionally, this guidance requires improved disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning after December 15, 2017, and early adoption is permitted for periods beginning after December 15, 2016. The Company is currently in the process of evaluating the impact the adoption of ASU 2014-09 will have on the Company’s financial position or results of operations.

In August 2014, the FASB issued ASU 2014-15, which requires management to evaluate whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern, and to provide certain disclosures when it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. ASU 2014-15 is effective for the annual period ended December 31, 2016 and for annual periods and interim periods thereafter with early adoption permitted. The adoption of ASU 2014-15 is not expected to materially impact the Company’s consolidated financial statements or disclosures.

In February 2016, the FASB issued ASU 2016-02, modifying the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for in the same manner as operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The guidance is expected to impact the consolidated financial statements as the Company has certain operating and land lease arrangements for which it is the lessee. The guidance supersedes previously issued guidance under ASC Topic 840 “Leases.” The guidance is effective on January 1, 2019, with early adoption permitted. The Company is currently in the process of evaluating the impact the adoption of ASU 2016-02 will have on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU 2016-07, which eliminates a requirement for the retroactive adjustment on a step by step basis of the investment, results of operations, and retained earnings as if the equity method had been effective during all previous periods that the investment had been held when an investment qualifies for equity method accounting due to an increase in the level of ownership or degree of influence. The cost of acquiring the additional interest in the investee is to be added to the current basis of the investor’s previously held interest and the equity method of accounting should be adopted as of the date the investment becomes qualified for equity method accounting. This guidance is to be applied on a prospective basis and is effective for interim and annual periods beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been previously issued. The Company is currently in the process of evaluating the impact the adoption of ASU 2016-07 will have on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The new guidance allows for entities to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. In addition, the guidance allows employers to withhold shares to satisfy minimum statutory tax withholding requirements up to the employees’ maximum individual tax rate without causing the award to be classified as a liability. The guidance also stipulates that cash paid by an employer to a taxing authority when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. This guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption is

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without causing the award to be classified as a liability. The guidance also stipulates that cash paid by an employer to a taxing authority when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. This guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is currently in the process of evaluating the impact the adoption of ASU 2016-09 will have on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 addresses eight specific cash flow issues and intends to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This guidance is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted. The Company is currently in the process of evaluating the impact the adoption of ASU 2016-15 will have on the Company’s consolidated statement of cash flows.

3. RECENT TRANSACTIONS

Acquisitions

The Company acquired the following office properties during the ~~six~~nine months ended ~~June~~September 30, 2016 (dollars in thousands):

Acquisition			# of	Rentable	Acquisition
Date	Property Address	Location	Bldgs.	Square Feet	Cost
04/04/16	11 Martine Avenue (a)	White Plains, New York	1	82,000	$	10,750
04/07/16	320, 321 University Avenue (b)	Newark, New Jersey	2	147,406	23,000
06/02/16	101 Wood Avenue South (c)	Edison, New Jersey	1	262,841	82,300
Total Acquisitions			4	492,247	$	116,050
07/01/16	111 River Street (c)	Hoboken, New Jersey	1	566,215	210,761
Total Acquisitions			5	1,058,462	$	326,811

(a) Acquisition represented four units of condominium interests which collectively comprise floors 2 through 5. Upon completion of the acquisition, the Company owns the entire 14-story 262,000 square-foot building. The acquisition was funded using available cash.

(b) This acquisition was funded through borrowings under the Company’s unsecured revolving credit facility.

(c) This acquisition was funded using available cash and through borrowings under the Company’s unsecured revolving credit facility.

The purchase prices were preliminarily allocated to the net assets acquired, as follows (in thousands):

			320, 321
	11 Martine		University		101 Wood			111 River
	Avenue		Avenue		Avenue			Street
Land	$	2,460	$	7,305	$	8,509
Land and leasehold interest	$	2,460	$	7,305	$	8,509		$	204
Buildings and improvements	8,290		15,695		72,738			198,609
Above market leases (1)	—		—		58
Above market leases (a)	—		—		58			617
In-place lease values (1)	—		—		6,743
In-place lease values (a)	—		—		6,743			43,801
					88,048
Other assets	—		—		—			11,279
Less: Below market lease values (1)	—		—		(5,748		)
					88,048			254,510
Net assets recorded upon acquisition	$	10,750	$	23,000	$	82,300
Less: Below market lease values (a)	—		—		(5,748		)	(43,749		)
Net assets recorded upon acquisition	$	10,750	$	23,000	$	82,300		$	210,761

(1a) Above market, in-place and below market leases will be amortized over a weighted-average term of 68.31 years.

On July 1, 2016, the Company acquired a 566,000 square-foot office property located in Hoboken, New Jersey, for approximately $235 million. It was not practicable to finalize the purchase price allocation for this acquisition given the short period of time between the acquisition date and the issuance of this Report.

Consolidations

On January 5, 2016, the Company, which held a 50 percent subordinated interest in the unconsolidated joint venture, Overlook Ridge Apartment Investors LLC, a 371-unit multi-family operating property located in Malden, Massachusetts, acquired the remaining interest for $39.8 million in cash plus the assumption of a first mortgage loan secured by the property with a principal balance of $52.7 million. The cash portion of the acquisition was funded primarily through borrowings under the Company’s unsecured revolving credit facility. Upon acquisition, the Company consolidated the asset and accordingly, remeasured its equity interests, as required by the FASB’s consolidation guidance, at fair value (based upon the income approach using current rates and market cap rates and discount rates). As a result, the Company recorded a gain on change of control of interests of $10.2 million in the ~~six~~nine months ended ~~June~~September 30, 2016. On January 19, 2016, the Company repaid the assumed loan and obtained a new loan secured by the property in the amount of $72.5 million, which bears interest at 3.625 percent and matures in February 2023. See Note 10: Mortgages, Loans Payable and Other Obligations.

During the three months ended June 30, 2016, the Company, which held a 38.25 percent subordinate interest in the unconsolidated Portside Apartment Developers, L.L.C., a joint venture which owns a 175-unit operating multi-family property located in East Boston, Massachusetts, acquired the remaining interests of its joint venture partners for $39.6 million in cash plus the assumption of a mortgage loan secured by the property with a principal balance of $42.5 million and interest at LIBOR plus 215 basis points, with a floor of 275 basis points, maturing in December 2017. See Note 10: Mortgages, loans payable. The cash portion of the acquisition was funded primarily through borrowings under the Company’s unsecured revolving credit facility. Upon acquisition, the Company 24

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During the second quarter 2016, the Company, which held a 38.25 percent subordinate interest in the unconsolidated Portside Apartment Developers, L.L.C., a joint venture which owns a 175-unit operating multi-family property located in East Boston, Massachusetts, acquired the remaining interests of its joint venture partners for $39.6 million in cash plus the assumption of a mortgage loan secured by the property with a principal balance of $42.5 million. The cash portion of the acquisition was funded primarily through borrowings under the Company’s unsecured revolving credit facility. Upon acquisition, the Company consolidated the asset and accordingly, remeasured its equity interests, as required by the FASB’s consolidation guidance, at fair value (based upon the income approach using current rates and market cap rates and discount rates). As a result, the Company recorded a gain on change of control of interests of $5.2 million in the ~~three~~nine ~~and six~~ months ended ~~June~~September 30, 2016. On July 8, 2016, the Company repaid the assumed loan and obtained a new loan secured by the property in the amount of $59 million, which bears interest at 3.44 percent and matures in August 2023. See Note 10: Mortgages, Loans Payable and Other Obligations.

The purchase prices were preliminarily allocated to the net assets acquired upon consolidation, as follows (in thousands):

	Overlook			Portside
	Ridge			Apts
Land and Leasehold Interest	$	11,072		$	9,160
Land and leasehold interest	$	11,072		$	—
Buildings and improvements	87,793			7473,~~147~~713
Furniture, fixtures and equipment	1,695			1,~~003~~038
In-place lease values (1)	4,389			2,548
Other assets	237			10,181
Below market lease values (1)	(489		)	(233		)
In-place lease values (a)	4,389			2,637
Other assets	237			703
Less: Below market lease values (a)	(489		)	(242		)
Sub Total	104,697			87,~~328~~327
Less: Debt assumed	(52,662		)	(42,500		)
Net assets recorded upon consolidation	$	52,035		$	44,~~828~~827

(1a) In-place lease values and below -market lease values will be amortized over a weighted average term of 7.5 ~~years~~months.

Other Investments

On April 26, 2016, the Company acquired the remaining non-controlling interest in a development project located in Weehawken, NJ for $36.4 million. The project includes developable land for approximately 1,100 multi-family units, 290,000 square feet of office space, a 52.5 percent ownership interest in Port Imperial 4/5 Garage and Retail operating properties. The initial phase, Port Imperial South 11, a 295-unit multi-family project, began construction in the ~~second~~first quarter 2016.

Dispositions/Rental Property Held for Sale

The Company disposed of the following office and multi-family properties during the ~~six~~nine months ended ~~June~~September 30, 2016 (dollars in thousands):

										Realized		~~Realized~~
				Rentable		Net			Net			Gain (loss)/
										Gains
Disposition			# of	Square		Sales			Book			Unrealized
				Net			Net			(losses)/
Date	Property/Address	Location	Bldgs.	Feet		Proceeds			Value			Loss
Disposition			# of	Sales			Book			Unrealized
03/11/16	2 Independence Way (a)	Princeton, New Jersey	1	67,401		$	4,119		$	4,283		$	(164	)
Date	Property/Address	Location	Bldgs.	Proceeds			Value			Losses, net
03/24/16	1201 Connecticut Avenue, NW	Washington, D.C.	1	169,549		90,591			31,827			58,764
03/11/16	2 Independence Way (a)	Princeton, New Jersey	1	$	4,119		$	4,283		$	(164	)
04/26/16	125 Broad Street (b)	New York, New York	1	524,476		192,323			200,183			(7,860		)
03/24/16	1201 Connecticut Avenue, NW	Washington, D.C.	1	90,591			31,827			58,764
05/09/16	9200 Edmonston Road	Greenbelt, Maryland	1	38,690		4,083		(c)	3,837			246
04/26/16	125 Broad Street (b)	New York, New York	1	192,323			200,183			(7,860		)
05/18/16	1400 L Street	Washington, D.C.	1	159,000		68,399		(d)	30,053			38,346
05/09/16	9200 Edmonston Road	Greenbelt, Maryland	1	4,083		(c)	3,837			246
Sub-total			5	959,116		359,515			270,183			89,332
05/18/16	1400 L Street	Washington, D.C.	1	68,399		(d)	30,053			38,346
	.
07/14/16	600 Parsippany Road	Parsippany, New Jersey	1	10,465		(e)	5,875			4,590
Unrealized losses on rental property held for sale			—	—		—			—			(3,615		)
07/14/16	4,5,6 Century Drive (f)	Parsippany, New Jersey	3	14,533			17,308			(2,775		)
Totals			5	959,116		$	359,515		$	270,183		$	85,717
08/11/16	Andover Place	Andover, Massachusetts	1	39,863			37,150			2,713
09/26/16	222,233 Mount Airy Road (g)	Basking Ridge, New Jersey	2	8,817			9,039			(222		)
09/27/16	10 Mountainview Road	Upper Saddle River, New Jersey	1	18,990			19,571			(581		)
Sub-total			13	452,183			359,126			93,057
Unrealized losses on rental property held for sale										(24,393		)
Totals			13	$	452,183		$	359,126		$	68,664

(a) The Company recorded an impairment charge of $3.2 million on this property during the year ended December 31, 2015. as(b) itThe ~~estimated~~Company ~~that~~recorded impairment charges of $83.2 million on this property during the ~~carrying~~year ~~value~~ended ofDecember 31, 2015. (c) The Company transferred the deed for this property ~~may~~to ~~not~~the belender ~~recoverable~~in ~~over~~satisfaction of its ~~anticipated~~obligations. ~~holding~~The ~~period~~Company recorded an impairment charge of $3.0 million on this property during the year ended December 31, 2012. (d) $28.5 million of the net sales proceeds from this sale were held by a qualified intermediary until such funds are used in acquisitions. (e) $10.5 million of the net sales proceeds from this sale were held by a qualified intermediary until such funds are used in acquisitions. (f) The Company recorded impairment charges of $9.8 million on these properties during the year ended December 31, 2015. (g) The Company recorded impairment charges of $1 million on these properties during the year ended December 31, 2015.

(b) The Company recorded impairment charges of $83.2 million on this property during the year ended December 31, 2015 as it estimated that the carrying value of the property may not be recoverable over its anticipated holding period.25

(c) The Company transferred the deed for this property to the lender in satisfaction of its obligations. The Company recorded an impairment charge of $3.0 million on this property during the year ended December 31, 2012 as it estimated that the carrying value of the property may not be recoverable over its anticipated holding period.

(d) $28.5 million of the net sales proceeds are held by a qualified intermediary until such funds are used in acquisitions.

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The following table summarizes income (loss) for the three and ~~six~~nine month periods ended ~~June~~September 30, 2016 and 2015 from the properties disposed of during the ~~six~~nine months ended ~~June~~September 30, 2016 and the six properties disposed of during the year ended December 31, 2015: (dollars in thousands)

	Three Months Ended						~~Six~~Nine Months Ended
	June 30,						June 30,
	September 30,						September 30,
	2016			2015			2016			2015
Total revenues	$	1,~~859~~854		$	12,~~203~~934		$	1120,~~608~~048		$	2747,~~680~~583
Operating and other expenses	(21,~~408~~709		)	(7,~~490~~273		)	(813,~~022~~374		)	(1425,~~281~~488		)
Depreciation and amortization	(32,~~173~~979		)	(57,~~641~~798		)	(711,~~275~~590		)	(920,~~994~~061		)
Interest expense	(~~665~~625		)	(21,~~604~~241		)	(12,~~386~~011		)	(56,~~380~~621		)
Income (loss) from properties disposed of	$	(43,~~387~~459	)	$	(3,~~532~~378	)	$	(56,~~075~~927	)	$	(14,~~975~~587	)
Realized gains on dispositions	30,731			34,399			89,332			34,543
Impairments	—			(61,891		)	—			(61,891		)
Total income (loss) from properties disposed of	$	26,344		$	30,867		$	84,257		$	32,568
Realized gains/unrealized Losses on dispositions	7,340			18,718			93,057			53,261
Total income (loss) from properties disposed of	$	3,881		$	(46,551	)	$	86,130		$	(13,217	)

Rental Property Held for Sale, Net

During the three months ended ~~June~~September 30, 2016, the Company signed agreements to ~~dispose~~sell of14 ~~five~~ office properties totaling approximately ~~567,000~~1.8 million square feet, ~~and~~subject ~~one~~to ~~220-unit~~certain ~~multi-family~~conditions, ~~rental~~and ~~property,~~identified ~~subject~~them toas ~~certain~~held ~~conditions. The~~for ~~office~~sale ~~and~~as ~~multi-family~~of ~~rental~~September 30, 2016. The properties are located in ~~Parsippany~~Freehold, New Jersey, ~~Upper Saddle River~~Roseland, New Jersey, ~~and Andover~~Greenbelt, ~~Massachusetts. The~~Maryland ~~Company~~and ~~identified these properties as held for sale at June 30~~Lanham, ~~2016~~Maryland. The total estimated sales proceeds ~~expected~~ from the ~~four~~three separate sales are expected to be approximately $84113 million. The Company determined that the carrying ~~amounts~~value of ~~four~~11 of the office properties were not expected to be recovered from estimated net sales proceeds and accordingly recognized an unrealized loss allowance of $324.64 million at ~~June~~September 30, 2016. In July 2016, the Company completed the disposition of four of these office properties for sales proceeds of approximately $24.9 million. All the remaining dispositions are expected to be completed in the third quarter of 2016.

The following table summarizes the rental property held for sale, net, as of ~~June~~September 30, 2016: (dollars in thousands)

	June 30,
	September 30,
	2016
Land	$	2034,~~229~~802
Buildings and improvements	80165,~~195~~231
Less: Accumulated depreciation	(2372,~~619~~842		)
Less: Unrealized losses on properties held for sale	(324,~~615~~393		)
Rental property held for sale,net	$	73102,~~190~~798

Other assets and liabilities related to the rental properties held for sale, as of ~~June~~September 30, 2016, include $27.06 million in deferred charges, and other assets, $1.5.6 million in Unbilled rents receivable, $02.9 million in Accounts payable, accrued expenses and other liabilities, and $1.2.8 million in Rents received in advance and security deposits. Approximately $312.5 million of these assets and $1.2 .8 million of these liabilities are expected to be written off with the completion of the sales.

Other Sales Agreement

During the three months ended June 30, 2016, the Company also signed an agreement to dispose of a land parcel located in Upper Saddle River, New Jersey, for approximately $41.9 million, subject to certain conditions. The disposition is expected to be completed in the fourth quarter 2016.

Unconsolidated Joint Venture Activity

On April 1, 2016, the Company bought out its partner PruRose Riverwalk G, L.L.C. for $11.3 million and increased its subordinated interest in Riverwalk G Urban Renewal, L.L.C. from 25 percent to 50 percent using borrowings on the Company’s unsecured credit facility. Riverwalk G Urban Renewal, L.L.C., owns a 316-unit operating multi-family property located in West New York, New Jersey.

On May 26, 2016, the Company sold its 50 percent interest in Port Imperial South 15, L.L.C. (“RiversEdge”) and its 20 percent interest in Port Imperial South 13 Urban Renewal, L.L.C. (“RiverParc”), joint ventures that own the 236-unit and the 280-unit multi-family operating properties, respectively, located in Weehawken, New Jersey for $6.4 million. The Company realized a gain on the sale of $5.7 million.

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4. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

As of ~~June~~September 30, 2016, the Company had an aggregate investment of approximately $~~315~~319.28 million in its equity method joint ventures. The Company formed these ventures with unaffiliated third parties, or acquired interests in them, to develop or manage primarily office and multi-family rental properties, or to acquire land in anticipation of possible development of office and multi-family rental properties. As of ~~June~~September 30, 2016, the unconsolidated joint ventures owned: 36 office and two retail properties aggregating approximately 5.7 million square feet, 10 multi-family properties totaling 3,587 apartments, a 350-room hotel, development projects for up to approximately ~~763~~ 822 apartments; and interests and/or rights to developable land parcels able to accommodate up to 4,~~210~~ 151 apartments. The Company’s unconsolidated interests range from 7.5 percent to 85 percent subject to specified priority allocations in certain of the joint ventures.

The amounts reflected in the following tables (except for the Company’s share of equity in earnings) are based on the historical financial information of the individual joint ventures. The Company does not record losses of the joint ventures in excess of its investment balances unless the Company is liable for the obligations of the joint venture or is otherwise committed to provide financial support to the joint venture. The outside basis portion of the Company’s investments in joint ventures is amortized over the anticipated useful lives of the underlying ventures’ tangible and intangible assets acquired and liabilities assumed. Unless otherwise noted below, the debt of the Company’s unconsolidated joint ventures generally is non-recourse to the Company, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions, and material misrepresentations.

The Company has agreed to guarantee repayment of a portion of the debt of its unconsolidated joint ventures. As of ~~June~~September 30, 2016, such debt had a total facility amount of $~~282~~272.2 million of which the Company agreed to guarantee up to $3222 million. As of ~~June~~September 30, 2016, the outstanding balance of such debt totaled $~~199~~221.58 million of which $~~23.1~~22 million was guaranteed by the Company. The Company also posted a $3.6 million letter of credit in support of the South Pier at Harborside joint venture, half of which is indemnified by Hyatt Corporation, the Company’s joint venture partner. The Company performed management, leasing, development and other services for the properties owned by the unconsolidated joint ventures and recognized $1.0.9 million and $1.4 million for such services in the three months ended ~~June~~September 30, 2016 and 2015, respectively. The Company had $01.64 million and $0.8 million in accounts receivable due from its unconsolidated joint ventures as of ~~June~~September 30, 2016 and December 31, 2015, respectively.

Included in the Company’s investments in unconsolidated joint ventures as of ~~June~~September 30, 2016 are four unconsolidated development joint ventures, which are VIEs for which the Company is not the primary beneficiary. These joint ventures are primarily established to develop real estate property for long-term investment and were deemed VIEs primarily based on the fact that the equity investment at risk was not sufficient to permit the entities to finance their activities without additional financial support. The initial equity contributed to these entities was not sufficient to fully finance the real estate construction as development costs are funded by the partners throughout the construction period. The Company determined that it was not the primary beneficiary of these VIEs based on the fact that the Company has shared control of these entities along with the entity’s partners and therefore does not have controlling financial interests in these VIEs. The Company’s aggregate investment in these VIEs was approximately $~~178~~183.46 million as of ~~June~~September 30, 2016. The Company’s maximum exposure to loss as a result of its involvement with these VIEs is estimated to be approximately $~~201~~205.5 6 million, which includes the Company’s current investment and estimated future funding commitments/guarantees of approximately $~~23.1~~ 22 million. The Company has not provided financial support to these VIEs that it was not previously contractually required to provide. In general, future costs of development not financed through third party will be funded with capital contributions from the Company and its outside partners in accordance with their respective ownership percentages.

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Table of Contents

The following is a summary of the Company’s unconsolidated joint ventures as of ~~June~~September 30, 2016 and December 31, 2015: (dollars in thousands, including footnotes)

											Property Debt
	Number of		Company’s		Carrying Value						As of ~~June~~September 30, 2016
	Apartment Units		Effective		~~June~~September 30,			December 31,						Maturity		Interest
Entity / Property Name	or Rentable Square Feet (sf)		Ownership % (a)		2016			2015			Balance			Date		Rate
Multi-family
Marbella RoseGarden, L.L.C./ Marbella (b)	412	units	24.27	%	$	15,~~362~~360		$	15,569		$	95,000		05/01/18		4.99	%
RoseGarden Monaco Holdings, L.L.C./ Monaco (b)	523	units	15.00	%	~~346~~68			937			165,000			02/01/21		4.19	%
Rosewood Morristown, L.L.C. / Metropolitan at 40 Park (c) (d)	130	units	12.50	%	5,784			5,723			45,533				(e)		(e)
Rosewood Morristown, L.L.C. / Metropolitan at 40 Park (b) (c)	130	units	12.50	%	6,958			5,723			44,190				(d)		(d)
Riverwalk G Urban Renewal, L.L.C./ RiverTrace at Port Imperial (b) (f)	316	units	50.00	%	10,683			—			79,393			07/15/21		6.00	%(g)
Riverwalk G Urban Renewal, L.L.C./ RiverTrace at Port Imperial (b) (e)	316	units	50.00	%	10,464			—			79,067			07/15/21		6.00	%(f)
Elmajo Urban Renewal Associates, LLC / Lincoln Harbor (Bldg A&C) (b)	355	units	7.50	%	—			—			128,100			03/01/30		4.00	%
Crystal House Apartments Investors LLC / Crystal House (h)	794	units	25.00	%	29,687			28,114			165,000			04/01/20		3.17	%
Crystal House Apartments Investors LLC / Crystal House (g)	794	units	25.00	%	30,493			28,114			165,000			04/01/20		3.17	%
Roseland/Port Imperial Partners, L.P./ Riverwalk C (b) (i)	363	units	20.00	%	1,678			1,678			—			—		—
Roseland/Port Imperial Partners, L.P./ Riverwalk C (b) (h)	363	units	20.00	%	1,678			1,678			—			—		—
RoseGarden Marbella South, L.L.C./ Marbella II	311	units	24.27	%	17,~~514~~895			16,728			72,~~615~~955			03/30/17		L+2.25	%(ji)
Estuary Urban Renewal Unit B, LLC / Lincoln Harbor (Bldg B) (b)	227	units	7.50	%	—			—			81,900			03/01/30		4.00	%
Riverpark at Harrison I, L.L.C./ Riverpark at Harrison	141	units	45.00	%	2,~~257~~169			2,544			30,000			08/01/25		3.70	%
Capitol Place Mezz LLC / Station Townhouses	378	units	50.00	%	44,~~923~~103			46,267			100,700			07/01/33		4.82	%~~(k)~~
Harborside Unit A Urban Renewal, L.L.C. / URL Harborside	763	units	85.00	%	9899,~~518~~358			96,799			~~119~~142,~~433~~746			08/01/29		5.197	%(lj)
RoseGarden Monaco, L.L.C./ San Remo Land	250	potential units	41.67	%	1,~~370~~385			1,339			—			—		—
Grand Jersey Waterfront URA, L.L.C./ Liberty Landing	850	potential units	50.00	%	337			337			—			—		—
Hillsborough 206 Holdings, L.L.C./ Hillsborough 206	160,000	sf	50.00	%	1,962			1,962			—			—		—
Plaza VIII & IX Associates, L.L.C./ Vacant land (parking operations)	1,225,000	sf	50.00	%	4,~~230~~311			4,055			—			—		—
PruRose Port Imperial South 15, LLC/RiversEdge at Port Imperial (x)	236	units	50.00	%	—			—			—			—		—
PruRose Port Imperial South 13, LLC/RiverParc at Port Imperial (x)	280	units	20.00	%	—			—			—			—		—
Office
Red Bank Corporate Plaza, L.L.C./ Red Bank	92,878	sf	50.00	%	4,~~085~~204			4,140			14,~~776~~626			05/17/1617		L+3.00	%~~(m)~~
12 Vreeland Associates, L.L.C./ 12 Vreeland Road	139,750	sf	50.00	%	6,~~082~~157			5,890			1211,~~171~~420			07/01/23		2.87	%
BNES Associates III / Offices at Crystal Lake	106,345	sf	31.25	%	2,~~587~~695			2,295			5,~~810~~646			11/01/23		4.76	%
KPG-P 100 IMW JV, LLC / 100 Independence Mall West	339,615	sf	33.33	%	—			—			72,000			09/0908/1618		L+75.0095	%(nk)
Keystone-Penn	1,842,820	sf		(ol)	—			—			~~229~~235,~~882~~124				(pm)		(pm)
Keystone-TriState	1,266,384	sf		(qn)	32,~~288~~771			3,958			~~213~~218,~~916~~321				(ro)		(ro)
KPG-MCG Curtis JV, L.L.C./ Curtis Center (s)	885,000	sf	50.00	%	62,144			59,858					(t)		(t)		(t)
KPG-MCG Curtis JV, L.L.C./ Curtis Center (p)	885,000	sf	50.00	%	64,909			59,858					(q)		(q)		(q)
Other
Roseland/North Retail, L.L.C./ Riverwalk at Port Imperial (b)	30,745	sf	20.00	%	1,~~733~~719			1,758			—			—		—
South Pier at Harborside / Hyatt Regency Jersey City on the Hudson	350	rooms	50.00	%			(ur)			(ur)	63100,~~023~~000			10/01/26	~~(v)~~	3.668	~~(v)~~%
Other (w)					630			3,506			—			—		—
Other (s)					811			3,506			—			—		—
Totals:					$	~~315~~319,~~200~~807		$	303,457		$	1,~~694~~761,~~252~~795

(a) Company’s effective ownership % represents the Company’s entitlement to residual distributions after payments of priority returns, where applicable. (b) The Company’s ownership interests in this venture are subordinate to its partner’s preferred capital balance and the Company is not expected to meaningfully participate in the venture’s cash flows in the near term. (c) Through the joint venture, the Company also owns a 12.5 percent interest in a 50,973 square feet retail building (“Shops at 40 Park”) and a 25 percent interest in a to-be-built 59-unit, five story multi-family rental development property (“Lofts at 40 Park”). (d) The Company’s ownership interests in this venture are subordinate to its partner’s preferred capital balance and the payment of the outstanding balance remaining on a note ($975 as of June 30, 2016), and is not expected to meaningfully participate in the venture’s cash flows in the near term. (e) Property debt balance consists of: (i) aan amortizable loan, collateralized by the Metropolitan at 40 Park, with a balance of $3837,~~028~~836, bears interest at 3.25 percent, matures in September 2020; (ii) an amortizable loan, collateralized by the Shops at 40 Park, with a balance of $6,~~388~~354, bears interest at 3.63 percent, matures in August 2018~~; and (iii) a loan, collateralized by the Lofts at 40 Park, with a balance of $1,117, bears interest at LIBOR plus 250 basis points and matures in September 2016~~. ~~The Shops at 40 Park mortgage loan also provides for additional borrowing proceeds of $1 million based on certain preferred thresholds being achieved.~~ (fe) During the ~~three~~second ~~months~~quarter ~~ended June 30,~~ 2016, the Company acquired the equity interests of its joint venture partner in Portside Apartment Holdings, L.L.C and PruRose Riverwalk G, L.L.C. for $39.6 million and $11.3 million, respectively, which increased its ownership to 100 percent in Portside Apartment Holdings, LLC and 50 percent in Riverwalk G Urban Renewal, L.L.C. (See Note 3: Recent Transactions — Acquisitions). (gf) The ~~permanent~~loan was refinanced in October 2016. The new $82 million loan ~~has~~matures ain ~~maximum~~October ~~borrowing~~2026 ~~amount~~and has an interest rate of ~~$80,249~~3.21 percent. (hg) The Company also owns a 50 percent interest in a vacant land to accommodate the development of approximately 295 additional units of which 252 are currently approved. (ih) The Company also owns a 20 percent residual interest in undeveloped land parcels: parcels 6, I, and J that can accommodate the development of 836 apartment units. (ji) The construction loan has a maximum borrowing amount of $77,400 and provides, subject to certain conditions, two one-year extension options with a fee of 25 basis points for each year. (kj) The construction/permanent loan has a maximum borrowing amount of $~~100,700 with amortization starting in August 2017. (l) The construction/permanent loan has a maximum borrowing amount of $~~192,000. (mk) The joint venture has a swap agreement that fixes the all-in rate to 3.99375 percent per annum on an initial notional amount of $13,650 and then adjusting in accordance with an amortization schedule, which is effective from October 17, 2011 through loan maturity. (n) The mortgage loan has ~~two~~three one-year extension options, subject to certain conditions. (ol) The Company’s equity interests in the joint ventures will be subordinated to Keystone Entities receiving a 15 percent internal rate of return (“IRR”) after which the Company will receive a 10 percent IRR on its subordinate equity and then all profit will be split equally. (pm) Principal balance of $127,~~600~~538 bears interest at 5.114 percent and matures on August 27, 2023; principal balance of $45,500 bears interest at 5.01 percent and matures on September 6, 2025; principal balance of $3517,~~107~~911 bears interest at ~~rates ranging from LIBOR+5~~8.0 percent toand matures on October 31, 2016; principal balance of $22,500 bears interest at LIBOR+5.752 percent t and matures on August 2731, ~~2016~~2019; principal balance of $11,250 bears interest at LIBOR+5.5 percent and matures on January 9, 2019; principal balance of $10,425 bears interest at LIBOR+6.0 percent matures on August 3127, ~~2016~~2017. (qn) Includes the Company’s pari-passu interests of $32.38 million in five properties and Company’s subordinated equity interests to Keystone Entities receiving a 15 percent internal rate of return (“IRR”) after which the Company will receive a 10 percent IRR on its subordinate equity and then all profit will be split equally. (ro) Principal balance of $4447,~~378~~500 bears interest at 5.38 percent and matures on July 1, 2017; principal balance of $7678,~~837~~121 bears interest at rates ranging from 5.65 percent to 6.75 percent and matures on September 9, 2017; principal balance of $14,250 bears interest at 4.88 percent and matures on July 6, 2024; principal balance of $63,400 bears interest at 4.93 percent and matures on July 6, 2044; principal balance of $15,050 bears interest at 4.71 percent and matures on August 6, 2044. (sp) Includes undivided interests in the same manner as investments in noncontrolling partnership, pursuant to ASC 970-323-25-12. (tq) See Note 10: Mortgages, Loans Payable and Other Obligations for debt secured by interests in these assets. (ur) The negative carrying value for this venture of $3,~~847 and $3,~~317 as of ~~June 30, 2016 and~~ December 31, 2015, ~~respectively,~~was ~~were~~ included in accounts payable, accrued expenses and other liabilities. (vs) Balance includes: (i) mortgage loan, collateralized by the hotel property, with a balance of $59,429, bears interest at 6.15 percent and matures in November 2016, and (ii) loan with a balance of $3,594, bears interest at fixed rates ranging from 6.09 percent to 6.62 percent and matures in August 1, 2020. The Company ~~posted a $3.6 million letter of credit in support of this loan, half of which is indemnified by the partner. (w) The Company~~ owns other interests in various unconsolidated joint ventures, including interests in assets previously owned and interest in ventures whose businesses are related to its core operations. These ventures are not expected to significantly impact the Company’s operations in the near term. ~~(x) See discussion in Note 3: Recent Transactions - Unconsolidated Joint Venture Activity.~~

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The following is a summary of the Company’s equity in earnings (loss) of unconsolidated joint ventures for the three and ~~six~~nine months ended ~~June~~September 30, 2016 and 2015: (dollars in thousands)

	Three Months Ended						~~Six~~Nine Months Ended
	June 30,						June 30,
	September 30,						September 30,
Entity / Property Name	2016			2015			2016			2015
Multi-family
Marbella RoseGarden, L.L.C./ Marbella	$	4776		$	6164		$	~~132~~208		$	~~122~~186
RoseGarden Monaco Holdings, L.L.C./ Monaco	(~~300~~277		)	(~~313~~295		)	(~~592~~869		)	(~~629~~924		)
Rosewood Morristown, L.L.C. / Metropolitan at 40 Park	(8276		)	(9193		)	(~~163~~239		)	(~~185~~277		)
Riverwalk G Urban Renewal, L.L.C./ RiverTrace at Port Imperial	(~~595~~594		)	(~~276~~151		)	(~~595~~1,189		)	(~~530~~681		)
Elmajo Urban Renewal Associates, LLC / Lincoln Harbor (Bldg A&C)	—			—			—			—
Crystal House Apartments Investors LLC / Crystal House	(~~110~~99		)	13(44		)	(~~222~~321		)	3(41		)
Roseland/Port Imperial Partners, L.P./ Riverwalk C	—(36		)	(~~125~~85		)	—(36		)	(~~309~~394		)
RoseGarden Marbella South, L.L.C./ Marbella II	~~(307~~105		)	—			(~~307~~202		)	—
Estuary Urban Renewal Unit B, LLC / Lincoln Harbor (Bldg B)	—			—			—			—
Riverpark at Harrison I, L.L.C./ Riverpark at Harrison	(~~102~~43		)	(~~150~~54		)	(~~130~~173		)	(~~324~~377		)
Capitol Place Mezz LLC / Station Townhouses	(~~727~~500		)	(1,~~263~~454		)	(1,~~495~~995		)	(12,~~188~~642		)
Harborside Unit A Urban Renewal, L.L.C. / URL Harborside	—(42		)	—			(1760		)	—
RoseGarden Monaco, L.L.C./ San Remo Land	—			—			—			—
Grand Jersey Waterfront URA, L.L.C./ Liberty Landing	—			—(12		)	(60		)	(1932		)
Hillsborough 206 Holdings, L.L.C./ Hillsborough 206	(1322		)	(5—		)	(3253		)	(5		)
Plaza VIII & IX Associates, L.L.C./ Vacant land (parking operations)	9881			70102			~~175~~256			~~156~~258
Office
Red Bank Corporate Plaza, L.L.C./ Red Bank	~~108~~111			~~112~~110			~~210~~321			~~222~~332
12 Vreeland Associates, L.L.C./ 12 Vreeland Road	~~108~~74			8638			~~192~~266			72110
BNES Associates III / Offices at Crystal Lake	17109			5213			(~~177~~68		)	~~121~~133
KPG-P 100 IMW JV, LLC / 100 Independence Mall West	—			(~~379~~37		)	—			(~~763~~800		)
Keystone-Penn	—150			—3,663			—450			—3,663
Keystone-TriState	(~~191~~518		)	(~~242~~173		)	(~~668~~1,186		)	(1,~~590~~763		)
KPG-MCG Curtis JV, L.L.C./ Curtis Center	~~226~~113			~~232~~327			~~405~~518			~~428~~755
Other
Roseland/North Retail, L.L.C./ Riverwalk at Port Imperial	(914		)	(1817		)	(2539		)	(3652		)
South Pier at Harborside / Hyatt Regency Jersey City on the Hudson	~~987~~22,447			~~868~~1,151			~~820~~23,267			~~784~~1,934
Other	~~231~~745			~~(961~~82		)	~~381~~826			(2,~~188~~106		)
Company’s equity in earnings (loss) of unconsolidated joint ventures	$	~~(614~~21,790	)	$	(23,~~329~~135	)	$	(219,~~168~~622	)	$	(52,~~858~~723	)

The following is a summary of the financial position of the unconsolidated joint ventures in which the Company had investment interests as of ~~June~~September 30, 2016 and December 31, 2015: (dollars in thousands)

	June 30,			December 31,
	September 30, 2016
	2016			2015
	Harborside					Combined
Assets:
	South Pier			Other JV’s		Total
Rental property, net	$	1,598,623		$	1,781,621
Assets:
Other assets	269,073			307,000
Rental property, net	$	41,161		$	1,684,502	$	1,725,663
Total assets	$	1,867,696		$	2,088,621
Other assets	17,959			250,274		268,233
Liabilities and partners’/ members’ capital:
Total assets	$	59,120		$	1,934,776	$	1,993,896
Mortgages and loans payable	$	1,187,866		$	1,298,293
Liabilities and partners’ members’ capital:
Other liabilities	229,941			215,951
Mortgages and loans payable	$	100,000		$	1,235,918	$	1,335,918
Partners’/members’ capital	449,889			574,377
Other liabilities	4,985			226,086		231,071
Total liabilities and partners’/members’ capital	$	1,867,696		$	2,088,621
Partners’/members’ capital	(45,865		)	472,772		426,907
Total liabilities and partners’/members’ capital	$	59,120		$	1,934,776	$	1,993,896
Company’s net investment in unconsolidated joint ventures	$	—		$	319,807	$	319,807

The following is a summary of the results from operations of the unconsolidated joint ventures for the period in which the Company had investment interests during the three and six months ended June 30, 2016 and 2015: (dollars in thousands)29

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Total revenues	$	94,193		$	81,075		$	164,315		$	155,552
Operating and other expenses	(65,456		)	(55,953		)	(111,017		)	(113,309		)
Depreciation and amortization	(16,924		)	(17,816		)	(35,766		)	(34,809		)
Interest expense	(13,415		)	(13,324		)	(27,464		)	(24,658		)
Net loss	$	(1,602	)	$	(6,018	)	$	(9,932	)	$	(17,224	)

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	December 31, 2015
	Harborside					Combined
	South Pier			Other JV’s		Total
Assets:
Rental property, net	$	44,925		$	1,736,696	$	1,781,621
Other assets	15,249			291,751		307,000
Total assets	$	60,174		$	2,028,447	$	2,088,621
Liabilities and partners’ members’ capital:
Mortgages and loans payable	$	63,741		$	1,234,552	$	1,298,293
Other liabilities	5,481			210,470		215,951
Partners’/members’ capital	(9,048		)	583,425		574,377
Total liabilities and partners’/members’ capital	$	60,174		$	2,028,447	$	2,088,621
Company’s net investment in unconsolidated joint ventures	$	—		$	303,457	$	303,457

The following is a summary of the results of operations of the unconsolidated joint ventures for the period in which the Company had investment interests during the three and nine month periods ended September 30, 2016 and 2015:

	Three Months Ended September 30, 2016
	Harborside						Combined
	South Pier			Other JV’s			Total
Total revenues	$	11,262		$	78,808		$	90,070
Operating and other expenses	(7,248		)	(56,411		)	(63,659		)
Depreciation and amortization	(1,499		)	(14,825		)	(16,324		)
Interest expense	(1,036		)	(12,236		)	(13,272		)
Net income	$	1,479		$	(4,664	)	$	(3,185	)
Company’s equity in earnings of unconsolidated joint ventures	$	22,447		$	(657	)	$	21,790

	Three Months Ended September 30, 2015
	Harborside						Combined
	South Pier			Other JV’s			Total
Total revenues	$	12,390		$	70,196		$	82,586
Operating and other expenses	(7,580		)	(48,389		)	(55,969		)
Depreciation and amortization	(1,501		)	(15,322		)	(16,823		)
Interest expense	(1,008		)	(13,614		)	(14,622		)
Net income	$	2,301		$	(7,129	)	$	(4,828	)
Company’s equity in earnings of unconsolidated joint ventures	$	1,151		$	1,984		$	3,135

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	Nine Months Ended September 30, 2016
	Harborside						Combined
	South Pier			Other JV’s			Total
Total revenues	$	30,973		$	223,412		$	254,385
Operating and other expenses	(20,356		)	(154,320		)	(174,676		)
Depreciation and amortization	(4,478		)	(47,612		)	(52,090		)
Interest expense	(3,020		)	(37,716		)	(40,736		)
Net income	$	3,119		$	(16,236	)	$	(13,117	)
Company’s equity in earnings of unconsolidated joint ventures	$	23,267		$	(3,645	)	$	19,622

	Nine Months Ended September 30, 2015
	Harborside			Other			Combined
	South Pier			JV’s			Total
Total revenues	$	31,815		$	206,323		$	238,138
Operating and other expenses	(20,306		)	(148,972		)	(169,278		)
Depreciation and amortization	(4,589		)	(47,043		)	(51,632		)
Interest expense	(3,051		)	(36,229		)	(39,280		)
Net income	$	3,869		$	(25,921	)	$	(22,052	)
Company’s equity in earnings of unconsolidated joint ventures	$	1,934		$	(4,657	)	$	(2,723	)

Recent Transactions

The South Pier at Harborside venture had a $59.1 million mortgage loan collateralized by the hotel property, which bore interest at a rate of 6.15 percent and was scheduled to mature in November 2016. The venture also had a $3.0 million loan with the City of Jersey City, provided by the U.S. Department of Housing and Urban Development (“HUD loan”), which was guaranteed by the Company, half of which was indemnified by the venture partner. On September 14, 2016, the venture refinanced the mortgage loan and repaid in full the HUD loan, eliminating the previous guarantee which had caused the Company to carry this investment at a negative balance. The Company recorded this reversal through equity in earnings for the three months ended September 30, 2016.

The new loan, with a balance of $100.0 million at September 30, 2016, bears interest at a rate of 3.668 percent and matures in October 2026. In connection with the refinancing, the venture distributed $35.7 million of the loan proceeds, of which the Company’s share was $17.8 million. Due to the fact that the Company’s equity basis in this investment was now held at zero, $17.8 million was recognized as equity in earnings for the three and nine months ended September 30, 2016. The Company has no obligations to fund future venture losses nor has any guarantees on the joint venture’s current debt.

5. DEFERRED CHARGES, GOODWILL AND OTHER ASSETS, NET

	June 30,			December 31,
	September 30,			December 31,
(dollars in thousands)	2016			2015
Deferred leasing costs	$	~~224~~230,~~925~~718		$	239,690
Deferred financing costs - revolving credit facility (1)	5,359			5,394
Deferred financing costs - revolving credit facility (a)	5,359			5,394
	230,284			245,084
	236,077			245,084
Accumulated amortization	(~~103~~107,~~881~~982		)	(118,014		)
Deferred charges, net	~~126~~128,~~403~~095			127,070
Notes receivable (2)	13,374			13,496
Notes receivable (b)	13,313			13,496
In-place lease values, related intangibles and other assets, net	1877,~~839~~656			10,931
Goodwill (3)	2,945			2,945
Goodwill (c)	2,945			2,945
Prepaid expenses and other assets, net (4)	91,672			49,408
Prepaid expenses and other assets, net (d)	81,645			49,408
Total deferred charges, goodwill and other assets, net	$	~~253~~303,~~233~~654		$	203,850

(1) Pursuant to recently issued accounting standards, deferred financing costs related to all other debt liabilities (other than for the revolving credit facility) are classified to net against those debt liabilities for all periods presented. See Note 2: Significant Accounting Policies — Deferred Financing Costs.31

~~(2) Includes~~Table as of June 30, 2016: a mortgage receivable for $10.4 million which bears interest at LIBOR plus six percent and matures in August 2016; and an interest-free note receivable with a net present value of $2.9 million and matures in April 2023. The Company believes these balances are fully collectible.Contents

(3a) ~~All~~Pursuant ~~goodwill~~to isrecently ~~attributable~~issued accounting standards, deferred financing costs related to all other debt liabilities (other than for the ~~Company’s~~revolving ~~Multi-family~~credit ~~Services~~facility) ~~segment~~are classified to net against those debt liabilities for all periods presented. See Note 2: Significant Accounting Policies — Deferred Financing Costs.

(4b) Includes as of ~~June~~September 30, 2016,: ~~deposits~~a ofmortgage receivable for $2610.84 million ~~for~~which ~~acquisitions~~bears interest at LIBOR plus six percent and ~~developments~~matures in August 2017; and an interest-free note receivable with a net present value of $282.59 million ofand ~~proceeds~~matures ~~from~~in ~~property~~April 2023. The ~~sales~~Company ~~held~~believes bythese abalances ~~qualified~~are ~~intermediary~~fully collectible.

(d) Includes as of September 30, 2016, $39.0 million of proceeds from property sales held by a qualified intermediary.

DERIVATIVE FINANCIAL INSTRUMENTS

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. As of ~~June~~September 30, 2016, the Company had outstanding interest rate swaps with a combined notional value of $350 million that were designated as cash flow hedges of interest rate risk. During the ~~six~~nine months ending ~~June~~September 30, 2016, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three and ~~six~~nine months ended ~~June~~September 30, 2016, the Company recorded ineffectiveness gain of $~~99,000 and $~~1,012,000 inand ~~expense~~zero, respectively, which is included in interest and other investment income (loss) in the consolidated statements of operations, attributable to a floor mismatch in the underlying indices of the derivatives and the hedged interest payments made on its variable-rate debt. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months, the Company estimates that an additional $32.4 7 million will be reclassified as an increase to interest expense.

Undesignated Cash Flow Hedges of Interest Rate Risk

Interest rate caps not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements but do not meet the strict hedge accounting requirements. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. The Company recognized expenses of ~~$1,000~~zero and $1712,000 for the three months ended ~~June~~September 30, 2016 and 2015, respectively, and $2,000 and $8092,000 during the ~~six~~nine months ended ~~June~~ September 30, 2016 and 2015, respectively, which is included in interest and other investment income (loss) in the consolidated statements of operations.

23The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet as of September 30, 2016 and December 31, 2015. (dollars in thousands)

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	Fair Value
Liability Derivatives designated	September 30,		December 31,
as hedging instruments	2016		2015		Balance sheet location
Interest rate swaps	$	7,528	$	—	Accounts payable, accrued expenses and other liabilities

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet as of June 30, 2016 and December 31, 2015. (dollars in thousands)

	Fair Value
Liability Derivatives designated	June 30,		December 31,
as hedging instruments	2016		2015		Balance sheet location
Interest rate swaps	$	10,265	$	—	Accounts payable, accrued expenses and other liabilities

Asset Derivatives not designated
as hedging instruments
Interest rate caps	$	—	$	2	Deferred charges, goodwill and other assets

~~The table below presents the effect of the Company’s derivative financial instruments on the Income Statement for the three and six months ending June 30, 2016 and 2015. (dollars in thousands)~~32

Derivatives in Cash Flow	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)					Location of Gain or (Loss) Reclassified from Accumulated OCI into	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)				Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion, Reclassification for Forecasted Transactions No Longer Probable of Occurring and Amount Excluded from Effectiveness Testing)
Hedging Relationships	2016			2015		Income (Effective Portion)	2016		2015		Effectiveness Testing)	2016			2015
Three months ended June 30,
Interest rate swaps	$	(3,807	)	$	—	Interest expense	$	893	$	—	Interest and other investment income (loss)	$	(99	)	$	—
Six months ended June 30,
Interest rate swaps	$	(10,994	)	$	—	Interest expense	$	1,740	$	—	Interest and other investment income (loss)	$	(1,012	)	$	—

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The table below presents the effect of the Company’s derivative financial instruments on the Income Statement for the three and nine months ending September 30, 2016 and 2015. (dollars in thousands)

Derivatives in Cash Flow	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)					Location of Gain or (Loss) Reclassified from Accumulated OCI into	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)				Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion, Reclassification for Forecasted Transactions No Longer Probable of Occurring and Amount Excluded from Effectiveness Testing)
Hedging Relationships	2016			2015		Income (Effective Portion)	2016		2015		Effectiveness Testing)	2016		2015
Three months ended September 30,
Interest rate swaps	$	866		$	—	Interest expense	$	860	$	—	Interest and other investment income (loss)	$	1,012	$	—
Nine months ended September 30,
Interest rate swaps	$	(10,128	)	$	—	Interest expense	$	2,600	$	—	Interest and other investment income (loss)	$	—	$	—

Credit-risk-related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. As of ~~June~~September 30, 2016, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $~~10.~~8.0 million. As of ~~June~~September 30, 2016, the Company has not posted any collateral related to these agreements. If the Company had breached any of these provisions at ~~June~~September 30, 2016, it could have been required to settle its obligations under the agreements at their termination value of $~~10.~~8.0 million.

6. RESTRICTED CASH

Restricted cash generally includes tenant and resident security deposits for certain of the Company’s properties, and escrow and reserve funds for debt service, real estate taxes, property insurance, capital improvements, tenant improvements, and leasing costs established pursuant to certain mortgage financing arrangements, and is comprised of the following: (dollars in thousands)

	June 30,		December 31,
	September 30,		December 31,
	2016		2015
Security deposits	$	8,~~570~~872	$	7,785
Escrow and other reserve funds	2645,~~321~~912		27,558
Total restricted cash	$	3454,~~891~~784	$	35,343

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7. SENIOR UNSECURED NOTES

AOn ~~summary~~September 12, of2016, the Company’s ~~senior~~commenced ~~unsecured~~a ~~notes~~tender asoffer to purchase for cash any and all of ~~June~~its $250 million principal amount, 7.750 percent Senior Unsecured Notes due August 3015, ~~2016~~2019, subject to certain terms and ~~December~~conditions. On September 3119, ~~2015~~2016, isthe Company purchased approximately $114.9 million principal amount of these notes validly tendered pursuant to its tender offer. The purchase price, including a make-whole premium, was 115.977 percent of the face amount of these notes, plus all accrued and unpaid interest up to the settlement date. The Company funded the purchase price, including accrued and unpaid interest, of approximately $134.1 million using available cash and borrowings on the Company’s unsecured revolving credit facility. In connection with the purchase of these notes, the Company recorded approximately $19.3 million as ~~follows:~~a ~~(dollars~~loss infrom ~~thousands)~~extinguishment of debt for the three and nine months ended September 30, 2016.

	June 30,			December 31,			Effective
	2016			2015			Rate (1)
5.800% Senior Unsecured Notes, due January 15, 2016 (2)	—			$	200,000		5.806	%
2.500% Senior Unsecured Notes, due December 15, 2017	$	250,000		250,000			2.803	%
7.750% Senior Unsecured Notes, due August 15, 2019	250,000			250,000			8.017	%
4.500% Senior Unsecured Notes, due April 18, 2022	300,000			300,000			4.612	%
3.150% Senior Unsecured Notes, due May 15, 2023	275,000			275,000			3.517	%
Principal balance outstanding	1,075,000			1,275,000
Adjustment for unamortized debt discount	(5,578		)	(6,156		)
Unamortized deferred financing costs	(4,480		)	(5,062		)
Total senior unsecured notes, net	$	1,064,942		$	1,263,782

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A summary of the Company’s senior unsecured notes as of September 30, 2016 and December 31, 2015 is as follows: (dollars in thousands)

	September 30,			December 31,			Effective
	2016			2015			Rate (1)
5.800% Senior Unsecured Notes, due January 15, 2016 (2)	—			$	200,000		5.806	%
2.500% Senior Unsecured Notes, due December 15, 2017	$	250,000		250,000			2.803	%
7.750% Senior Unsecured Notes, due August 15, 2019 (3)	135,136			250,000			8.017	%
4.500% Senior Unsecured Notes, due April 18, 2022	300,000			300,000			4.612	%
3.150% Senior Unsecured Notes, due May 15, 2023	275,000			275,000			3.517	%
Principal balance outstanding	960,136			1,275,000
Adjustment for unamortized debt discount	(5,013		)	(6,156		)
Unamortized deferred financing costs	(3,848		)	(5,062		)

Total senior unsecured notes, net	$	951,275		$	1,263,782

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

(2) On January 15, 2016, the Company repaid these notes at their maturity using proceeds from a new unsecured term loan and borrowings under the Company’s unsecured revolving credit facility.

~~The~~(3) On ~~terms of the Company’s senior unsecured notes include certain restrictions and covenants which require compliance with financial ratios relating to the maximum amount of debt leverage~~September 19, ~~the maximum amount of secured indebtedness~~2016, the ~~minimum~~Company ~~amount~~purchased of$114.9 ~~debt~~million ~~service~~principal ~~coverage and the maximum~~ amount of ~~unsecured~~these ~~debt~~notes aspursuant ~~a percent of unsecured assets. The Company was in compliance with its debt covenants under the indenture relating~~ to its ~~senior~~tender ~~unsecured~~offer. See ~~notes~~summary ~~as of June 30, 2016~~above.

The terms of the Company’s senior unsecured notes include certain restrictions and covenants which require compliance with financial ratios relating to the maximum amount of debt leverage, the maximum amount of secured indebtedness, the minimum amount of debt service coverage and the maximum amount of unsecured debt as a percent of unsecured assets. The Company was in compliance with its debt covenants under the indenture relating to its senior unsecured notes as of September 30, 2016.

8. UNSECURED TERM LOAN

On January 7, 2016, the Company obtained a new $350 million unsecured term loan, which matures in January 2019 with two one-year extension options. The interest rate for the new term loan is currently 140 basis points over LIBOR, subject to adjustment on a sliding scale based on the ~~Company~~Operating Partnership’s unsecured debt ratings, or at the Company’s option, a defined leverage ratio. The Company entered into interest rate swap arrangements to fix LIBOR for the duration of the term loan. Including costs, the current all-in fixed rate is 3.13 percent. The proceeds from the loan were used primarily to repay outstanding borrowings on the Company’s unsecured revolving credit facility and to repay the Company’s $200 million, 5.8 percent senior unsecured notes that matured on January 15, 2016. As of September 30, 2016 and December 31, 2015, there was $2,170,000 and zero of unamortized deferred financing costs related to this debt.

The interest rate on the unsecured term loan is based upon the Operating Partnership’s unsecured debt ratings, as follows:

Operating Partnership’s		Interest Rate -
Unsecured Debt Ratings:		Applicable Basis Points
Higher of S&P or Moody’s		Above LIBOR
No ratings or less than BBB-/Baa3		185.0
BBB- or Baa3 (current interest rate based on Company’s election)		140.0
BBB or Baa2		115.0
BBB+ or Baa1		100.0
A- or A3 or higher		90.0

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If the Company elected to use the defined leverage ratio, the interest rate under the unsecured term loan would be based on the following total leverage ratio grid:

		Interest Rate -
		Applicable Basis
Total Leverage Ratio		Points above LIBOR
<45%		145
>45% and <50% (current ratio)		155
>50% and <55%		165
>55%		195

25The terms of the unsecured term loan include certain restrictions and covenants which limit, among other things the incurrence of additional indebtedness, the incurrence of liens and the disposition of real estate properties (to the extent that: (i) such property dispositions cause the Company to default on any of the financial ratios of the term loan described below, or (ii) the property dispositions are completed while the Company is under an event of default under the term loan, unless, under certain circumstances, such disposition is being carried out to cure such default), and which require compliance with financial ratios relating to the maximum leverage ratio (60 percent), the maximum amount of secured indebtedness (40 percent), the minimum amount of fixed charge coverage (1.5 times), the maximum amount of unsecured indebtedness (60 percent), the minimum amount of unencumbered property interest coverage (2.0 times) and certain investment limitations (generally 15 percent of total capitalization). If an event of default has occurred and is continuing, the Company will not make any excess distributions except to enable the General Partner to continue to qualify as a REIT under the Code. The Company was in compliance with its debt covenants under its unsecured term loan as of September 30, 2016.

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The terms of the unsecured term loan include certain restrictions and covenants which limit, among other things the incurrence of additional indebtedness, the incurrence of liens and the disposition of real estate properties (to the extent that: (i) such property dispositions cause the Company to default on any of the financial ratios of the term loan described below, or (ii) the property dispositions are completed while the Company is under an event of default under the term loan, unless, under certain circumstances, such disposition is being carried out to cure such default), and which require compliance with financial ratios relating to the maximum leverage ratio (60 percent), the maximum amount of secured indebtedness (40 percent), the minimum amount of fixed charge coverage (1.5 times), the maximum amount of unsecured indebtedness (60 percent), the minimum amount of unencumbered property interest coverage (2.0 times) and certain investment limitations (generally 15 percent of total capitalization). If an event of default has occurred and is continuing, the Corporation will not make any excess distributions except to enable the Corporation to continue to qualify as a REIT under the Code. The Company was in compliance with its debt covenants under its unsecured term loan as of June 30, 2016.

9. UNSECURED REVOLVING CREDIT FACILITY

The Company has a $600 million unsecured revolving credit facility with a group of 17 lenders. The facility is expandable to $1 billion and matures in July 2017. It has two six-month extension options each requiring the payment of a 7.5 basis point fee. The interest rate on outstanding borrowings (not electing the Company’s competitive bid feature) and the facility fee on the current borrowing capacity payable quarterly in arrears are based upon the Operating Partnership’s unsecured debt ratings, as follows:

Operating Partnership’s	Interest Rate -
Unsecured Debt Ratings:	Applicable Basis Points	Facility Fee
Higher of S&P or Moody’s	Above LIBOR	Basis Points
No ratings or less than BBB-/Baa3	170.0	35.0
BBB- or Baa3 (current)	130.0	30.0
BBB or Baa2	110.0	20.0
BBB+ or Baa1	100.0	15.0
A- or A3 or higher	92.5	12.5

The facility has a competitive bid feature, which allows the Company to solicit bids from lenders under the facility to borrow up to $300 million at interest rates less than those above.

The terms of the unsecured facility include certain restrictions and covenants which limit, among other things the incurrence of additional indebtedness, the incurrence of liens and the disposition of real estate properties (to the extent that: (i) such property dispositions cause the Company to default on any of the financial ratios of the facility described below, or (ii) the property dispositions are completed while the Company is under an event of default under the facility, unless, under certain circumstances, such disposition is being carried out to cure such default), and which require compliance with financial ratios relating to the maximum leverage ratio (60 percent), the maximum amount of secured indebtedness (40 percent), the minimum amount of fixed charge coverage (1.5 times), the maximum amount of unsecured indebtedness (60 percent), the minimum amount of unencumbered property interest coverage (2.0 times) and certain investment limitations (generally 15 percent of total capitalization). If an event of default has occurred and is continuing, the ~~Corporation~~Company will not make any excess distributions except to enable the ~~Corporation~~General Partner to continue to qualify as a REIT under the Code. The Company was in compliance with its debt covenants under its revolving credit facility as of ~~June~~September 30, 2016.

As of ~~June~~September 30, 2016 and December 31, 2015, the Company had outstanding borrowings of $7595 million and $155 million, respectively, under its unsecured revolving credit facility.

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10. MORTGAGES, LOANS PAYABLE AND OTHER OBLIGATIONS

The Company has mortgages, loans payable and other obligations which primarily consist of various loans collateralized by certain of the Company’s rental properties, land and development projects. As of ~~June~~September 30, 2016, 2421 of the Company’s properties, with a total carrying value of approximately $~~857~~1.2 ~~million~~billion, and ~~five~~three of the Company’s ~~land and~~ development projects, with a total carrying value of approximately $~~219~~146 million, are encumbered by the Company’s mortgages and loans payable. Payments on mortgages, loans payable and other obligations are generally due in monthly installments of principal and interest, or interest only. Except as noted below, the Company was in compliance with its debt covenants under its mortgages and loans payable as of ~~June~~September 30, 2016.

26A summary of the Company’s mortgages, loans payable and other obligations as of September 30, 2016 and December 31, 2015 is as follows: (dollars in thousands)

		Effective		September 30,			December 31,
Property/Project Name	Lender	Rate (a)		2016			2015			Maturity
Port Imperial South (b)	Wells Fargo Bank N.A.	LIBOR+1.75%		—			$	34,962		—
6 Becker, 85 Livingston, 75 Livingston & 20 Waterview (c)	Wells Fargo CMBS	10.260	%	—			63,279			—
9200 Edmonston Road (d)	Principal Commercial Funding L.L.C.	9.780	%	—			3,793			—
4 Becker	Wells Fargo CMBS	11.260	%	$	40,180		40,631			05/11/16	(e)
Various (f)	Prudential Insurance	6.332	%	141,894			143,513			01/15/17
150 Main St. (g)	Webster Bank	LIBOR+2.35%		25,159			10,937			03/30/17
Curtis Center (h)	CCRE & PREFG	LIBOR+5.912	%(i)	75,000			64,000			10/09/17
23 Main Street	JPMorgan CMBS	5.587	%	28,020			28,541			09/01/18
Port Imperial 4/5 Hotel (j)	Fifth Third Bank & Santander	LIBOR+4.50%		8,311			—			10/06/18
Harborside Plaza 5	The Northwestern Mutual Life Insurance Co. & New York Life Insurance Co.	6.842	%	214,690			217,736			11/01/18
Chase II (k)	Fifth Third Bank	LIBOR+2.25%		23,599			—			12/15/18
100 Walnut Avenue	Guardian Life Insurance Co.	7.311	%	18,058			18,273			02/01/19
One River Center (l)	Guardian Life Insurance Co.	7.311	%	41,367			41,859			02/01/19
Park Square	Wells Fargo Bank N.A.	LIBOR+1.872	%(m)	27,500			27,500			04/10/19
Port Imperial South 11 (n)	JPMorgan Chase	LIBOR+2.35%		7,136			—			11/24/19
Port Imperial South 4/5 Retail	American General Life & A/G PC	4.559	%	4,000			4,000			12/01/21
The Chase at Overlook Ridge	New York Community Bank	3.740	%	72,500			—			02/01/23
Portside 7 (o)	CBRE Capital Markets/	3.569	%	58,998			—			08/01/23
	FreddieMac
101 Hudson (p)	Wells Fargo CMBS	3.197	%(q)	250,000			—			10/11/26
Port Imperial South 4/5 Garage	American General Life & A/G PC	4.853	%	32,600			32,600			12/01/29

Principal balance outstanding				1,069,012			731,624
Adjustment for unamortized debt discount				—			(548		)
Unamortized deferred financing costs				(7,808		)	(4,465		)

Total mortgages, loans payable and other obligations, net				$	1,061,204		$	726,611

(a)		Reflects effective rate of debt, including deferred financing costs, comprised of the cost of terminated treasury lock agreements (if any), debt initiation costs, mark-to-market adjustment of acquired debt and other transaction costs, as applicable.
(b)		On January 19, 2016, the loan was repaid in full at maturity, using borrowings from the Company’s revolving credit facility.
(c)		On April 22, 2016, the loan was repaid at a discount for $51.5 million, using borrowings from the Company’s revolving credit facility. Accordingly, the Company recognized a gain on extinguishment of debt of $12.4 million, which is included in loss on extinguishment of debt, net.
(d)		On May 5, 2016, the Company transferred the deed for 9200 Edmonston Road to the lender in satisfaction of its obligations and recorded a gain of $0.2 million.
(e)		The Company has begun discussions with the lender regarding the past due maturity of the loan.
(f)		Mortgage is cross collateralized by seven properties. The Company has agreed, subject to certain conditions, to guarantee repayment of $61.1 million of the loan.
(g)		This construction loan has a maximum borrowing capacity of $28.8 million.
(h)		The Company owns a 50 percent tenants-in-common interest in the Curtis Center property. The Company’s $75 million loan consists of its 50 percent interest in a $102 million senior loan with a current rate of 3.8191 percent at September 30, 2016 and its 50 percent interest in a $48 million mezzanine loan with a current rate of 10.025 percent at September 30, 2016. The senior loan rate is based on a floating rate of one-month LIBOR plus 329 basis points and the mezzanine loan rate is based on a floating rate of one-month LIBOR plus 950 basis points. The Company has entered into LIBOR caps for the periods of the loans. In October 2016, the first of three one-year extension options was exercised by the venture.
(i)		The effective interest rate includes amortization of deferred financing costs of 1.362 percent.
(j)		This construction loan has a maximum borrowing capacity of $94 million.
(k)		This construction loan has a maximum borrowing capacity of $48 million.
(l)		Mortgage is collateralized by the three properties comprising One River Center.
(m)		The effective interest rate includes amortization of deferred financing costs of 0.122 percent.
(n)		This constuction loan has a maximum borrowing capacity of $78 million.

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A(o) ~~summary~~This ofmortgage loan was obtained by the Company’s ~~mortgages,~~in ~~loans~~July ~~payable~~2016 ~~and~~to ~~other~~replace ~~obligations~~a as$42.5 million mortgage loan that was in place at the property acquisition date of ~~June 30~~April 1, 2016. ~~and~~(p) ~~December 31~~This mortgage loan was obtained by the Company on September 30, ~~2015~~2016. is$19.2 asmillion ~~follows:~~of ~~(dollars~~the mortgage loan principal was placed in ~~thousands~~escrow accounts directly by the lender at the loan closing. (q) The effective interest rate includes amortization of deferred financing costs of 0.0798 percent.

		Effective		June 30,			December 31,
Property/Project Name	Lender	Rate (a)		2016			2015			Maturity
Port Imperial South (b)	Wells Fargo Bank N.A.	LIBOR+1.75	%	—			$	34,962		—
6 Becker, 85 Livingston,
75 Livingston & 20 Waterview (c)	Wells Fargo CMBS	10.260	%	—			63,279			—
9200 Edmonston Road (d)	Principal Commercial Funding L.L.C.	9.780	%	—			3,793			—
4 Becker	Wells Fargo CMBS	9.550	%	$	40,330		40,631			05/11/16	(e)
Curtis Center (f)	CCRE & PREFG	LIBOR+5.912	%(g)	75,000			64,000			10/09/16
Various (h)	Prudential Insurance	6.332	%	142,443			143,513			01/15/17
150 Main St. (i)	Webster Bank	LIBOR+2.35	%	20,929			10,937			03/30/17
Portside 7 (j)	RBS Citizens N.A. &	LIBOR+2.15	%	42,500			—			12/04/17
	Salem Five Cents Savings Bank
23 Main Street	JPMorgan CMBS	5.587	%	28,195			28,541			09/01/18
Port Imperial 4/5 Hotel	Fifth Third Bank & Santander	LIBOR+4.50	%	3,094			—			10/06/18
Harborside Plaza 5	The Northwestern Mutual Life	6.842	%	215,723			217,736			11/01/18
	Insurance Co. & New York Life
	Insurance Co.
Chase II (k)	Fifth Third Bank	LIBOR+2.25	%	8,680			—			12/15/18
100 Walnut Avenue	Guardian Life Insurance Co.	7.311	%	18,131			18,273			02/01/19
One River Center (l)	Guardian Life Insurance Co.	7.311	%	41,534			41,859			02/01/19
Park Square	Wells Fargo Bank N.A.	LIBOR+1.872	%(m)	27,500			27,500			04/10/19
Port Imperial South 11 (n)	JPMorgan Chase	LIBOR+2.35	%	1,639			—			11/24/19
Port Imperial South 4/5 Retail	American General Life & A/G PC	4.559	%	4,000			4,000			12/01/21
The Chase at Overlook Ridge	New York Community Bank	3.740	%	72,500			—			02/01/23
Port Imperial South 4/5 Garage	American General Life & A/G PC	4.853	%	32,600			32,600			12/01/29
Principal balance outstanding				774,798			731,624
Adjustment for unamortized debt discount				—			(548		)
Unamortized deferred financing costs				(5,375		)	(4,465		)
Total mortgages, loans payable and other obligations, net				$	769,423		$	726,611

(a) Reflects effective rate of debt, including deferred financing costs, comprised of the cost of terminated treasury lock agreements (if any), debt initiation costs, mark-to-market adjustment of acquired debt and other transaction costs, as applicable. (b) On January 19, 2016, the loan was repaid in full at maturity, using borrowings from the Company’s revolving credit facility. (c) On April 22, 2016, the loan was repaid at a discount for $51.5 million, using borrowings from the Company’s revolving credit facility. Accordingly, the Company recognized a gain on extinguishment of debt of $12.4 million. (d) On May 5, 2016, the Company transferred the deed for 9200 Edmonston Road to the lender in satisfaction of its obligations and recorded a gain of $0.2 million. (e) The Company has begun discussions with the lender regarding the past due maturity of the loan. (f) The Company owns a 50 percent tenants-in-common interest in the Curtis Center property. The Company’s $75 million loan consists of its 50 percent interest in a $102 million senior loan with a current rate of 3.7371 percent at June 30, 2016 and its 50 percent interest in a $48 million mezzanine loan with a current rate of 9.943 percent at June 30, 2016. The senior loan rate is based on a floating rate of one-month LIBOR plus 329 basis points and the mezzanine loan rate is based on a floating rate of one-month LIBOR plus 950 basis points. The Company has entered into LIBOR caps for the periods of the loans. The loans provide for three one-year extension options. (g) The effective interest rate includes amortization of deferred financing costs of 1.362 percent. (h) Mortgage is cross collateralized by seven properties. The Company has agreed, subject to certain conditions, to guarantee repayment of $61.1 million of the loan. (i) This construction loan has a maximum borrowing capacity of $28.8 million. (j) On July 8, 2016, the loan was repaid in full from loan refinancing proceeds. (k) This construction loan has a maximum borrowing capacity of $48 million. (l) Mortgage is collateralized by the three properties comprising One River Center. (m) The effective interest rate includes amortization of deferred financing costs of 0.122 percent. (n) This constuction loan has a maximum borrowing capacity of $78 million.

CASH PAID FOR INTEREST AND INTEREST CAPITALIZED

Cash paid for interest for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015 was $6189,~~979~~617,000 and $5385,~~353~~019,000, respectively. Interest capitalized by the Company for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015 was $914,~~346~~436,000 and $711,~~388~~744,000, respectively (which amounts included $23,~~771~~937,000 and $23,~~314~~769,000 for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively, of interest capitalized on the Company’s investments in unconsolidated joint ventures which were substantially in development).

SUMMARY OF INDEBTEDNESS

As of ~~June~~September 30, 2016, the Company’s total indebtedness of $2,~~274~~474,~~798~~148,000 (weighted average interest rate of 4.7948 percent) was comprised of $~~254~~261,~~343~~706,000 of revolving credit facility borrowings and other variable rate mortgage debt (weighted average rate of 3.7275 percent) and fixed rate debt and other obligations of $2,~~020~~212,~~455~~442,000 (weighted average rate of 4.9356 percent).

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As of December 31, 2015, the Company’s total indebtedness of $2,154,920,000 (weighted average interest rate of 5.22 percent) was comprised of $292,399,000 of revolving credit facility borrowings and other variable rate mortgage debt (weighted average rate of 2.81 percent) and fixed rate debt and other obligations of $1,862,521,000 (weighted average rate of 5.60 percent).

11. EMPLOYEE BENEFIT 401(k) PLANS

Employees of the ~~Corporation~~General Partner, who meet certain minimum age and service requirements, are eligible to participate in the Mack-Cali Realty Corporation 401(k) Savings/Retirement Plan (the “401(k) Plan”). Eligible employees may elect to defer from one percent up to 60 percent of their annual compensation on a pre-tax basis to the 401(k) Plan, subject to certain limitations imposed by federal law. The amounts contributed by employees are immediately vested and non-forfeitable. The ~~Corporation~~Company may make discretionary matching or profit sharing contributions to the 401(k) Plan on behalf of eligible participants in any plan year. Participants are always 100 percent vested in their pre-tax contributions and will begin vesting in any matching or profit sharing contributions made on their behalf after two years of service with the ~~Corporation~~Company at a rate of 20 percent per year, becoming 100 percent vested after a total of six years of service with the ~~Corporation~~Company. All contributions are allocated as a percentage of compensation of the eligible participants for the Plan year. The assets of the 401(k) Plan are held in trust and a separate account is established for each participant. A participant may receive a distribution of his or her vested account balance in the 401(k) Plan in a single sum or in installment payments upon his or her termination of service with the ~~Corporation~~Company. Total expense recognized by the Company for the 401(k) Plan for the three months ended ~~June~~September 30, 2016 and 2015 was $254,000 and zero, respectively, and $~~492~~746,000 and zero for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively.

12. DISCLOSURE OF FAIR VALUE OF ASSETS AND LIABILITIES

The following disclosure of estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize on disposition of the assets and liabilities at ~~June~~September 30, 2016 and December 31, 2015. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash equivalents, receivables, notes receivables, accounts payable, and accrued expenses and other liabilities are carried at amounts which reasonably approximate their fair values as of ~~June~~September 30, 2016 and December 31, 2015.

The fair value of the Company’s long-term debt, consisting of senior unsecured notes, an unsecured term loan, an unsecured revolving credit facility and mortgages, loans payable and other obligations aggregated approximately $2,~~302~~483,~~856~~897,000 and $2,150,507,000 as compared to the book value of approximately $2,~~256~~455,~~955~~309,000 and $2,145,393,000 as of ~~June~~September 30, 2016 and December 31, 2015, respectively. The fair value of the Company’s long-term debt was categorized as a level 3 basis (as provided by ASC 820, Fair Value Measurements and Disclosures). The fair value was estimated using a discounted cash flow analysis valuation based on the borrowing rates currently available to the Company for loans with similar terms and maturities. The fair value of the mortgage debt and the unsecured notes was determined by discounting the future contractual interest and principal payments by a market rate. Although the Company has determined that the majority of the inputs used to value its derivative financial instruments fall within level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivative financial instruments utilize level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. The Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivative financial instruments. As a result, the Company has determined that its derivative financial instruments valuations in their entirety are classified in level 2 of the fair value hierarchy.

The fair value measurements used in the evaluation of the Company’s rental properties are considered to be Level 3 valuations within the fair value hierarchy, as there are significant unobservable inputs. Examples of inputs utilized in the fair value calculations include estimated holding periods, discount rates, market capitalization rates, expected lease rental rates, and third party broker information. For rental properties identified as held for sale, fair value measurements used represent estimated fair value of properties, less selling costs, based on contract prices when available.37

Disclosure about fair value of assets and liabilities is based on pertinent information available to management as of June 30, 2016 and December 31, 2015. Although management is not aware of any factors that would significantly affect the fair value amounts, such

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~~amounts~~significance ~~have~~of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not ~~been~~significant ~~comprehensively~~to ~~revalued~~the ~~for~~overall ~~purposes~~valuation of ~~these~~its derivative financial ~~statements~~instruments. ~~since~~As ~~June 30~~a result, ~~2016~~the ~~and~~Company ~~current~~has ~~estimates~~determined ofthat ~~fair~~its ~~value~~derivative ~~may~~financial ~~differ~~instruments ~~significantly~~valuations ~~from~~in their entirety are classified in level 2 of the ~~amounts~~fair ~~presented~~value ~~herein~~hierarchy.

The valuation techniques and significant unobservable inputs used for the Company’s Level 3 fair value measurements at September 30, 2015 were as follows:

Fair Value at

Primary

September 30,

Valuation

Unobservable

Location

Range of

Description

2015

Techniques

Inputs

Type

Rates

Properties held and used on which the Company recognized impairment losses

438,606,000

Discounted cash flows

Discount rate

Suburban

8% - 15%

Central Business District

6% - 8%

Exit Capitalization rate

Suburban

7.5% - 9%

Central Business District

4.6% - 5.75%

Disclosure about fair value of assets and liabilities is based on pertinent information available to management as of September 30, 2016 and December 31, 2015. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since September 30, 2016 and current estimates of fair value may differ significantly from the amounts presented herein.

13. COMMITMENTS AND CONTINGENCIES

TAX ABATEMENT AGREEMENTS

Pursuant to agreements with certain municipalities, the Company is required to make payments in lieu of property taxes (“PILOT”) on certain of its properties and has tax abatement agreements on other properties, as follows:

The Harborside Plaza 4-A agreement with the City of Jersey City, as amended, which commenced in 2002, is for a term of 20 years. The annual PILOT is equal to two percent of Total Project Costs, as defined. Total Project Costs are $49.5 million. The PILOT totaled $~~271~~279,000 and $247,000 for the three months ended ~~June~~September 30, 2016 and 2015, respectively, and $~~519~~798,000 and $~~495~~742,000 for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively.

The Harborside Plaza 5 agreement, also with the City of Jersey City, as amended, which commenced in 2002, is for a term of 20 years. The annual PILOT is equal to two percent of Total Project Costs, as defined. Total Project Costs are $170.9 million. The PILOT totaled $~~917,000~~1.1 million and $854,000 for the three months ended ~~June~~September 30, 2016 and 2015, respectively, and $12.89 million and $12.7 6 million for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively.

The Port Imperial 4/5 Garage development project agreement with the City of Weehawken has a term of five years beginning when the project is substantially complete, which occurred in the third quarter of 2013. The agreement provides that real estate taxes be paid initially on the land value of the project only and allows for a phase in of real estate taxes on the value of the improvements at zero percent year one and 80 percent in years two through five.

The Port Imperial South 1/3 Garage development project agreement with the City of Weehawken has a term of five years beginning when the project is substantially complete, which occurred in the fourth quarter of 2015. The agreement provides that real estate taxes be paid at 100 percent on the land value of the project only over the five year period and allows for a phase in of real estate taxes on the building improvement value at zero percent in year one and 95 percent in years two through five.

The Port Imperial Hotel development project agreement with the City of Weehawken is for a term of 15 years following substantial completion, which is anticipated to be in the first quarter 2018. The annual PILOT is equal to two percent of Total Project Costs, as defined.

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The Port Imperial South 11 development project agreement with the City of Weehawken is for a term of 15 years following substantial completion, which is anticipated to be in the first quarter 2018. The annual PILOT is equal to 10 percent of Gross Revenues, as defined.

The 111 River Realty agreement with the City of Hoboken, which commenced on October 1, 2001 expires in April 2022. The PILOT payment equals $1,227,708 annually through April 2017 and then increases to $1,406,064 annually until expiration. The PILOT totaled $306,927 for the three months ended September 30, 2016.

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

LITIGATION

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

GROUND LEASE AGREEMENTS

Future minimum rental payments under the terms of all non-cancelable ground leases under which the Company is the lessee, as of ~~June~~September 30, 2016, are as follows: (dollars in thousands)

Year	Amount
July 1 through December 31, 2016	$	212
October 1 through December 31, 2016	$	320
2017	~~315~~2,024
2018	~~280~~1,989
2019	~~283~~1,999
2020	~~283~~2,015
2021 through 2084	20172,~~501~~264
Total	$	21180,~~874~~611

29Ground lease expense incurred by the Company amounted to $538,000 and $102,000 during the three months ended September 30, 2016 and 2015, respectively, and $767,000 and $305,000 during the nine months ended September 30, 2016 and 2015, respectively.

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Ground lease expense incurred by the Company amounted to $128,000 and $102,000 during the three months ended June 30, 2016 and 2015, respectively, and $229,000 and $203,000 for each of the six months ended June 30, 2016 and 2015, respectively.

CONSTRUCTION PROJECTS

The Company owns a 76.25 percent interest in a consolidated joint venture which is constructing a 108-unit multi-family development rental property located in Eastchester, New York (the “Eastchester Project”). The project is expected to be ready for occupancy in the ~~third~~fourth quarter of 2016. The Eastchester Project is estimated to cost a total of $5153.81 million (of which development costs of $4349.14 million have been incurred through ~~June~~September 30, 2016). The venture has a $28.8 million construction loan (with $2025.92 million outstanding as of ~~June~~September 30, 2016). The Company expects to fund costs of approximately $~~22.8~~24 million for the development of the project (of which, as of ~~June~~September 30, 2016, the Company has funded $1720.41 million of the development costs and estimates it will need to fund an additional $53.49 million for the completion of the project).

On April 1, 2015, the Company acquired vacant land in Worcester, Massachusetts to accommodate a two-phase development of the CitySquare Project for a purchase price of $3.1 million with an additional $1.25 million to be paid (which is accrued as of ~~June~~September 30, 2016), subject to certain conditions, in accordance with the terms of the purchase and sale agreement. The first phase with 237 units started construction in the third quarter 2015 with anticipated initial deliveries in the fourth quarter 2017. The second phase with 128 units started construction in the third quarter 2016 with anticipated initial deliveries in the third quarter 2018. The Company has a construction loan with a maximum borrowing amount of $41.5 million and has received a term sheet to increase the loan to $58 million related to the construction of the second phase (with no outstanding balance as of ~~June~~September 30, 2016). Total development costs for both phases are estimated to be approximately $9290.5 million (of which $1823.59 million was incurred by the Company through ~~June~~September 30, 2016 and estimates it will need to fund an additional $328.56 million for the completion of the project).

On October 6, 2015, the Company entered into a joint venture partnership with XS Port Imperial Hotel, LLC (“XS”) to form XS Hotel Urban Renewal Associates LLC (“XS Hotel URA”) for the development and ownership of a 372-key dual branded hotel property located in Weehawken, New Jersey (“Port Imperial Hotel”). Concurrently, the Company and XS entered into a separate joint venture partnership to form XS Hotel Associates, L.L.C. (“XS Hotel”) for the management and operations of the completed hotel development. The Company holds a 90 percent interest and XS holds the remaining 10 percent interest in the consolidated joint ventures, XS Hotel URA and XS Hotel, with the Company having full and complete authority, power, and discretion to manage and control the ventures’ business, affairs, and property. The construction of the Port Imperial Hotel is estimated to cost a total of $105.9 million. The venture has a $94 million construction loan (with $38.13 million outstanding as of ~~June~~September 30, 2016). As of ~~June 30, 2016, the Company incurred development costs of $8.4 million and will not need to fund additional costs for the completion of the project.~~

The Company owns developable land to accommodate a multi-phase development project of approximately 1,034-unit multi-family rental property located in Malden, Massachusetts. The initial phase commenced construction of 292 units in the third quarter of 2015 (the “Chase II Project”). The Chase II project is estimated to cost a total of $74.9 million (of which the Company has funded $26.9 million through June 30, 2016) and is expected to be ready for occupancy by fourth quarter of 2016. The Company has a construction loan with a maximum borrowing amount of $48 million (with $8.7 million outstanding as of June 30, 2016). The Company will not need to fund additional costs for the completion of the Chase II Project.39

The Company owns an office property that has been repurposed for residential use. The 197-unit multi-family development project, which is located in Morris Plains, New Jersey (“Signature Place Project”), is expected to be ready for occupancy by the fourth quarter of 2017. The Signature Place Project, which is estimated to cost a total of $58.7 million (of which development costs of $7.7 million have been incurred through June 30, 2016) is expected to be funded by a $42 million construction loan. The Company expects to fund costs of approximately $16.7 million for the development of the project, of which the Company has incurred $7.1 million as of June 30, 2016.

The Company owns a leasehold interest in developable land for a 296-unit multi-family development project located in East Boston, Massachusetts (“Portside 5/6 Project”). The project is expected to be ready for occupancy by the first quarter of 2018. The Portside 5/6 Project, which is estimated to cost a total of $112 million (of which development costs of $15.3 million have been incurred through June 30, 2016), is expected to be funded primarily by a $73 million construction loan. The Company expects to fund costs of $39 million for the development of the project, of which the Company has funded $11.2 million as of June 30, 2016.

The Company owns developable land for a 295-unit multi-family development project located in Weehawken, New Jersey (“RiverHouse 11 Project”), which began construction in the second quarter 2016. The project is expected to be ready for occupancy by first quarter 2018. The RiverHouse 11 Project, which is estimated to cost a total of $125 million (of which development costs of $28 million have been incurred through June 30, 2016), is expected to be funded primarily by a $78 million construction loan. The Company expects to fund costs of $47 million for the development of the project, of which the Company has funded $24.7 million as of June 30, 2016.

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September 30, 2016, the Company incurred development costs of $8.4 million and will not need to fund additional costs for the completion of the project.

The Company owns developable land to accommodate a multi-phase development project of approximately 1,034-unit multi-family rental property located in Malden, Massachusetts. The initial phase commenced construction of 292 units in the third quarter of 2015 (the “Chase II Project”). The Chase II project is estimated to cost a total of $74.9 million (of which the Company has funded $26.9 million through September 30, 2016) and is expected to be ready for occupancy by fourth quarter of 2016. The Company has a construction loan with a maximum borrowing amount of $48 million (with $23.6 million outstanding as of September 30, 2016). The Company will not need to fund additional costs for the completion of the Chase II Project.

The Company owned an office property that has been repurposed for residential use. The 197-unit multi-family development project, which is located in Morris Plains, New Jersey (“Signature Place Project”), is expected to be ready for occupancy by the fourth quarter of 2017. The Signature Place Project, which is estimated to cost a total of $58.7 million (of which development costs of $13.1 million have been incurred through September 30, 2016) is expected to be funded by a $42 million construction loan. The Company expects to fund costs of approximately $16.7 million for the development of the project, of which the Company has incurred $12.9 million as of September 30, 2016.

The Company owns a leasehold interest in developable land for a 296-unit multi-family development project located in East Boston, Massachusetts (“Portside 5/6 Project”). The project is expected to be ready for occupancy by the first quarter of 2018. The Portside 5/6 Project, which is estimated to cost a total of $111.4 million (of which development costs of $27.7 million have been incurred through September 30, 2016), is expected to be funded primarily by a $73 million construction loan. The Company expects to fund costs of $38.4 million for the development of the project, of which the Company has funded $26.0 million as of September 30, 2016.

The Company owns developable land for a 295-unit multi-family development project located in Weehawken, New Jersey (“RiverHouse 11 Project”), which began construction in the first quarter 2016. The project is expected to be ready for occupancy by first quarter 2018. The RiverHouse 11 Project, which is estimated to cost a total of $124 million (of which development costs of $33 million have been incurred through September 30, 2016), is expected to be funded primarily by a $78 million construction loan. The Company expects to fund costs of $46 million for the development of the project, of which the Company has funded $25.8 million as of September 30, 2016.

The Company owns developable land to accommodate a development project of approximately 310-unit multi-family rental property located in Conshohocken, Pennsylvania, which began construction in the third quarter of 2016 (the “51 Washington Street Project”) with anticipated initial occupancy in the fourth quarter of 2018. The 51 Washington Street Project, which is estimated to cost a total of $86.1 million (of which development costs of $19.5 million have been incurred through September 30, 2016), is expected to be funded with a $54 million construction loan and the balance of $32.1 million from the Company.

OTHER

Through February 2016, the Company could not dispose of or distribute certain of its properties which were originally contributed by certain unrelated common unitholders of the Operating Partnership, without the express written consent of such common unitholders, as applicable, except in a manner which did not result in recognition of any built-in-gain (which could result in an income tax liability) or which reimbursed the appropriate specific common unitholders for the tax consequences of the recognition of such built-in-gains (collectively, the “Property Lock-Ups”). The aforementioned restrictions did not apply in the event that the Company sold all of its properties or in connection with a sale transaction which the ~~Corporation~~Company’s Board of Directors determined was reasonably necessary to satisfy a material monetary default on any unsecured debt, judgment or liability of the Company or to cure any material monetary default on any mortgage secured by a property. The Property Lock-Ups expired as of February 2016. Upon the expiration of the Property Lock-Ups, the Company is generally required to use commercially reasonable efforts to prevent any sale, transfer or other disposition of the subject properties from resulting in the recognition of built-in gain to the specific common unitholders, which include members of the Mack Group (which includes William L. Mack, Chairman of the ~~Corporation~~Company’s Board of Directors; David S. Mack, director ~~of the Corporation~~; and Earle I. Mack, a former director ~~of the Corporation~~); the Robert Martin Group (which includes Robert F. Weinberg, a former director ~~of the Corporation~~ and current member of its Advisory Board), and the Cali Group (which includes John R. Cali, a former director ~~of the Corporation~~ and current member of its Advisory Board). As of ~~June~~September 30, 2016, 116 of the Company’s properties, with an aggregate ~~net~~carrying ~~book~~ value of approximately $1.3 billion, have lapsed restrictions and are subject to these conditions.

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14. TENANT LEASES

The Properties are leased to tenants under operating leases with various expiration dates through 2035. Substantially all of the commercial leases provide for annual base rents plus recoveries and escalation charges based upon the tenant’s proportionate share of and/or increases in real estate taxes and certain operating costs, as defined, and the pass-through of charges for electrical usage.

Future minimum rentals to be received under non-cancelable commercial operating leases at ~~June~~September 30, 2016 are as follows (dollars in thousands):

Year	Amount
July 1 through December 31, 2016	$	234,508
October 1 through December 31, 2016	$	119,973
2017	~~439~~438,~~968~~466
2018	~~373~~379,~~910~~744
2019	~~315~~319,~~521~~822
2020	~~268~~273,~~005~~424
2021 and thereafter	1,~~110~~194,~~072~~462
Total	$	2,~~741~~725,~~984~~891

Multi-family rental property residential leases are excluded from the above table as they generally expire within one year.

15. MACK-CALI REALTY CORPORATION STOCKHOLDERS’ EQUITY AND MACK-CALI REALTY, L.P.’S PARTNERS’ CAPITAL

~~Partners’~~To ~~Capital~~maintain its qualification as a REIT, not more than 50 percent in value of the ~~accompanying~~outstanding ~~consolidated~~shares ~~financial~~of ~~statements~~the ~~relates~~General toPartner may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of any taxable year of the General Partner, other than its initial taxable year (adefined to include certain entities) , applying certain constructive ownership rules. To help ensure that the General ~~Partners~~Partner will not fail this test, the General Partner’s ~~capital~~Charter ~~consisting~~provides, among other things, certain restrictions on the transfer of common ~~units~~stock into ~~the~~prevent ~~Company~~further ~~held~~concentration byof stock ownership. Moreover, to evidence compliance with these requirements, the General Partner, ~~and~~must ~~(b) Limited~~maintain ~~Partners’~~records ~~capital~~that ~~consisting~~disclose the actual ownership of its outstanding common ~~units~~stock and ~~LTIP~~demands ~~Units~~written ~~held~~statements byeach year from the ~~limited~~holders ~~partners~~of record of designated percentages of its common stock requesting the disclosure of the beneficial owners of such common stock.

~~Any~~Partners’ ~~transactions~~Capital ~~resulting~~ in the ~~issuance~~accompanying ofconsolidated ~~additional~~financial ~~common~~statements ~~and~~relates ~~preferred~~to ~~stock~~(a) General ofPartners’ ~~the~~capital ~~Corporation~~consisting ~~result~~of common units in athe ~~corresponding~~Operating ~~issuance~~Partnership held by the ~~Company~~General ofPartner, anand ~~equivalent~~(b) Limited ~~amount~~Partners’ capital consisting of common units and ~~preferred~~LTIP ~~units~~Units toheld by the ~~Corporation~~limited partners. See Note 16: Noncontrolling interests in Subsidiaries.

~~GENERAL~~Any ~~PARTNERS’~~transactions ~~CAPITAL~~resulting in the issuance of additional common and preferred stock of the General Partner result in a corresponding issuance by the Operating Partnership of an equivalent amount of common and preferred units to the General Partner.

SHARE/UNIT REPURCHASE ~~OF GENERAL PARTNER UNITS~~PROGRAM

In September 2012, the ~~Corporation’s~~ Board of Directors renewed and authorized an increase to the ~~Corporation~~General Partner’s repurchase program (“Repurchase Program”). The ~~Corporation~~General Partner has authorization to repurchase up to $150 million of its outstanding common stock under the renewed Repurchase Program, which it may repurchase from time to time in open market transactions at prevailing prices or through privately negotiated transactions. The ~~Corporation~~General Partner has purchased and retired 394,625 shares of its outstanding common stock for an aggregate cost of approximately $11 million (all of which occurred in the year ended December 31, 2012), with a remaining authorization under the Repurchase Program of $139 million. Concurrent with these purchases, the General Partner sold to the Operating Partnership common units for approximately $11 million.

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authorization under the Repurchase Program of $139 million. Concurrent with these purchases, the Corporation sold to the Company 394,625 common units for approximately $11 million.

DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN

The ~~Corporation~~Company has a Dividend Reinvestment and Stock Purchase Plan (the “DRIP”) which commenced in March 1999 under which approximately 5.5 million shares of the ~~Corporation~~Company’s common stock have been reserved for future issuance. The DRIP provides for automatic reinvestment of all or a portion of a participant’s dividends from the ~~Corporation~~Company’s shares of common stock. The DRIP also permits participants to make optional cash investments up to $5,000 a month without restriction and, if the ~~Corporation~~Company waives this limit, for additional amounts subject to certain restrictions and other conditions set forth in the DRIP prospectus filed as part of the ~~Corporation~~Company’s effective registration statement on Form S-3 filed with the SEC for the approximately 5.5 million shares of the ~~Corporation~~Company’s common stock reserved for issuance under the DRIP.

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STOCK OPTION PLANS

In May 2013, the ~~Corporation~~Company established the 2013 Incentive Stock Plan (the “2013 Plan”) under which a total of 4,600,000 shares have been reserved for issuance. In September 2000, the ~~Corporation~~Company established the 2000 Employee Stock Option Plan (“2000 Employee Plan”) and the Amended and Restated 2000 Director Stock Option Plan (“2000 Director Plan” and together with the 2000 Employee Plan, the “2000 Plans”). In May 2002, shareholders of the ~~Corporation~~Company approved amendments to both of the 2000 Plans to increase the total shares reserved for issuance under both of the 2000 Plans from 2,700,000 to 4,350,000 shares of the ~~Corporation~~Company’s common stock (from 2,500,000 to 4,000,000 shares under the 2000 Employee Plan and from 200,000 to 350,000 shares under the 2000 Director Plan). As the 2000 Plans expired in 2010, stock options may no longer be issued under those plans. Stock options granted under the 2000 Employee Plan became exercisable over a five-year period. All stock options granted under the 2000 Director Plan became exercisable in one year. All options were granted at the fair market value at the dates of grant and have terms of 10 years. As of ~~June~~September 30, 2016 and December 31, 2015, the stock options outstanding had a weighted average remaining contractual life of approximately 8.96 and 9.4 years, respectively.

On June 5, 2015, in connection with employment agreements entered into with each of Messrs. Rudin and DeMarco (together, the “Executive Employment Agreements”), the ~~Corporation~~Company granted options to purchase a total of 800,000 shares of the ~~Corporation~~Company’s common stock, exercisable for a period of ten years with an exercise price equal to the closing price of the ~~Corporation~~Company’s common stock on the grant date of $17.31 per share, with 400,000 of such options vesting in three equal annual installments commencing on the first anniversary of the grant date (“Time Vesting Options”), and 400,000 of such options vesting if the ~~Corporation~~Company’s common stock trades at or above $25.00 per share for 30 consecutive trading days while the executive is employed (“Price Vesting Options”), or on or before June 30, 2019, subject to certain conditions. The Price Vesting options vested on July 5, 2016 on account of the price vesting condition being achieved.

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

		Weighted		Aggregate
		Average		Intrinsic
	Shares	Exercise		Value
	Under Options	Price		$(000’s)
Outstanding at January 1, 2016	805,000	$	17.33	$	4,843
Lapsed or Cancelled	—	—
Outstanding at June 30, 2016 ($17.31 — $21.25)	805,000	$	17.33	$	7,781
Outstanding at September 30, 2016 ($17.31 – $21.25)	805,000	$	17.33	$	7,958
Options exercisable at June 30, 2016	138,334
Options exercisable at September 30, 2016	538,334
Available for grant at June 30, 2016	2,724,820
Available for grant at September 30, 2016	2,728,507

There were no stock options exercised under any stock option plans for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively. The ~~Corporation~~Company has a policy of issuing new shares to satisfy stock option exercises.

The Company recognized stock options expense of $~~183~~924,000 and $62185,000 for the three months ended ~~June~~September 30, 2016 and 2015, respectively, and $~~367~~1,291,000 and $63248,000 for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, respectively.

RESTRICTED STOCK AWARDS

The ~~Corporation~~Company has issued stock awards (“Restricted Stock Awards”) to officers, certain other employees, and non-employee members of the Board of Directors of the ~~Corporation~~Company, which allow the holders to each receive a certain amount of shares of the ~~Corporation~~Company’s common stock generally over a one to seven-year vesting period, of which 8682,~~403~~716 unvested shares were legally outstanding at ~~June~~September 30, 2016. Vesting of the Restricted Stock Awards issued to executive officers and certain other employees ~~of the Corporation~~ is based on time and service.

32On June 5, 2015, in connection with the Executive Employment Agreements, the Company granted a total of 37,550.54 Restricted Stock Awards, which were valued in accordance with ASC 718 — Stock Compensation, at their fair value. These awards vest equally over a three-year period on each annual anniversary date of the grant date.

All currently outstanding and unvested Restricted Stock Awards provided to the officers, certain other employees, and members of the Board of Directors of the Company were issued under the 2013 Plan.

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On June 5, 2015, in connection with the Executive Employment Agreements, the Corporation granted a total of 37,550.54 Restricted Stock Awards, which were valued in accordance with ASC 718 — Stock Compensation, at their fair value. These awards vest equally over a three-year period on each annual anniversary date of the grant date.

All currently outstanding and unvested Restricted Stock Awards provided to the officers, certain other employees, and members of the Board of Directors of the Corporation were issued under the 2013 Plan.

Information regarding the Restricted Stock Awards grant activity is summarized below:

			Weighted-Average
			Grant — Date
			Grant – Date
	Shares		Fair Value
Outstanding at January 1, 2016	136,220		$19.36	~~19.36~~
Granted	36,870		21.70
Vested	(61,654	)	18.94
Outstanding at June 30, 2016	111,436		$	20.37
Forfeited	(3,687	)	21.70
Outstanding at September 30, 2016	107,749		$20.33

As of ~~June~~September 30, 2016, the Company had $0.95 million of total unrecognized compensation cost related to unvested Restricted Stock Awards granted under the ~~Corporation~~Company’s stock compensation plans. That cost is expected to be recognized over a weighted average period of 0.65 years.

PERFORMANCE SHARE UNITS

On June 5, 2015, in connection with the Executive Employment Agreements, the ~~Corporation~~Company granted a total of 112,651.64 performance share units (“PSUs”) which will vest from 0 to 150 percent of the number of PSUs granted based on the ~~Corporation~~Company’s total shareholder return relative to a peer group of equity office REITs over a three-year performance period starting from the grant date, each PSU evidencing the right to receive a share of the ~~Corporation~~Company’s common stock upon vesting. The PSUs are also entitled to the payment of dividend equivalents in respect of vested PSUs in the form of additional PSUs. The PSUs were valued in accordance with ASC 718, Compensation - Stock Compensation, at their fair value on the grant date, utilizing a Monte-Carlo simulation to estimate the probability of the vesting conditions being satisfied.

The ~~Corporation~~Company has reserved shares of common stock under the 2013 Plan for issuance upon vesting of the PSUs in accordance with their terms and conditions.

As of ~~June~~September 30, 2016, the Company had $1.0.8 million of total unrecognized compensation cost related to unvested PSUs granted under the ~~Corporation~~Company’s stock compensation plans. That cost is expected to be recognized over a weighted average period of 1.97 years.

LONG-TERM INCENTIVE PLAN AWARDS

On March 8, 2016, the Company granted Long-Term Incentive Plan (“LTIP”) awards to senior management of the ~~Corporation~~Company, including all of the ~~Corporation~~Company’s executive officers (the “2016 LTIP Awards”). All of the 2016 LTIP Awards were in the form of units in the Operating Partnership (“LTIP Units”) and constitute awards under the 2013 Plan. For Messrs. Rudin, DeMarco and Tycher, approximately 25 percent of the target 2016 LTIP Award was in the form of a time-based award that will vest after three years on March 8, 2019 (the “2016 TBV LTIP Units”), and the remaining approximately 75 percent of the target 2016 LTIP Award was in the form of a performance-based award under a new Outperformance Plan (the “2016 OPP”) adopted by the ~~Corporation~~Company’s Board of Directors consisting of a multi-year, performance-based equity compensation plan and related forms of award agreement (the “2016 PBV LTIP Units”). For all other executive officers, approximately 40 percent of the target 2016 LTIP Award was in the form of 2016 TBV LTIP Units and the remaining approximately 60 percent of the target 2016 LTIP Award was in the form of 2016 PBV LTIP Units.

The 2016 OPP is designed to align the interests of senior management to relative and absolute performance of the ~~Corporation~~Company over a three-year performance period from March 8, 2016 through March 7, 2019. The senior management team that received 2016 LTIP Awards includes the ~~Corporation~~Company’s eight executive officers. Participants in the 2016 OPP will only earn the full awards if, over the three-year performance period, the ~~Corporation~~Company achieves a 50 percent absolute total stockholder return (“TSR”) and if the ~~Corporation~~Company is in the 75th percentile of performance versus the NAREIT Office Index.

LTIP Units will remain subject to forfeiture depending on the extent that the 2016 LTIP Awards vest. The number of LTIP Units to be issued initially to recipients of the 2016 PBV LTIP Awards is the maximum number of LTIP Units that may be earned under the awards. The number of LTIP Units that actually vest for each award recipient will be determined at the end of the performance measurement period. TSR for the ~~Corporation~~Company and for the Index over the three-year measurement period and other circumstances will determine how many LTIP Units vest for each recipient; if they are fewer than the number issued initially, the balance will be forfeited as of the performance measurement date.

33Prior to vesting, recipients of LTIP Units will be entitled to receive per unit distributions equal to one-tenth (10 percent) of the regular quarterly distributions payable on a common unit of limited partnership interest in the Operating Partnership (a “common unit”), but will not be entitled to receive any special distributions. Distributions with respect to the other nine-tenths (90 percent) of regular quarterly distributions payable on a common unit will accrue but shall only become payable upon vesting of the LTIP Unit. After vesting of the 2016 TBV LTIP Units or the end of the measurement period for the 2016 PBV LTIP Units, the number of LTIP Units,

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~~determine~~both ~~how~~vested ~~many~~and ~~LTIP~~unvested, ~~Units~~will ~~vest~~be ~~for~~entitled ~~each~~to ~~recipient;~~receive ifdistributions ~~they~~in ~~are~~an ~~fewer~~amount ~~than~~per ~~the~~unit ~~number~~equal ~~issued~~to ~~initially~~distributions, ~~the~~both ~~balance~~regular ~~will~~and bespecial, ~~forfeited~~payable ason ofa ~~the~~common ~~performance measurement date~~unit.

~~Prior~~The toCompany ~~vesting,~~granted ~~recipients~~a oftotal ~~LTIP Units will be entitled to receive per unit distributions equal to one-tenth (10 percent)~~ of ~~the~~499,756 ~~regular~~PBV ~~quarterly~~LTIP ~~distributions~~Units ~~payable~~and on157,617 aTBV ~~common~~LTIP ~~unit~~Units. The ofLTIP ~~limited~~Units ~~partnership~~were ~~interest~~valued in ~~the~~accordance ~~Operating~~with ~~Partnership~~ASC (a718 ~~“common~~— ~~unit”)~~Stock Compensation, ~~but~~at ~~will~~their ~~not~~fair ~~be entitled to receive any special distributions~~value. ~~Distributions~~ ~~with~~The ~~respect~~Company tohas ~~the~~reserved ~~other~~shares ~~nine-tenths (90 percent)~~ of ~~regular quarterly distributions payable on a~~ common ~~unit~~stock ~~will~~under ~~accrue~~the ~~but~~2013 ~~shall~~Plan ~~only~~for ~~become~~issuance ~~payable~~ upon vesting ofand ~~the~~conversion ~~LTIP Unit. After vesting~~ of the ~~2016 TBV~~ LTIP Units ~~or the end of the measurement period for the 2016 PBV LTIP Units, the number of LTIP Units, both vested and unvested, will be entitled to receive distributions~~ in anaccordance ~~amount~~with ~~per~~their ~~unit~~terms ~~equal to distributions, both regular~~ and ~~special, payable on a common unit~~conditions.

~~The~~As ~~Company granted a total~~ of ~~499~~September 30,~~756~~ ~~PBV LTIP Units and 157~~2016,~~617~~ ~~TBV~~the ~~LTIP~~Company ~~Units~~had $7. ~~The~~4 ~~LTIP~~million ~~Units~~of ~~were~~total ~~valued~~unrecognized incompensation ~~accordance~~cost ~~with~~related ~~ASC~~to ~~718~~unvested —2016 ~~Stock~~LTIP ~~Compensation,~~Awards atgranted ~~their fair value. The Corporation has reserved shares of common stock~~ under the ~~2013~~Company’s ~~Plan~~stock ~~for~~compensation ~~issuance~~plans. That ~~upon~~cost ~~vesting~~is ~~and~~expected ~~conversion~~to ofbe ~~the~~recognized ~~LTIP~~over ~~Units~~a inweighted ~~accordance~~average ~~with~~period ~~their~~of ~~terms~~2.9 ~~and conditions~~years.

As of June 30, 2016, the Company had $8.1 million of total unrecognized compensation cost related to unvested 2016 LTIP Awards granted under the Corporation’s stock compensation plans. That cost is expected to be recognized over a weighted average period of 3.1 years.

DEFERRED STOCK COMPENSATION PLAN FOR DIRECTORS

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

During the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015, 711,~~859~~249 and 1015,~~264~~279 deferred stock units were earned, respectively. As of ~~June~~September 30, 2016 and December 31, 2015, there were ~~186~~190,~~835~~322 and 178,039 deferred stock units outstanding, respectively.

~~LIMITED~~EARNINGS ~~PARTNERS’~~PER ~~CAPITAL~~SHARE/UNIT

~~Common~~Basic ~~Units~~EPS or EPU excludes dilution and is computed by dividing net income available to common shareholders or unitholders by the weighted average number of shares or units outstanding for the period. Diluted EPS or EPU reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

Certain individuals and entities own common units in the Company. A common unit and a share of Common Stock of the Corporation have substantially the same economic characteristics in as much as they effectively share equally in the net income or loss of the Company. Common unitholders (other than the General Partner) have the right to redeem their common units, subject to certain restrictions. The ~~redemption~~following isinformation ~~required~~presents ~~to be satisfied in shares of Common Stock of~~ the ~~General Partner, cash, or a combination thereof, calculated as follows: one share of the General Partner~~Company’s ~~Common~~results ~~Stock,~~for ~~or cash equal to~~ the ~~fair~~three ~~market~~and ~~value~~nine ofmonths aended ~~share of the General Partner’s Common Stock at the time of redemption~~September 30, ~~for~~2016 ~~each~~and ~~common~~2015 ~~unit. The Company,~~ in ~~its~~accordance sole discretion, determines the form of redemption of common units (i.e., whether a common unitholder receives Common Stock of the General Partner, cash, or any combination thereof). If the Company elects to satisfy the redemption with ~~shares~~ASC ~~of Common Stock of the General Partner as opposed to cash~~260, ~~the~~Earnings ~~General~~Per ~~Partner~~Share: is(dollars ~~obligated~~in ~~to issue shares of its Common Stock to the redeeming unitholder. Regardless of the rights described above~~thousands, ~~the~~except ~~common~~per ~~unitholders~~share ~~may not put their units for cash to the Company or the General Partner under any circumstances.~~amounts)

~~LTIP~~Mack-Cali ~~Units~~Realty Corporation:

On March 8, 2016, the Company granted 2016 LTIP awards to senior management of the Corporation, including all of the Corporation’s executive officers. All of the 2016 LTIP Awards will be in the form of units in the Operating Partnership (“LTIP Units”). See description of Long-Term Incentive Plan Awards earlier in this footnote.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Computation of Basic EPS	2016			2015			2016			2015
Net income (loss)	$	(9,605	)	$	(142,141	)	$	113,530		$	(106,077	)
Add: Noncontrolling interest in consolidated joint ventures	65			(281		)	460			582
Add (deduct): Noncontrolling interest in Operating Partnership	999			15,530			(11,947		)	11,461
Net income (loss) available to common shareholders	$	(8,541	)	$	(126,892	)	$	102,043		$	(94,034	)

Weighted average common shares	89,755			89,249			89,739			89,229

Basic EPS:
Net income (loss) available to common shareholders	$	(0.10	)	$	(1.42	)	$	1.14		$	(1.05	)

LTIP Units are designed to qualify as “profits interests” in the Operating Partnership for federal income tax purposes. As a general matter, the profits interests characteristics of the LTIP Units mean that initially they will not be economically equivalent in value to a common unit. If and when events specified by applicable tax regulations occur, LTIP Units can over time increase in value up to the point where they are equivalent to common units on a one-for-one basis. After LTIP Units are fully vested, and to the extent the special tax rules applicable to profits interests have allowed them to become equivalent in value to common units, LTIP Units may be converted on a one-for-one basis into common units. Common units in turn have a one-for-one relationship in value with shares of the

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Computation of Diluted EPS	2016			2015			2016		2015
Net income (loss) available to common shareholders	$	(8,541	)	$	(126,892	)	$	102,043	$	(94,034	)
Add (deduct): Noncontrolling interest in Operating Partnership	(999		)	(15,530		)	11,947		(11,461		)
Net income (loss) for diluted earnings per share	$	(9,540	)	$	(142,422	)	$	113,990	$	(105,495	)

Weighted average common shares	100,253			100,172			100,486		100,236

Diluted EPS:
Net income (loss) available to common shareholders	$	(0.10	)	$	(1.42	)	$	1.13	$	(1.05	)

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~~Corporation’s~~The ~~common~~following ~~stock,~~schedule ~~and~~reconciles ~~are~~the ~~redeemable~~shares onused ain ~~one-for-one~~the ~~basis~~basic ~~for~~EPS ~~cash~~calculation ~~or,~~to at the ~~election~~shares ofused in the ~~Company,~~diluted ~~shares~~EPS ofcalculation: ~~the~~(in ~~Corporation’s common stock.~~thousands)

EARNINGS PER UNIT

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2016	2015	2016	2015
Basic EPS shares	89,755	89,249	89,739	89,229
Add: Operating Partnership — common units	10,498	10,923	10,502	11,007
Restricted Stock Awards	—	—	50	—
Stock Options	—	—	195	—
Diluted EPS Shares	100,253	100,172	100,486	100,236

~~Basic~~Contingently ~~EPU~~issuable ~~excludes~~shares ~~dilution~~under the PSUs and isPrice ~~computed~~Vesting byOptions ~~dividing~~were ~~net~~excluded ~~income~~from ~~available~~the todenominator ~~common~~in ~~unitholders~~2016 byand ~~the~~2015 ~~weighted~~because ~~average~~the ~~number~~criteria ofhad ~~units~~not ~~outstanding~~been met for the period ended September 30, 2016. ~~Diluted~~Not ~~EPU~~included ~~reflects~~in the ~~potential~~computations ~~dilution~~of ~~that~~diluted ~~could~~EPS ~~occur~~were ifzero and 405,000 stock options as such securities orwere ~~other~~anti-dilutive ~~contracts~~during tothe ~~issue~~periods ~~common~~ended ~~stock~~September 30, 2016 and 2015, respectively. Also, not included in the computations of diluted EPS were ~~exercised~~all orof ~~converted~~the ~~into~~LTIP ~~common~~Units as such securities were anti-dilutive during the periods. Unvested restricted stock outstanding as of September 30, 2016 and 2015 were 82,716 and 99,006 shares, respectively.

~~The~~Dividends ~~following~~declared ~~information~~per ~~presents~~common ~~the~~share ~~Company’s~~for ~~results~~each ~~for~~of the three-month ~~and~~periods ~~six months~~ ended ~~June~~September 30, 2016 and 2015 inwas ~~accordance~~$0.15 ~~with~~per ~~ASC~~share. Dividends ~~260,~~declared ~~Earnings~~per ~~Per~~common ~~Share:~~share ~~(dollars~~for ineach ~~thousands~~of the nine-month periods ended September 30, ~~except~~2016 ~~per~~and ~~unit~~2015 ~~amounts)~~was $0.45 per share.

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2016			2015		2016		2015
Computation of Basic EPU
Net income	$	54,366		$	39,389	$	123,135	$	36,064
Add: Noncontrolling interest in consolidated joint ventures	(311		)	373		395		863
Net income available to common unitholders	$	54,055		$	39,762	$	123,530	$	36,927
Weighted average common units	100,239			100,272		100,235		100,269
Basic EPU:
Net income available to common unitholders	$	0.54		$	0.40	$	1.23	$	0.37
	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2016			2015		2016		2015
Computation of Diluted EPU
Net income available to common unitholders	$	54,055		$	39,762	$	123,530	$	36,927
Weighted average common unit	100,401			100,314		100,359		100,313
Diluted EPU:
Net income available to common unitholders	$	0.54		$	0.40	$	1.23	$	0.37

Mack-Cali Realty, L.P.:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Computation of Basic EPU	2016			2015			2016		2015
Net income (loss)	$	(9,605	)	$	(142,141	)	$	113,530	$	(106,077	)
Add: Noncontrolling interest in consolidated joint ventures	65			(281		)	460		582
Net income (loss) available to common unitholders	$	(9,540	)	$	(142,422	)	$	113,990	$	(105,495	)

Weighted average common units	100,253			100,172			100,241		100,236

Basic EPU:
Net income (loss) available to common unitholders	$	(0.10	)	$	(1.42	)	$	1.14	$	(1.05	)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Computation of Diluted EPU	2016			2015			2016		2015
Net income (loss) available to common unitholders	$	(9,540	)	$	(142,422	)	$	113,990	$	(105,495	)

Weighted average common unit	100,253			100,172			100,486		100,236

Diluted EPU:
Net income (loss) available to common unitholders	$	(0.10	)	$	(1.42	)	$	1.13	$	(1.05	)

The following schedule reconciles the units used in the basic EPU calculation to the units used in the diluted EPU calculation: (in thousands)

		Three Months Ended	~~Three Months Ended~~			Nine Months Ended	~~Six Months Ended~~
			June 30,				June 30,
		September 30,				September 30,
		2016	~~2016~~	2015	~~2015~~	2016	~~2016~~	2015	~~2015~~
Basic EPU units		100,253	~~100,239~~	100,172	~~100,272~~	100,241	~~100,235~~	100,236	~~100,269~~
Add:	Restricted Stock Awards		55		42		52		44
Add: Restricted Stock Awards		—		—		50		—
Stock Options	~~Stock Options~~	—	~~107~~	—	—	195	72	—
Diluted EPU units			100,401		100,314		100,359		100,313
Diluted EPU Units		100,253		100,172		100,486		100,236

Contingently issuable shares under the PSUs and Price Vesting Options were excluded from the denominator in 2016 and 2015 because the criteria had not been met for the period ended ~~June~~September 30, 2016. Not included in the computations of diluted EPU were zero and ~~410~~405,000 stock options as such securities were anti-dilutive during the periods ended ~~June~~September 30, 2016 and 2015, respectively. Also, not included in the computations of diluted EPU were all of the LTIP Units as such securities were anti-dilutive ~~during the periods. Unvested restricted stock outstanding as of June 30, 2016 and 2015 were 86,403 and 103,337 shares, respectively.~~

Distributions declared per common unit for each of the three month periods ended June 30, 2016 and 2015 was $0.15 per unit. Distributions declared per common unit for each of the six-month periods ended June 30, 2016 and 2015 was $0.30 per unit.45

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16during the periods. ~~NONCONTROLLING~~Unvested ~~INTERESTS~~restricted INstock ~~CONSOLIDATED~~outstanding ~~JOINT~~as ~~VENTURES~~of September 30, 2016 and 2015 were 82,716 and 99,006 shares, respectively.

Distributions declared per common unit for each of the three-month periods ended September 30, 2016 and 2015 was $0.15 per unit. Distributions declared per common unit for each of the nine-month periods ended September 30, 2016 and 2015 was $0.45 per unit.

16. NONCONTROLLING INTERESTS IN SUBSIDIARIES

NONCONTROLLING INTEREST IN OPERATING PARTNERSHIP (applicable only to General Partner)

Noncontrolling interests in subsidiaries in the accompanying consolidated financial statements relate to (i) common units and LTIP units in the Operating Partnership, held by parties other than the General Partner (“Limited Partners”), and (ii) interests in consolidated joint ventures for the portion of such ventures not owned by the Company.

The following table reflects the activity of noncontrolling interests for the nine months ended September 30, 2016 and 2015, respectively (dollars in thousands):

	Nine Months Ended
	September 30,
	2016			2015
Balance at January 1	$	228,032		$	257,230
Net income	11,487			(12,043		)
Unit distributions	(4,947		)	(4,927		)
Acquisition/increase in noncontrolling interests in consolidated joint ventures	(35,544		)	251
Redemption of common units for common stock	(308		)	(5,370		)
Stock compensation	1,511			—
Other comprehensive income (loss)	(789		)	—
Rebalancing of ownership percentage between parent and subsidiaries	(865		)	276
Balance at September 30	$	198,577		$	235,417

Pursuant to ASC 810, Consolidation, on the accounting and reporting for noncontrolling interests and changes in ownership interests of a subsidiary, changes in a parent’s ownership interest (and transactions with noncontrolling interest unitholders in the subsidiary) while the parent retains its controlling interest in its subsidiary should be accounted for as equity transactions. The carrying value of the noncontrolling interest shall be adjusted to reflect the change in its ownership interest in the subsidiary, with the offset to equity attributable to the parent. Accordingly, as a result of equity transactions which caused changes in ownership percentages between Mack-Cali Realty Corporation stockholders’ equity and noncontrolling interests in the Operating Partnership that occurred during the nine months ended September 30, 2016, the Company has decreased noncontrolling interests in the Operating Partnership and increased additional paid-in capital in Mack-Cali Realty Corporation stockholders’ equity by approximately $0.9 million as of September 30, 2016.

Common Units

Certain individuals and entities own common units in the Operating Partnership. A common unit and a share of Common Stock of the General Partner have substantially the same economic characteristics in as much as they effectively share equally in the net income or loss of the Operating Partnership. Common unitholders have the right to redeem their common units, subject to certain restrictions. The redemption is required to be satisfied in shares of Common Stock, cash, or a combination thereof, calculated as follows: one share of the General Partner’s Common Stock, or cash equal to the fair market value of a share of the General Partner’s Common Stock at the time of redemption, for each common unit. The General Partner, in its sole discretion, determines the form of redemption of common units (i.e., whether a common unitholder receives Common Stock, cash, or any combination thereof). If the General Partner elects to satisfy the redemption with shares of Common Stock as opposed to cash, it is obligated to issue shares of its Common Stock to the redeeming unitholder. Regardless of the rights described above, the common unitholders may not put their units for cash to the General Partner or the Operating Partnership under any circumstances. When a unitholder redeems a common unit, noncontrolling interest in the Operating Partnership is reduced and Mack-Cali Realty Corporation Stockholders’ equity is increased.

LTIP Units

On March 8, 2016, the Company granted 2016 LTIP awards to senior management of the Company, including all of the General Partner’s executive officers. All of the 2016 LTIP Awards will be in the form of units in the Operating Partnership. See Note 15: Mack-Cali Realty Corporation Stockholders’ Equity and Mack-Cali Realty, L.P.’s Partners’ Capital — Long-Term Incentive Plan Awards.

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Unit Transactions

The following table sets forth the changes in noncontrolling interests in the Operating Partnership which relate to the common units and LTIP units in the Operating Partnership for the nine months ended September 30, 2016:

	Common		LTIP
	Units		Units
Balance at January 1, 2016	10,516,844		—
Granted	—		657,373
Redemption of common units for shares of common stock	(18,898	)	—
Balance at September 30, 2016	10,497,946		657,373

Noncontrolling Interest Ownership in Operating Partnership

As of September 30, 2016 and December 31, 2015, the noncontrolling interest common unitholders owned 10.5 percent and 10.5 percent of the Operating Partnership, respectively.

NONCONTROLLING INTEREST IN CONSOLIDATED JOINT VENTURES (applicable to General Partner and Operating Partnership)

The Company consolidates certain joint ventures in which it has ownership interests. Various entities and/or individuals hold noncontrolling interests in these ventures.

The following table reflects the activity of noncontrolling interests in consolidated joint ventures for the six months ended June 30, 2016 and 2015, respectively (dollars in thousands):

	Six Months Ended
	June 30,
	2016			2015
Balance at January 1	$	57,141		$	55,057
Net income	(395		)	(490		)
Increase in noncontrolling interests	(35,544		)	94
Balance at June 30	$	21,202		$	54,661

PARTICIPATION RIGHTS

The Company’s interests in certain real estate projects (three properties and a future development) each provide for the initial distributions of net cash flow solely to the Company, and thereafter, other parties have participation rights in 50 percent of the excess net cash flow remaining after the distribution to the Company of the aggregate amount equal to the sum of: (a) the Company’s capital contributions, plus (b) an IRR of 10 percent per annum.

17. SEGMENT REPORTING

The Company operates in three business segments: (i) commercial and other real estate, (ii) multi-family real estate, and (iii) multi-family services. The Company provides leasing, property management, acquisition, development, construction and tenant-related services for its commercial and other real estate and multi-family real estate portfolio. The Company’s multi-family services business also provides similar services for third parties. The Company no longer considers construction services as a reportable segment as it phased out this line of business in 2014. The Company had no revenues from foreign countries recorded for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015. The Company had no long lived assets in foreign locations as of ~~June~~September 30, 2016 and December 31, 2015. The accounting policies of the segments are the same as those described in Note 2: Significant Accounting Policies, excluding depreciation and amortization.

The Company evaluates performance based upon net operating income from the combined properties in each of its real estate segments (commercial and other, and multi-family) and from its multi-family services segment.

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Selected results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2016 and 2015 and selected asset information as of ~~June~~September 30, 2016 and December 31, 2015 regarding the Company’s operating segments are as follows. Amounts for prior periods have been restated to conform to the current period segment reporting presentation: (dollars in thousands)

	Real Estate
	Commercial						Multi-family			Corporate			Total
	& Other			Multi-family			Services			& Other (d)			Company
Total revenues:
Three months ended:
June 30, 2016	$	133,768		$	9,219		$	9,421	(e)	$	(3,181	)	$	149,227
September 30, 2016	$	141,226		$	8,806		$	9,842	(e)	$	(2,357	)	$	157,517
June 30, 2015	134,613			6,842			8,269		(f)	(1,157		)	148,567
September 30, 2015	131,910			6,964			8,409		(f)	(1,125		)	146,158
Six months ended:
Nine months ended:
June 30, 2016	270,721			18,205			18,148		(e)	(4,924		)	302,150
September 30, 2016	411,947			27,011			27,990		(e)	(7,281		)	459,667
June 30, 2015	274,217			13,579			16,501		(f)	(2,015		)	302,282
September 30, 2015	406,128			20,541			24,910		(f)	(3,139		)	448,440
Total operating and interest expenses (a):
Three months ended:
June 30, 2016	$	64,368		$	5,920		$	9,425	(g)	$	21,473		$	101,186
September 30, 2016	$	68,533		$	5,005		$	9,633	(g)	$	21,269		$	104,440
June 30, 2015	64,158			4,872			9,051		(h)	27,250			105,331
September 30, 2015	59,810			4,233			9,598		(h)	28,236			101,877
Six months ended:
Nine months ended:
June 30, 2016	133,378			11,335			20,245		(g)	44,521			209,479
September 30, 2016	201,914			16,337			29,879		(g)	65,789			313,919
June 30, 2015	136,008			8,541			18,706		(h)	54,929			218,184
September 30, 2015	199,178			12,775			28,304		(h)	79,804			320,061
Equity in earnings (loss) of unconsolidated joint ventures:
Three months ended:
June 30, 2016	$	1,405		$	(2,100	)	$	81		$	—		$	(614	)
September 30, 2016	$	22,487		$	(1,442	)	$	745		$	—		$	21,790
June 30, 2015	798			(3,336		)	209			—			(2,329		)
September 30, 2015	5,181			(2,793		)	747			—			3,135
Six months ended:
Nine months ended:
June 30, 2016	1,082			(3,331		)	81			—			(2,168		)
September 30, 2016	23,569			(4,773		)	826			—			19,622
June 30, 2015	(570		)	(5,497		)	209			—			(5,858		)
September 30, 2015	4,611			(8,290		)	956			—			(2,723		)
Net operating income (loss) (b):
Three months ended:
June 30, 2016	$	70,805		$	1,199		$	77		$	(24,654	)	$	47,427
September 30, 2016	$	95,180		$	2,359		$	954		$	(23,626	)	$	74,867
June 30, 2015	71,253			(1,366		)	(573		)	(28,407		)	40,907
September 30, 2015	77,281			(62		)	(442		)	(29,361		)	47,416
Six months ended:
Nine months ended:
June 30, 2016	138,425			3,539			(2,016		)	(49,445		)	90,503
September 30, 2016	233,602			5,901			(1,063		)	(73,070		)	165,370
June 30, 2015	137,639			(459		)	(1,996		)	(56,944		)	78,240
September 30, 2015	211,561			(524		)	(2,438		)	(82,943		)	125,656
Total assets:
June 30, 2016	$	3,165,791		$	972,292		$	12,656		$	62,801		$	4,213,540
September 30, 2016	$	3,394,462		$	963,569		$	15,441		$	62,147		$	4,435,619
December 31, 2015	3,166,577			836,020			9,831			41,535			4,053,963
Total long-lived assets (c):
June 30, 2016	$	2,898,185		$	679,374		$	3,923		$	(3,571	)	$	3,577,911
September 30, 2016	$	3,061,298		$	667,602		$	4,371		$	(4,455	)	$	3,728,816
December 31, 2015	2,886,583			577,705			3,670			(1,531		)	3,466,427
Total investments in unconsolidated joint ventures:
June 30, 2016	$	78,185		$	236,383		$	632		$	—		$	315,200
September 30, 2016	$	80,735		$	238,261		$	811		$	—		$	319,807
December 31, 2015	76,140			225,850			1,467			—			303,457

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

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

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

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Filing Compare · Veris Residential, L.P.