Mack Cali Realty Corp – ‘424B4’ on 4/27/98

As of:  Monday, 4/27/98   ·   Accession #:  1047469-98-16580   ·   File #:  333-19101

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Prospectus   —   Rule 424(b)(4)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B4       Prospectus                                            49    294K 

Document Table of Contents

424B4
1st Page of 49
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
                                        Filed Pursuant to Rule 424(b)(4)
                                              Registration No. 333-19101
PROSPECTUS SUPPLEMENT                                                           
(TO PROSPECTUS DATED JANUARY 7, 1997)                                           

_______________________________________________________________________________ 

      994,228 Shares

      MACK-CALI REALTY CORPORATION

      Common Stock

_______________________________________________________________________________ 

Mack-Cali Realty Corporation (the "Company") is a fully-integrated,             
self-administered and self-managed real estate investment trust ("REIT") that   
owns and operates a portfolio comprised predominantly of Class A office and     
office/flex buildings located primarily in the Northeast and Southwest, as well 
as commercial real estate leasing, management, acquisition, development and     
construction businesses. As of April 15, 1998, the Company and its subsidiaries 
owned and operated 228 properties, totaling approximately 25.2 million square   
feet (collectively, the "Properties").                                          

The 994,228 shares of common stock of the Company, par value $.01 per share (the
"Common Stock"), offered hereby (the "Offering") are being sold by the Company. 
The Common Stock is listed on the New York Stock Exchange (the "NYSE") under the
symbol "CLI." The last reported sales price of the Common Stock on the NYSE on  
April 23, 1998 was $36.8125 per share. See "Price Range of Common Stock and     
Distributions."                                                                 

The shares of Common Stock are subject to certain restrictions on ownership     
designed to preserve the Company's status as a REIT for federal income tax      
purposes. See "Description of Common Stock" and "Restrictions on Ownership of   
Offered Securities" in the accompanying Prospectus.                             

SEE "RISK FACTORS" ON PAGES S-4 TO S-8 FOR A DISCUSSION OF CERTAIN MATERIAL     
FACTORS WHICH SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE      
COMMON STOCK OFFERED HEREBY.                                                    
_______________________________________________________________________________ 

  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
  EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
  THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
 COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
 PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
 PROSPECTUS. ANY REPRESENTATION TO THE
 CONTRARY IS A CRIMINAL OFFENSE.
_______________________________________________________________________________ 

The Underwriter has agreed to purchase the shares of Common Stock from the      
Company at a price of $34.8798 per share, resulting in aggregate proceeds to the
Company of $34,678,474 before deducting expenses payable by the Company         
estimated to be $35,000, subject to the terms and conditions set forth in the   
Underwriting Agreement.  The Underwriter intends to deposit the shares of Common
Stock, valued at the last reported sales price, with the trustee of the Equity  
Investor Fund Cohen & Steers Realty Majors Portfolio (a Unit Investment Trust)  
(the "Trust") in exchange for units in the Trust.  If all the shares of Common  
Stock so deposited with the trustee of the Trust are valued at their last       
reported sales price on April 23, 1998, the aggregate underwriting discounts and
commissions to the Underwriter would be $1,921,544.  The units of the Trust will
be sold to investors at a price based upon the net asset value of the securities
in the Trust.  For purposes of this calculation, the value of the shares of     
Common Stock as of the time of evaluation for units of the Trust on April 23,   
1998 was $36.8125 per share.  See "Underwriting."                               
_______________________________________________________________________________ 
The shares of Common Stock are offered by the Underwriter, subject to delivery  
by the Company and acceptance by the Underwriter, to prior sale and to          
withdrawal, cancellation or modification of the offer without notice.  Delivery 
of the shares of Common Stock to the Underwriter is expected to be made through 
the facilities of The Depository Trust Company, New York, New York, on or about 
April 29, 1998.                                                                 

     MERRILL LYNCH & CO.
April 23, 1998                                                                  

424B4
2nd Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 2nd
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT   
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, INCLUDING
PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET PRICE AND PURCHASES OF THE
COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN THE COMMON STOCK       
MAINTAINED BY THE UNDERWRITER.  FOR A DESCRIPTION OF THESE ACTIVITIES,  SEE     
"UNDERWRITING."                                                                 
     S-2

424B4
3rd Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 3rd
     AVAILABLE INFORMATION

The Company has filed a Registration Statement on Form S-3 (the       
"Registration Statement") under the Securities Act of 1933, as amended (the     
"Securities Act") with the Securities and Exchange Commission (the "Commission")
covering the Common Stock offered hereby. As permitted by the rules and         
regulations of the Commission, this Prospectus Supplement and the accompanying  
Prospectus omits certain information, exhibits and undertakings contained in the
Registration Statement. For further information pertaining to the securities    
offered hereby, reference is made to the Registration Statement, including the  
exhibits filed as a part thereof.                                               

    The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance        
therewith files reports, proxy statements and other information with the        
Commission. Reports, proxy statements and other information filed by the Company
with the Commission in accordance with the Exchange Act can be inspected and    
copied at the Commission's public reference section, 450 Fifth Street, N.W.,    
Room 1024, Washington, D.C. 20549, and at the following regional offices of the 
Commission: Seven World Trade Center, 13th Floor, New York, New York 10048 and  
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,       
Illinois 60661-2511. Copies of such material can also be obtained at prescribed 
rates by writing to the public reference section of the Commission, 450 Fifth   
Street, N.W., Washington, D.C. 20549. The Commission maintains a Web site that  
contains reports, proxy and information statements and other information        
regarding registrants that file electronically with the Commission. The address 
of the Commission's Web site is: http://www.sec.gov. In addition, the Company's 
Common Stock is listed on the New York Stock Exchange (the "NYSE") and the      
Pacific Exchange, and similar information concerning the Company can be         
inspected and copied at the offices of the NYSE, 20 Broad Street, New York, New 
York 10005, and the Pacific Exchange, 301 Pine Street, San Francisco, California
90082.                                                                          

     INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

   The following documents filed with the Commission by the Company pursuant
to the Exchange Act are hereby incorporated by reference:                       

a.   The Company's Annual Report on Form 10-K (File No. 1-13274) for the fiscal 
year ended December 31, 1997;                                         

b.   The Company's Current Report on Form 8-K (File No. 1-13274) dated January  
16, 1998;                                                             

c.   The Company's Proxy Statement relating to the Annual Meeting of            
Shareholders to be held on May 21, 1998; and                          

d.   The description of the Common Stock and the description of certain         
    provisions of Maryland Law and the Company's Articles of Incorporation and
     Bylaws, both contained in the Company's Registration Statement on Form 8-A,
dated August 9, 1994.                                                 

 Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are            
specifically incorporated by reference in such information) are available       
without charge upon request from the Company, 11 Commerce Drive, Cranford, New  
Jersey 07016-3510 (telephone number: (908) 272-8000).                           

     S-3

424B4
4th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 4th
THE FOLLOWING IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION
APPEARING ELSEWHERE IN THE ACCOMPANYING PROSPECTUS OR INCORPORATED HEREIN OR    
THEREIN BY REFERENCE.  ALL REFERENCES TO THE COMPANY IN THIS PROSPECTUS         
SUPPLEMENT INCLUDE THE COMPANY, ITS SUBSIDIARIES AND THE OTHER ENTITIES OWNED OR
CONTROLLED BY THE COMPANY, INCLUDING MACK-CALI SERVICES, INC., UNLESS THE       
CONTEXT INDICATES OTHERWISE. AS USED HEREIN, "UNITS" REFERS TO LIMITED          
PARTNERSHIP INTERESTS IN MACK-CALI REALTY, L.P., A DELAWARE LIMITED PARTNERSHIP 
(THE "OPERATING PARTNERSHIP") THROUGH WHICH THE COMPANY CONDUCTS ITS REAL ESTATE
ACTIVITIES.                                                                     

THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, INCLUDING 
DOCUMENTS INCORPORATED BY REFERENCE, CONTAIN FORWARD-LOOKING STATEMENTS WITHIN  
THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE
ACT. FORWARD-LOOKING STATEMENTS ARE INHERENTLY SUBJECT TO RISKS AND             
UNCERTAINTIES, MANY OF WHICH CANNOT BE PREDICTED WITH ACCURACY AND SOME OF WHICH
MIGHT NOT EVEN BE ANTICIPATED. FUTURE EVENTS AND ACTUAL RESULTS, FINANCIAL AND  
OTHERWISE, MAY DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN THE              
FORWARD-LOOKING STATEMENTS. CERTAIN FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE  
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN "RISK FACTORS" BELOW AND IN 
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL    
CONDITION" INCLUDED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR    
ENDED DECEMBER 31, 1997, INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS.                                                

      RISK FACTORS

     An investment in shares of Common Stock involves various risks. Prospective
investors should consider carefully the following risk factors, in addition to  
the other information set forth in this Prospectus Supplement, in connection    
with an investment in the shares of Common Stock offered hereby.                

    DEPENDENCE ON NORTHEASTERN AND SOUTHWESTERN OFFICE MARKETS.  A majority of
the Properties are located in the Northeastern and Southwestern United States,  
particularly in New Jersey, New York, Pennsylvania and Texas. The Company's     
performance will be linked to economic conditions and the demand for office     
space in these states. A decline in the economy in these states generally may   
result in a decline in the demand for office space, which may adversely affect  
the ability of the Company to make distributions to stockholders. Such declines 
could have a greater adverse effect on the Company because its portfolio        
consists primarily of office and office/flex buildings (compared to a more      
diversified real estate portfolio).                                             

REAL ESTATE INVESTMENT CONSIDERATIONS.                                          

     GENERAL.  Real property investments are subject to varying degrees of risk.
The yields available from equity investments in real estate depend on the amount
of income earned and capital appreciation generated by the related properties as
well as the expenses incurred in connection therewith. If the properties do not 
generate income sufficient to meet operating expenses, including debt service   
and capital expenditures, the ability to make distributions to the Company's    
stockholders could be adversely affected. Income from the Properties may be     
adversely affected by the general economic climate, local conditions such as    
oversupply of office space or a reduction in demand for office space in the     
area, the attractiveness of the Properties to potential tenants, competition    
from other office and office/flex buildings, the ability of the Company to      
provide adequate maintenance and increased operating costs (including insurance 
premiums and real estate taxes). In addition, revenues from properties and real 
estate values are also affected by such factors as the cost of compliance with  
regulations and the potential for liability under applicable laws, including    
changes in tax laws and housing laws, interest rate levels and the availability 
of financing. The Company's income would be adversely affected if a significant 
number of tenants were unable to pay rent or if office space could not be rented
on favorable terms. Certain significant expenditures associated with an         
investment in real estate (such as mortgage payments, real estate taxes and     
maintenance costs) generally are not reduced when circumstances cause a         
reduction in income from the investment.                                        

     S-4

424B4
5th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 5th
   FINANCIALLY DISTRESSED TENANTS.  In the event of any default by a tenant,
the Company may experience delays in enforcing its rights as landlord and may   
incur substantial costs in protecting its investment. A tenant of the Properties
may seek the protection of the bankruptcy laws at any time, which could result  
in the rejection and termination of such tenant's lease and thereby cause a     
reduction in the cash flow available for distribution by the Company.           

ILLIQUIDITY OF REAL ESTATE.  Real estate investments are relatively   
illiquid and, therefore, the Company has limited ability to vary its portfolio  
quickly in response to changes in economic or other conditions. In addition, the
prohibition in the Internal Revenue Code of 1986, as amended (the "Code"), and  
related regulations on a REIT holding property for sale may affect the Company's
ability to sell properties without adversely affecting distributions to the     
Company's stockholders.                                                         

COMPLIANCE WITH LAWS AND REGULATIONS.  Many laws and governmental     
regulations are applicable to the Properties and changes in these laws and      
regulations, or their interpretation by agencies and the courts, occur          
frequently. Under the Americans with Disabilities Act of 1990 (the "ADA"), all  
places of public accommodation, effective beginning in 1992, are required to    
meet certain federal requirements related to access and use by disabled persons.
Compliance with the ADA requires removal of structural barriers to handicapped  
access in certain public areas where such removal is "readily achievable." A    
number of additional federal, state and local laws exist which also may require 
modifications to the Properties, or restrict certain further renovations        
thereof, with respect to access thereto by disabled persons. Noncompliance with 
the ADA or any of such other laws could result in the imposition of fines or an 
award of damages to private litigants. Although management of the Company       
believes that the Properties are substantially in compliance with present       
requirements, final regulations under the ADA have not yet been promulgated and 
the Company is likely to incur additional costs of complying with the ADA. If   
required changes involve a greater amount of expenditures than the Company      
currently anticipates or if the changes must be made on a more accelerated      
schedule than the Company currently anticipates, the Company's ability to make  
expected distributions to stockholders could be adversely affected.             

Under various laws and regulations relating to the protection of the  
environment, an owner of real estate may be held liable for the costs of removal
or remediation of certain hazardous or toxic substances located on or in the    
property. These laws often impose liability without regard to whether the owner 
was responsible for, or even knew of, the presence of such substances. The      
presence of such substances may adversely affect the owner's ability to rent or 
sell the property or to borrow using such property as collateral and may expose 
it to liability resulting from any release or exposure of such substances.      
Persons who arrange for the disposal or treatment of hazardous or toxic         
substances at another location may also be liable for the costs of removal or   
remediation of such substances at the disposal or treatment facility, whether or
not such facility is owned or operated by such person. Certain environmental    
laws impose liability for release of asbestos-containing materials into the air,
and third parties may also seek recovery from owners or operators of real       
properties for personal injury associated with asbestos-containing materials and
other hazardous or toxic substances. In connection with the ownership (direct or
indirect), operation, management and development of real properties, the Company
may be considered an owner or operator of such properties or as having arranged 
for the disposal or treatment of hazardous or toxic substances and, therefore,  
potentially liable for removal or remediation costs, as well as certain other   
related costs, including governmental penalties and injuries to persons and     
property.                                                                       

COMPETITION IN THE COMPANY'S MARKETS.  The Company plans to acquire   
additional properties in New Jersey, New York, Pennsylvania, Texas and in the   
Northeast and Southwest generally. There are a number of office building        
developers and real estate companies that compete with the Company in seeking   
properties for acquisition, prospective tenants and land for development. All of
the Properties are in developed areas where there are other properties of the   
same type. Competition from other office properties may affect the Company's    
ability to attract and retain tenants, rental rates and expenses of operation   
(particularly in light of the higher vacancy rates of many competing properties 

     S-5

424B4
6th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 6th
which may result in lower-priced space being available in such properties). The 
Company may be competing with other entities that have greater resources than   
the Company and whose managers have more experience than the Company's directors
and officers.                                                                   

    RISKS OF REAL ESTATE DEVELOPMENT.  While the Company's primary focus is on
acquisitions of property, it is a part of the Company's operating strategy,     
under certain conditions, to seek selective, attractive opportunities for       
development. The real estate development business involves significant risks in 
addition to those involved in the ownership and operation of established office,
office/flex, industrial/warehouse or multifamily residential apartment          
buildings, including the risks that financing may not be available on favorable 
terms for development projects, construction may not be completed on schedule or
on budget, resulting in increased debt service expense and construction costs,  
and long-term financing may not be available upon completion of construction.   

REAL ESTATE FINANCING RISKS.                                          

  DEBT FINANCING AND DEBT MATURITIES.  The Company is subject to the risks
normally associated with debt financing, including the risk that the Company's  
cash flow will be insufficient to meet required payments of principal and       
interest, the risk that indebtedness on the Properties will not be able to be   
refinanced at maturity or that the terms of such refinancing will not be as     
favorable as the terms of such indebtedness.                                    

As of April 15, 1998, the Company had outstanding an aggregate of     
approximately $850.8 million of mortgage indebtedness (in addition to borrowings
under the Company's revolving credit facilities). As of April 15, 1998, $346.8  
million was outstanding under the Company's revolving credit facilities. The    
Company currently believes it will have to refinance the principal due on its   
long-term mortgage indebtedness at maturity. There can be no assurance, however,
that the Company will be able to refinance any indebtedness the Company may     
incur.                                                                          

If the Company were unable to refinance its indebtedness on acceptable
terms, or at all, the Company might be forced to dispose of one or more of the  
Properties upon disadvantageous terms, which might result in losses to the      
Company and might adversely affect its ability to make distributions. If        
prevailing interest rates or other factors at the time of refinancing result in 
higher interest rates on refinancings, the Company's interest expense would     
increase, which would adversely affect the Company's cash flow and its ability  
to pay expected distributions to stockholders. Further, if a Property is        
mortgaged to secure payment of indebtedness and the Company is unable to meet   
mortgage payments, the mortgagee could foreclose upon the Property, appoint a   
receiver and receive an assignment of rents and leases or pursue other remedies,
all with a consequent loss of income and asset value to the Company.            
Foreclosures could also create taxable income without accompanying cash         
proceeds, thereby hindering the Company's ability to meet the REIT distribution 
requirements of the Code.                                                       

RISK OF RISING INTEREST RATES.  Advances under the Company's revolving
credit facilities, as well as $291.4 million (as of April 15, 1998) of          
borrowings under the Company's mortgage indebtedness, bear interest at variable 
rates. In addition, the Company may incur other indebtedness in the future that 
also bears interest at a variable rate. Accordingly, increases in interest rates
could increase the Company's interest expense, which could adversely affect the 
Company's cash flow and its ability to pay expected distributions to            
stockholders or cause the Company to be in default under certain debt covenants.

 NO LIMITATION ON DEBT.  The Company funds acquisition opportunities and
development partially through short-term borrowings (including the revolving    
credit facilities), as well as out of undistributed cash. It expects to         
refinance projects purchased with short-term debt either with long-term         
indebtedness or equity financing depending upon the economic conditions at the  
time of refinancing. The Board of Directors has a general policy of limiting the
ratio of its indebtedness to total market capitalization (i.e., the market value
of the issued and outstanding shares of                                         

     S-6

424B4
7th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 7th
Common Stock, including interests redeemable therefor, plus any preferred stock 
that may be outstanding and total debt), but the organizational documents of the
Company do not contain any limitation on the amount or percentage of            
indebtedness, funded or otherwise, that the Company may incur. The Board of     
Directors could alter or eliminate its current policy on borrowing at any time  
at its discretion. If this policy were changed, the Company could become more   
highly leveraged, resulting in an increase in debt service that could adversely 
affect the Company's cash flow and its ability to make expected distributions to
its stockholders and an increased risk of default on the Company's obligations. 

     LIMITS ON OWNERSHIP.  In order to maintain its qualification as a REIT, not
more than 50 percent in value of the outstanding stock of the Company may be    
actually and/or constructively owned by five or fewer individuals (as defined in
the Code to include certain entities). In light of the ownership positions of   
certain stockholders of the Company immediately following the closing of its    
initial public offering of shares of Common Stock (the "IPO"), the Company has  
limited ownership of the outstanding shares of Common Stock by any single       
stockholder to 9.8 percent of the outstanding shares of Common Stock (with      
exceptions for the former principals of the Cali Group who in the aggregate     
currently own Units redeemable for approximately 3.7 percent of the outstanding 
shares of Common Stock, after giving effect to the conversion of such Units).   
The former principals of the Cali Group are permitted to acquire additional     
shares of Common Stock, except to the extent that such acquisition results in   
more than 50 percent in value of the outstanding shares of Common Stock of the  
Company being actually and/or constructively owned by five or fewer individuals.
The Board of Directors could waive this restriction if it was satisfied, based  
upon the advice of tax counsel or otherwise, that such action would be in the   
best interests of the Company and would not affect the Company's qualifications 
as a REIT. Common Stock acquired or transferred in breach of the limitation may 
be redeemed by the Company for the lesser of the price paid and the average     
closing price for the 10 trading days immediately preceding redemption or sold  
at the direction of the Company. The Company may elect to redeem such shares of 
Common Stock for Units, which are nontransferable except in very limited        
circumstances. Any transfer of shares of Common Stock which, as a result of such
transfer, causes the Company to be in violation of any ownership limit will be  
deemed void. Although the Company currently intends to continue to operate in a 
manner which will enable the Company to continue to qualify as a REIT, it is    
possible that future economic, market, legal, tax or other considerations may   
cause the Company's Board of Directors to revoke the election for the Company to
qualify as a REIT. Under the Company's Articles of Incorporation, the Board of  
Directors can make such revocation without the consent of the Company's         
stockholders.                                                                   

     In addition, the consent of the holders of at least 85 percent of the Units
is required: (i) to merge (or permit the merger of) the Operating Partnership   
with another unrelated person, pursuant to a transaction in which the Operating 
Partnership is not the surviving entity; (ii) to dissolve, liquidate or wind-up 
the Operating Partnership; or (iii) to convey or otherwise transfer all or      
substantially all of the Operating Partnership's assets. Following the          
completion of this Offering, the Company, as general partner of the Operating   
Partnership, will own approximately 81.8 percent of the outstanding Units       
(assuming conversion of all Preferred Units).                                   

  DEPENDENCE ON KEY PERSONNEL.  The Company is dependent on the efforts of
its executive officers for strategic business direction and real estate         
experience. While the Company believes that it could find replacements for these
key personnel, the loss of their services could have an adverse effect on the   
operations of the Company. The Company has entered into an employment agreement 
(including non-competition provisions) which provides for a continuous five-year
employment term with each of Thomas A. Rizk, Mitchell E. Hersh, Brant Cali, John
R. Cali, Roger W. Thomas, Barry Lefkowitz and Timothy M. Jones, and a five-year 
employment agreement with an automatic one-year extension at the end of the     
five-year term and each subsequent term with each of James Nugent and Albert    
Spring. The Company does not have key man life insurance for its executive      
officers.                                                                       

     S-7

424B4
8th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 8th
ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT.                 

TAX LIABILITIES AS A CONSEQUENCE OF FAILURE TO QUALIFY AS A REIT.  The
Company has operated so as to qualify as a REIT under the Code, commencing with 
its taxable year ended December 31, 1994. Although the Company believes that it 
will continue to operate in such a manner, no assurance can be given that the   
Company will be able to operate in a manner so as to remain so qualified.       
Qualification as a REIT involves the satisfaction of numerous requirements (some
on an annual and quarterly basis) established under highly technical and complex
Code provisions for which there are only limited judicial or administrative     
interpretations, and involve the determination of various factual matters and   
circumstances not entirely within the Company's control.                        

   If the Company were to fail to qualify as a REIT in any taxable year, the
Company would be subject to federal income tax (including any applicable        
alternative minimum tax) on its taxable income at corporate rates and would not 
be permitted a deduction for the distributions paid to its stockholders.        
Moreover, unless entitled to relief under certain statutory provisions, the     
Company also would be disqualified from treatment as a REIT for the four taxable
years following the year during which qualification was lost. This treatment    
would reduce the net earnings of the Company available for investment or        
distribution to stockholders because of the additional tax liability of the     
Company for the years involved. In addition, distributions to stockholders would
no longer be required to be made. See "Certain United States Federal Income Tax 
Considerations to the Company of its REIT Election-Failure to Qualify" in the   
accompanying Prospectus.                                                        

  OTHER TAX LIABILITIES.  The Company, notwithstanding its REIT status, is
subject to certain federal, state and local taxes on its income and property and
certain states might contend that the Company is subject to certain additional  
taxes.  In addition, the Company's net income, if any, from third party         
management and tenant improvements will be subject to United States federal     
income tax.                                                                     

     RISK OF CHANGES IN THE TAX LAW APPLICABLE TO REITS.  The rules dealing with
federal income taxation are constantly under review by the Internal Revenue     
Service ("IRS"), the Treasury Department and Congress. New federal tax          
legislation or other provisions may be enacted into law or new interpretations, 
rulings or Treasury Regulations could be adopted, all of which could adversely  
affect the taxation of the Company or its stockholders.  No prediction can be   
made as to the likelihood of passage of any new tax legislation or other        
provisions either directly or indirectly affecting the Company or its           
stockholders. Consequently, the tax treatment described herein may be modified  
prospectively or retroactively by legislative action which is beyond the control
of the Company. See "Proposed Tax Legislation."                                 

     EFFECT OF MARKET INTEREST RATES ON PRICE OF COMMON STOCK.  Since the market
price of shares of a publicly traded REIT, such as the Company, is determined in
part by the attractiveness of the yield on those shares compared to the         
prevailing interest rates on fixed-income securities, an increase in interest   
rates could lead purchasers of Common Stock to demand a higher yield, which     
could adversely affect the market price of the Common Stock.                    

     S-8

424B4
9th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 9th
     THE COMPANY

   The Company is a fully-integrated REIT that owns and operates a portfolio
comprised primarily of Class A office and office/flex buildings located         
primarily in the Northeast and Southwest, as well as commercial real estate     
leasing, management, acquisition, development and construction businesses. As of
April 15, 1998, the Company owned and operated 228 properties, aggregating      
approximately 25.2 million square feet. The Properties are comprised of 216     
office and office/flex buildings totaling approximately 24.8 million square     
feet, six industrial/warehouse properties containing an aggregate of            
approximately 400,000 square feet (the "Industrial/Warehouse Properties"), two  
multi-family residential properties, two stand-alone retail properties and two  
land leases. The 216 office and office/flex properties are comprised of 140     
office buildings containing an aggregate of 21.0 million square feet (the       
"Office Properties") and 76 office/flex buildings containing an aggregate of    
approximately 3.8 million square feet (the "Office/Flex Properties"). The       
Company believes that its Properties have excellent locations and access and are
well-maintained and professionally managed. As a result, the Company believes   
that its Properties attract high quality tenants and achieve among the highest  
rental, occupancy and tenant retention rates within their markets.              

   The Company's strategy has been to focus its development and ownership of
office properties in submarkets where it is, or can become, a significant and   
preferred owner and operator. The Company will continue this strategy by        
expanding, primarily through acquisitions, initially into submarkets where it   
has, or can achieve, similar status. Management believes that the recent trend  
towards increasing rental and occupancy rates in office buildings in the        
Company's sub-markets continues to present significant opportunities for growth.
The Company may also develop properties in such submarkets, particularly with a 
view towards potential utilization of certain vacant land recently acquired or  
on which the Company holds options. Management believes that its extensive      
market knowledge provides the Company with a significant competitive advantage  
which is further enhanced by its strong reputation for and emphasis on          
delivering highly responsive management services, including direct and continued
access to the Company's senior management. The Company performs substantially   
all construction, leasing, management and tenant improvements on an "in-house"  
basis and is self-administered and self-managed. As of April 15, 1998, the      
Company had over 300 employees.                                                 

  The Company was incorporated under the laws of Maryland on May 24, 1994.
Its executive offices are located at 11 Commerce Drive, Cranford, New Jersey    
07016-3510, and its telephone number is (908) 272-8000. The Company has an      
internet Web site at "http://www.mack-cali.com."                                

     RECENT DEVELOPMENTS

ACQUISITIONS                                                                    

   On March 27, 1998, the Company acquired ten office properties, located in
suburban Denver and Colorado Springs, Colorado, and 2.5 acres of vacant land,   
located in the Denver Tech Center, from Pacifica Holding Company ("Pacifica"), a
private real estate owner and operator in Denver, Colorado, for a total cost of 
approximately $75.0 million, which funds were made available from drawing on one
of the Company's credit facilities.  The building acquisition comprised         
approximately 620,156 square feet of Pacifica's entire 1.4 million square-foot  
office portfolio, which consists of 19 office buildings and related operations. 
The Company currently is a party to a letter of intent to acquire the remaining 
nine office buildings, encompassing 742,973 square feet, from Pacifica for an   
aggregate purchase price of approximately $113.0 million.                       

Also on March 27, 1998, the Company acquired substantially all of the 
assets of Prudential Business Campus, an 875,000 square-foot office complex with
five office buildings and a day care center, plus land parcels, located in      
Parsippany and East Hanover, Morris County, New Jersey.  The properties were    
acquired for a total cost of                                                    

     S-9

424B4
10th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 10th
approximately $170.0 million, which funds were made available from the Company's
cash reserves (drawn in part from the proceeds of the sale of 2,705,628 shares  
of the Company's Common Stock pursuant to a Stock Purchase Agreement with The   
Prudential Insurance Company of America, Strategic Value Investors, LLC and     
Strategic Value Investors International, LLC) and from drawing on one of the    
Company's credit facilities.                                                    

   On March 30, 1998, the Company acquired Morris County Financial Center, a
308,215 square-foot, two-building office complex located in Parsippany, Morris  
County, New Jersey.  The property was acquired for approximately $52.7 million, 
which funds were made available from drawing on one of the Company's credit     
facilities.                                                                     

FINANCING ACTIVITIES                                                            

As of April 15, 1998, the Company's two revolving credit facilities   
consisted of an unsecured revolving credit facility (the "Original Unsecured    
Facility") and a revolving credit facility (the "Prudential Facility") with an  
aggregate borrowing capacity of $500.0 million and an aggregate outstanding     
balance of $346.8 million.  As of April 15, 1998, the Company had 148           
unencumbered properties totaling approximately 14.2 million square feet,        
representing approximately 56.3 percent of the Company's portfolio. The         
Company's total debt constituted approximately 31.0 percent of the total market 
capitalization of the Company as of April 15, 1998, based on a Common Stock     
price of $38.375 per share.                                                     

   On April 17, 1998, the Company terminated the Original Unsecured Facility
and entered into a new unsecured revolving credit facility (the "New Unsecured  
Facility") with a group of 25 lender banks, arranged by Chase Securities, Inc.  
and Fleet National Bank.  The New Unsecured Facility provides the Company with  
an aggregate borrowing capacity, together with the Prudential Facility, of $970 
million.                                                                        

      S-10

424B4
11th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 11th
     USE OF PROCEEDS

   The net proceeds to the Company from the sale of the Common Stock offered
hereby, after deduction of the underwriting discounts and commissions and       
estimated offering expenses, are approximately $34,643,474.  The Company        
presently intends to use the net proceeds from the Offering to reduce           
outstanding borrowings under its revolving credit facilities and for general    
corporate purposes including acquisitions. The Company continually examines     
potential property acquisitions and, at any given time, one or more of such     
acquisitions may be under consideration. There is no assurance that any such    
acquisitions will be consummated. Pending such uses, the Company may invest the 
remaining net proceeds of the Offering in short-term investment-grade income    
producing investments such as investments in commercial paper, government       
securities or money market funds that invest in government securities. The New  
Unsecured Facility matures in April 2001 and currently bears interest at 110    
basis points over LIBOR. The Prudential Facility matures in March 1999 and      
currently bears interest at 110 basis points over one-month LIBOR. As of April  
15, 1998, the aggregate outstanding balance under the Prudential Facility and   
the Original Unsecured Facility was $346.8 million.                             

     PRICE RANGE OF COMMON STOCK AND DISTRIBUTIONS

  The Company's Common Stock is listed on the NYSE under the symbol "CLI."
The following sets forth the high and low closing sales prices for the Common   
Stock for the fiscal periods indicated as reported by the NYSE and the          
distributions per share paid by the Company with respect to each such period.   

424B4
12th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 12th
                                                                [Download Table]


                                                HIGH       LOW    DISTRIBUTION
                                                ----       ---    ------------

                                                                              
     1996                                                                     
First Quarter . . . . . . . . . . . . . . . . $23.6250  $20.7500    $.425     
Second Quarter. . . . . . . . . . . . . . . . $24.6250  $21.5000    $.425     
Third Quarter . . . . . . . . . . . . . . . . $27.1250  $22.6250    $.450     
Fourth Quarter. . . . . . . . . . . . . . . . $30.8750  $26.1250    $.450     
1997                                                                          
First Quarter . . . . . . . . . . . . . . . . $34.8750  $30.0000    $.450     
Second Quarter. . . . . . . . . . . . . . . . $34.0000  $28.7500    $.450     
Third Quarter . . . . . . . . . . . . . . . . $41.6250  $32.3750    $.500     
Fourth Quarter. . . . . . . . . . . . . . . . $42.6875  $36.2500    $.500     
1998                                                                          
First Quarter . . . . . . . . . . . . . . . . $40.9375  $37.0625    $.500     
Second Quarter (through April 23, 1998) . . . $39.0000  $36.8125    N/A       

     As of April 15, 1998, there were 342 registered holders of shares of Common
Stock.                                                                          

OPERATING PERFORMANCE                                                 

    The Company has consistently increased its Funds from Operations since the
closing of its initial public offering. The Company's Funds from Operations     
(after adjustment for the straight-lining of rents) for the year ended December 
31, 1997 grew to $111.8 million from $45.2 million for the year ended December  
31, 1996.                                                                       

   As a result of the Company's improved operating performance, on September
16, 1997, the Company announced an 11.1 percent increase in its regular         
quarterly distribution, commencing with the Company's distribution with respect 
to the third quarter of 1997, from $0.45 per share to $0.50 per share of Common 
Stock ($2.00 per share of                                                       

        S-11

424B4
13th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 13th
Common Stock on an annualized basis). Since 1995, the Company has increased its 
regular quarterly distribution by 23.8 percent.                                 

    Future distributions by the Company will be at the discretion of the Board
of Directors and will depend on the actual cash flow of the Company, its        
financial condition, capital requirements, the annual distribution requirements 
under the REIT provisions of the Code and such other factors as the Board of    
Directors deems relevant.                                                       

Distributions by the Company to the extent of its current earnings and
profits for federal income tax purposes are taxable to stockholders as ordinary 
dividend income (unless such distributions are designated as capital gain       
distributions). Distributions in excess of earnings and profits will be treated 
as a tax-free return of capital, reducing the stockholder's tax basis in the    
Common Stock, and distributions in excess of such stockholder's tax basis in the
Common Stock will be treated as gain realized from the sale of such shares. See 
"Federal Income Tax Considerations-Taxation of Taxable U.S. Stockholders        
Generally" and "Federal Income Tax Considerations-Taxation of Non-U.S.          
Stockholders-Distributions." The Company has determined that all of the         
distributions paid during 1995, 1996 and 1997 represented ordinary dividend     
income to its stockholders.                                                     

         FEDERAL INCOME TAX CONSIDERATIONS

The following summary of certain United States federal income tax     
considerations to holders of Common Stock is based on current law, is for       
general information only, and is not tax advice. The tax treatment of a holder  
of Common Stock will vary depending upon such holder's particular situation, and
this discussion does not purport to deal with all aspects of taxation that may  
be relevant to particular stockholders in light of their personal investment or 
tax circumstances, or to certain types of stockholders (including insurance     
companies, financial institutions or broker-dealers, tax-exempt organizations,  
foreign corporations, and persons who are not citizens or residents of the      
United States, except to the extent discussed under the heading "Taxation of    
Tax-Exempt Stockholders" and "Taxation of Non-U.S. Stockholders") subject to    
special treatment under the United States federal income tax laws.              

 THIS SUMMARY SUPPLEMENTS THE DISCUSSION SET FORTH IN THE SECTION IN THE
ACCOMPANYING PROSPECTUS ENTITLED "CERTAIN UNITED STATES FEDERAL INCOME TAX      
CONSIDERATIONS TO THE COMPANY OF ITS REIT ELECTION," WHICH CONTAINS A SUMMARY OF
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS TO THE COMPANY, AND SHOULD BE READ    
TOGETHER THEREWITH. EACH INVESTOR IS ADVISED TO CONSULT WITH HIS OWN TAX        
ADVISOR, REGARDING THE TAX CONSEQUENCES TO HIM OF THE ACQUISITION, OWNERSHIP AND
SALE OF COMMON STOCK, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES OF SUCH ACQUISITION, OWNERSHIP AND SALE AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.                                                            

TAXPAYER RELIEF ACT OF 1997                                                     

The Taxpayer Relief Act of 1997 (the "Act") revised several of the    
REIT-related requirements, and in general, modified the general requirements for
qualification as a REIT as well as the rules governing the taxation of a REIT.  
The amendments in the law resulting from the Act became applicable to the       
Company as of the beginning of its current taxable year which began on January  
1, 1998. Set forth below is a brief summary of certain provisions of the Act,   
together with a discussion of their effect on the Company.                      

  In order for Company to maintain its qualification as a REIT, during the
last half of each taxable year, not more than 50 percent in value of the        
Company's outstanding stock may be owned, actually or constructively, by five or
fewer individuals (as defined to include certain entities). (See "Certain United
States Federal Income Tax Considerations to                                     

        S-12

424B4
14th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 14th
the Company of its REIT Election-Taxation of the Company as a REIT-Requirements 
for Qualification" in the accompanying Prospectus). Prior to 1998, the Company's
failure to comply with the Treasury regulations requiring a REIT to maintain    
permanent records showing the actual ownership of its stock (the "Stock         
Ownership Regulations") could have resulted in the Company's disqualification as
a REIT for the taxable year of the failure. Pursuant to the Act, effective for  
the Company's taxable years beginning on or after January 1, 1998, if the       
Company fails to comply with the Stock Ownership Regulations, the Company will  
not lose its qualifications as a REIT as a result of a violation of the         
foregoing requirement if it neither knows nor upon exercising reasonable        
diligence would have known of such violation.  Effective for the Company's      
taxable years beginning on or after January 1, 1998, instead of being           
disqualified as a REIT, the Company would be subject to a financial penalty of  
$25,000 ($50,000 for intentional violations) for any year in which the Company  
failed to comply with the Stock Ownership Regulations. Furthermore, if the      
Company could establish that its failure to comply was due to reasonable cause  
and not to willful neglect, no penalty would be imposed.                        

The Company must also satisfy certain gross income tests on an annual 
basis. (See "Certain United States Federal Income Tax Considerations to the     
Company of its REIT Election-Taxation of the Company as a REIT-Income Tests" in 
the accompanying Prospectus), Under pre-Act law, short-term gain from the sale  
or other disposition of stock or securities, gain from prohibited transactions  
and gain on the sale or other disposition of real property held for fewer than  
four years (apart from involuntary conversions and sales of foreclosure         
property) must have constituted less than 30 percent of the Company's gross     
income (including gross income from prohibited transactions) for each taxable   
year (the "30 Percent Test"). Effective for the Company's current taxable year  
and thereafter, the Company is no longer subject to the 30 Percent Test.        

     For purposes of the 75 percent and 95 percent gross income tests (together,
the "Gross Income Tests"), in order for the rents received by the Company in    
respect of property to qualify as "rents from real property," the Company is    
generally not permitted to operate or manage the property or furnish or render  
services to the tenants of such property, other than through an "independent    
contractor" from whom the Company derives no revenue; except that the Company   
may directly perform certain services that are "usually or customarily rendered"
in connection with the rental of space for occupancy only and are not otherwise 
considered "rendered to the occupant" of the property.  (See "Certain United    
States Federal Income Tax Considerations to the Company of its REIT             
Election-Taxation of the Company as a REIT-Income Tests" in the accompanying    
Prospectus).  Pursuant to the Act, effective for the Company's taxable years    
beginning on or after January 1, 1998, the Company may render a DE MINIMIS      
amount of impermissible services to tenants, or in connection with the          
management of a property (together, "Impermissible Services"), without having   
otherwise qualifying rents from the property being disqualified as "rents from  
real property." In order to qualify for this DE MINIMIS exception, the value of 
the Impermissible Services may not exceed 1 percent of the Company's gross      
income from the property, and such Impermissible Services may not be valued at  
less than 150 percent of the Company's direct cost.  However, the amount of any 
income that the Company receives for Impermissible Services will not be treated 
as "rents from real property" for purposes of the Gross Income Tests and,       
accordingly, must be considered together with other nonqualifying income for    
purposes of satisfying the Gross Income Tests.                                  

The Operating Partnership may receive fees in consideration of the    
performance of management and administrative services with respect to properties
that are not owned entirely by the Operating Partnership. Although a portion of 
such management and administrative fees generally will not constitute           
"qualifying income" for purposes of the Gross Income Tests, the Company believes
that the aggregate amount of such fees (plus any income from Impermissible      
Services and other nonqualifying income) in any taxable year will not cause the 
Company to fail the Gross Income Tests.                                         

     Rents received by the Company from a tenant will not qualify as "rents from
real property" for purposes of the Gross Income Tests if the Company, or a      
direct or constructive owner of 10 percent or more of the Company, directly     

        S-13

424B4
15th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 15th
or constructively owns 10 percent or more of such tenant (a "Related Tenant")   
(See "Certain United States Federal Income Tax Considerations to the Company of 
its REIT Election-Taxation of the Company as a REIT-Income Tests" in the        
accompanying Prospectus).  Effective for the Company's current taxable year and 
thereafter, the constructive ownership rules for determining whether a tenant is
a Related Tenant have been modified with respect to partners and partnerships to
provide that attribution between partners and partnerships occurs only when a   
partner owns, directly and/or indirectly, a 25 percent-or-greater interest in   
the partnership. Thus, a tenant will not be treated as a Related Tenant with    
respect to the Company if shares of the Company are owned by a partnership and a
partner that owns, directly and indirectly, a less-than-25 percent interest in  
such partnership also owns an interest in the tenant. A tenant will also not be 
a Related Tenant with respect to the Company if stockholders of the Company and 
owners of such tenant are partners in a partnership in which neither own,       
directly and/or indirectly, a 25 percent-or-greater interest.                   

Also effective for the Company's taxable years beginning on or after  
January 1, 1998, except to the extent provided by regulations, "qualifying      
income" for purposes of the Gross Income Tests includes payments to the Company 
under an interest rate swap, cap agreement, option, futures contract, forward   
rate agreement or any similar financial instrument entered into by the Company  
to hedge its indebtedness, as well as any gain from the disposition of any of   
the foregoing investments.                                                      

   Other amendments enacted pursuant to the Act include: (a) an earnings and
profits ("E&P") sourcing rule which, for purposes of determining whether a REIT 
has non-REIT, E&P as of the close of its taxable year, treats a REIT's          
distributions of accumulated E&P as being made out of the REIT's earliest       
accumulated E&P (b) an extension of the period for which property may be treated
as "foreclosure property," (c) the exclusion of involuntarily converted property
from the "prohibited transaction" rules, (d) the treatment of any wholly-owned  
subsidiary of a REIT (whether or not the subsidiary has always been wholly-owned
by the REIT) as a "qualified REIT subsidiary" (although certain tax consequences
may result from such treatment), (e) the expansion of the list of "excess       
noncash" items for purposes of the annual 95 percent distribution requirement   
and (f) an election to allow the Company to retain its net long-term capital    
gain (discussed below).                                                         

TAXATION OF TAXABLE U.S. STOCKHOLDERS GENERALLY                                 

 As used herein, the term "U.S. Stockholder" means a holder of shares of
Common Stock who (for United States federal income tax purposes) is (i) a       
citizen or resident of the United States, (ii) a corporation, partnership or    
other entity that is treated as a domestic entity for federal income tax        
purposes (iii) an estate the income of which is subject to United States federal
income taxation regardless of its source, (iv) a trust (other than a grantor    
trust) which (x) was in existence on August 20, 1996 and was treated as a U.S.  
person on August 19, 1996 and (y) has elected, pursuant to regulations (which   
have not yet been issued), to continue to be treated as a U.S. person, or (v) a 
trust not described in (iv) above, if a court within the United States is able  
to exercise primary supervision over the administration of the trust and one or 
more United States fiduciaries have the authority to control all substantial    
decisions of the trust.                                                         

As long as the Company qualifies as a REIT, distributions made by the 
Company out of its current or accumulated earnings and profits (and not         
designated as capital gain dividends) will constitute dividends taxable to its  
taxable U.S. Stockholders as ordinary income. Such distributions will not be    
eligible for the dividends-received deduction in the case of U.S. Stockholders  
that are corporations. Distributions made by the Company that are properly      
designated by the Company as capital gain dividends will be taxable to taxable  
U.S. Stockholders as long-term capital gains (to the extent that they do not    
exceed the Company's actual net capital gain for the taxable year) without      
regard to the period for which a U.S. Stockholder has held his shares of stock. 
U.S. Stockholders that are corporations may, however, be required to treat up to
20 percent of certain capital gain dividends as ordinary income.                

        S-14

424B4
16th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 16th
Pursuant to the Act, the portion of any such capital gain dividends   
attributable to gain recognized after July 28, 1997 with respect to capital     
assets held by the Company for more than 18 months on the date of sale (and so  
designated by the Company subject to certain limits) will be treated as         
long-term capital gain taxable to non-corporate stockholders at a maximum rate  
of 20 percent (or 25 percent to the extent any such gain arises from the        
recapture of straight-line depreciation deductions reflected in the basis of    
real property that has been held by the Company for more than 18 months as of   
the date of sale), and the portion of such capital gain dividends attributable  
to gain recognized with respect to capital assets held for more than one year   
but not more than 18 months (and so designated by the Company subject to certain
limits) will be treated as long-term capital gain taxable to non-corporate      
stockholders at a maximum rate of 28 percent.  If the Company fails to make a   
designation of the capital gain rate applicable to any capital gain distribution
that otherwise has been properly designated as such (including any deemed       
distribution on Retained Gains as described below), the distributions will be   
taxed at 28%.                                                                   

  As indicated above, pursuant to the Act, effective for its taxable years
beginning on or after January 1, 1998, the Company may elect to retain its net  
long term capital gains recognized during a taxable year ("Retained Gains") and 
pay a corporate-level tax on such Retained Gains. Corporations are currently    
subject to a maximum 35 percent tax on recognized capital gains. A stockholder  
owning shares of the Company's stock on December 31st of a taxable year in which
the Company has Retained Gains would be required to include in gross income for 
that year such stockholder's proportionate share of the Retained Gains (as      
designated by the Company in a notice mailed to stockholders within 60 days     
following the end of the taxable year). The amount of any corporate-level tax   
paid by the Company in respect of the Retained Gains (the "Company Tax") would  
be treated as having been paid by the stockholders of the Company and each      
stockholder would receive a credit or refund for such stockholder's             
proportionate share of the Company Tax. A stockholder receiving any such        
Retained Gains would increase his adjusted tax basis in his shares of Company   
stock by the excess of such stockholder's proportionate share of the Retained   
Gains over the stockholder's share of the Company Tax.                          

To the extent that the Company makes distributions (not designated as 
capital gain dividends) in excess of its current and accumulated earnings and   
profits, such distributions to U.S. Stockholders will be treated first as a     
tax-free return of capital to each U.S. Stockholder, reducing the adjusted tax  
basis which such U.S. Stockholder has in his shares of stock for tax purposes by
the amount of such distribution (but not below zero), with distributions in     
excess of the U.S. Stockholder's adjusted tax basis in his shares taxable being 
treated as capital gains (provided that the shares have been held as a capital  
asset). Any such distribution in excess of a U.S. Stockholder's adjusted tax    
basis in his shares of Company stock will be included in income as (i) long-term
capital gain and, for non-corporate stockholders, will be subject to a maximum  
rate of 20 percent if the gain is recognized after July 28, 1997, and the shares
have been held for more than 18 months at the time of distribution, (ii)        
long-term capital gain subject to a maximum tax rate of 28 percent if the shares
have been held for more than one year but not more than 18 months as of the time
of distribution and (iii) short-term capital gain subject to a maximum rate of  
up to 39.6 percent if the shares were held for no more than one year at the time
of the distribution. Distributions declared by the Company in October, November 
or December of any year and payable to a stockholder of record on a specified   
date in any such month shall be treated as both paid by the Company and received
by the stockholder on December 31 of such year, provided that the dividend is   
actually paid by the Company on or before January 31 of the following calendar  
year. Stockholders may not include in their own income tax returns any net      
operating losses or capital losses of the Company.                              

Distributions made by the Company and gain arising from the sale or   
exchange by a U.S. Stockholder of shares of  Company stock will not be treated  
as passive activity income, and as a result, U.S. Stockholders generally will   
not be able to apply any "passive losses" against such income or gain .         
Distributions made by the Company to U.S. Stockholders  (to the extent they do  
not constitute a return of capital) generally will be treated as investment     
income for purposes of computing the investment income limitation. Gain arising 
from the sale or disposition of Company stock by a U.S. Stockholder ,however,   
will not be treated as investment income unless the U.S.                        

        S-15

424B4
17th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 17th
Stockholder elects to reduce the amount of his total net capital gain eligible  
for the 28 percent maximum capital gains rate by the amount of such gain with   
respect to such stock.                                                          

A U.S. Stockholder will recognize gain or loss for federal income tax     
purposes upon the sale or other disposition of Company stock held as a capital  
asset in an amount equal to the difference between (i) the amount of cash and   
the fair market value of any property received on such sale or other disposition
and (ii) the U.S. Stockholder's adjusted tax basis in such Company stock.  Such 
gain or loss will be capital gain or loss if the shares of Company stock have   
been held for more than one year and, generally, as short term capital gain or  
loss otherwise.  Any loss recognized by a U.S. Stockholder upon a sale or       
exchange of shares of Company stock held for only six months or less (after     
applying certain holding period rules) will be treated as long-term capital loss
to the extent of distributions from the Company required to be treated by such  
U.S. Stockholder as long-term capital gain.                                     

BACKUP WITHHOLDING                                                              

    The Company will report to its U.S. Stockholders and to the IRS the amount
of dividends paid during each calendar year and the amount of tax withheld, if  
any. Under the backup withholding rules, a stockholder may be subject to backup 
withholding at the rate of 31 percent with respect to dividends paid unless such
holder (a) is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact or (b) provides a taxpayer identification 
number, certifies as to no loss of exemption from backup withholding and        
otherwise complies with applicable requirements of the backup withholding rules.
A U.S. Stockholder that does not provide the Company with the correct taxpayer  
identification number may also be subject to penalties imposed by the IRS. Any  
amount paid as backup withholding will be creditable against the stockholder's  
income tax liability. In addition, the Company may be required to withhold a    
portion of capital gain distributions to any stockholders who fail to certify   
their non-foreign status to the Company. See "Taxation of Non-U.S.              
Stockholders."                                                                  

TAXATION OF TAX-EXEMPT STOCKHOLDERS                                             

   In applying the REIT stock ownership test under the Code, a pension trust
generally is not treated as a single individual. Rather, beneficiaries of       
certain pension trusts are treated as holding the shares of a REIT in proportion
to their actuarial interests in such trust, and thus permitting certain pension 
trusts to acquire more concentrated ownership of a REIT.                        

  In addition, a pension fund owning more than 10 percent of a REIT may be
required to treat a percentage of dividends from the REIT as "unrelated business
taxable income" ("UBTI"). The percentage is determined by dividing the REIT's   
gross income derived from an unrelated trade or business for that year by the   
gross income of the REIT for the year in which the dividends are paid. If this  
percentage is less than five percent, however, dividends are not treated as     
UBTI. In general, the UBTI rule applies to a REIT where the REIT qualifies as a 
REIT by reason of the above modification of the stock ownership test and (i) one
pension trust owns more than 25 percent of the value of the REIT; or (ii) a     
group of pension trusts individually holding more than 10 percent of the value  
of the REIT collectively owns more than 50 percent of the value of the RElT.    

TAXATION OF NON-U.S. STOCKHOLDERS                                               

    The rules governing United States federal income taxation of the ownership
and disposition of stock by persons that are, for purposes of such taxation,    
nonresident alien individuals, foreign corporations, foreign partnerships or    
foreign estates or trusts (collectively, "Non-U.S. Stockholders") are complex,  
and no attempt is made herein to provide more than a brief summary of such      
rules. Accordingly, the discussion does not address all aspects of United States
federal income tax and does not address state, local or foreign tax consequences
(including treaty benefits, if any, that                                        

        S-16

424B4
18th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 18th
may be available in certain instances) that may be relevant to a Non-U.S.       
Stockholder in light of its particular circumstances. In addition, this         
discussion is based on current law, which is subject to change, and assumes that
the Company qualifies for taxation as a REIT. Prospective Non-U.S. Stockholders 
should consult with their own tax advisers to determine the impact of federal,  
state, local and foreign income tax laws with regard to an investment in stock, 
including any reporting requirements.                                           

     DISTRIBUTIONS.  Distributions by the Company to a Non-U.S. Stockholder that
are neither attributable to gain from sales or exchanges by the Company of      
"United States real property interests" (discussed below) nor designated by the 
Company as capital gains dividends will be treated as dividends of ordinary     
income to the extent that they are made out of current or accumulated earnings  
and profits of the Company. Such distributions ordinarily will be subject to    
withholding of United States federal income tax on a gross basis (that is,      
without allowance of deductions) at a 30 percent rate unless an applicable      
treaty lowers the withholding rate. However, if income from the investment in   
Common Stock is treated as effectively connected with the conduct by the        
Non-U.S. Stockholder of a United States trade or business, the Non-U.S.         
Stockholder generally will be subject to tax at graduated rates, in the same    
manner as U.S. Stockholders are taxed with respect to such distributions, and   
are generally not subject to withholding. Any such effectively connected        
distributions received by a Non-U.S. Stockholder that is a corporation may also 
be subject to an additional branch profits tax at a 30 percent rate or such     
lower rate as may be specified by an applicable income tax treaty. The Company  
expects to withhold United States federal income tax at the rate of 30 percent  
on the gross amount of any distributions paid to a Non-U.S. Stockholder unless  
(i) a lower treaty rate applies and the required form evidencing eligibility for
that reduced rate is filed with the Company or (ii) the Non-U.S. Stockholder    
files an IRS Form 4224 with the Company claiming that the distribution is       
"effectively connected" income.                                                 

   Distributions in excess of current or accumulated earnings and profits of
the Company will not be taxable to a Non-U.S. Stockholder to the extent that    
they do not exceed the adjusted basis of the stockholder's stock, but rather    
will reduce the adjusted basis of such stock.  For FIRPTA withholding purposes  
(discussed below), such distributions will be treated as consideration for the  
sale or exchange of shares of Company stock. To the extent that such            
distributions exceed the adjusted basis of a Non-U.S. Stockholder's stock, they 
will give rise to tax liability if the Non-U.S. Stockholder would otherwise be  
subject to tax on any gain from the sale or disposition of his stock, as        
described below. If it cannot be determined at the time a distribution is made  
whether or not such distribution will be in excess of current and accumulated   
earnings and profits, the distribution will be subject to withholding at the    
rate applicable to dividends. However, amounts thus withheld are generally      
refundable if it is subsequently determined that such distribution was, in fact,
in excess of current and accumulated earnings and profits of the Company. In    
such a case, the Non-U.S. Stockholder must file a U.S. income tax return with   
the IRS to claim a refund.                                                      

    Distributions to a Non-U.S. Stockholder that are designated by the Company
at the time of distribution as capital gains dividends (other than those arising
from the disposition of a United States real property interest) generally will  
not be subject to United States federal income taxation, unless (i) investment  
in the stock is effectively connected with the Non-U.S. Stockholder's United    
States trade or business, in which case the Non U.S. Stockholder will be subject
to the same treatment as U.S. Stockholders with respect to such gain (except    
that a stockholder that is a foreign corporation may also be subject to the 30  
percent branch profits tax, as discussed above), or (ii) the Non-U.S.           
Stockholder is a nonresident alien individual who is present in the United      
States for 183 days or more during the taxable year and has a "tax home" in the 
United States, in which case the nonresident alien individual will be subject to
a 30 percent tax on the individual's capital gains.                             

    Distributions to a Non-U.S. Stockholder that are attributable to gain from
sales or exchanges by the Company of United States real property interests will 
be taxed to a Non-U.S. Stockholder under the provisions of the Foreign          
Investment in Real Property Tax Act of 1980 ("FIRPTA").  Under FIRPTA, these    
distributions are taxed to a Non-U.S. Stockholder as if such gain as income     
effectively connected with a United States trade or business. The Non-U.S.      

        S-17

424B4
19th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 19th
Stockholders would thus be taxed at the normal capital gains rates applicable to
U.S. Stockholders (subject to applicable alternative minimum tax and a special  
alternative minimum tax in the case of nonresident alien individuals). Also,    
such gain might also be subject to a 30 percent branch profits tax in the hands 
of a Non-U.S. Stockholder that is a corporation, as discussed above. The Company
is required to withhold 35 percent of any such distribution that could be       
designated by the Company as a capital gains dividend. Any such withheld amount 
is creditable against the Non-U.S. Stockholder's United States federal income   
tax liability.                                                                  

    SALE OF STOCK.  Gain recognized by a Non-U.S. Stockholder upon the sale or
exchange of shares of stock generally will not be subject to FIRPTA so long as  
the Company is a "domestically controlled REIT" defined generally as a REIT in  
which at all times during a specified testing period less than 50 percent in    
value of its stock is held directly or indirectly by Non-U.S. Stockholders. The 
Company believes that it is currently a "domestically controlled REIT" and      
therefore the sale of stock will not be subject to taxation under FIRPTA.       
Because the stock of the Company is publicly traded, however, no assurance can  
be given that the Company will continue to be a domestically controlled REIT. If
the Company is not or ceases to be, a "domestically-controlled REIT" whether    
gain arising from the sale or exchange of shares of stock by a Non-U.S.         
Stockholder would be subject to United States taxation under FIRPTA as a sale of
a "United States real property interest" will depend on whether the shares are  
"regularly traded" (as defined by applicable Treasury regulations) on an        
established securities market (e.g., the New York Stock Exchange) and on the    
size of the selling Non-U.S. Stockholder's interest in the Company. In the case 
where the Company is not or ceases to be a "domestically-controlled REIT" and   
the Common Stock is "regularly traded" on an established securities market at   
any time during the calendar year, a sale of shares of Common Stock by a        
Non-U.S. Stockholder will only be treated as a sale of a "United States real    
property interest" (and thus subject to taxation under FIRPTA) if such selling  
shareholder beneficially owns (including by attribution) more than 5 percent of 
the total fair market value of the Common Stock at any time during the shorter  
of the period such Non-U.S. Stockholder held the stock or the five-year period  
ending either on the date of such sale or other applicable determination dates. 
If gain on the sale or exchange of shares of stock were subject to taxation     
under FIRPTA, the Non-U.S. Stockholder would be subject to regular United States
income tax with respect to such gain in the same manner as a U.S. Stockholder   
(subject to any applicable alternative minimum tax and a special alternative    
minimum tax in the case of nonresident alien individuals); provided, however,   
that deductions otherwise allowable will be allowed as deductions only if the   
tax returns were filed within the time prescribed by law. In general, the       
purchaser of the stock would be required to withhold and remit to the IRS 10    
percent of the amount realized by the seller on the sale of such stock.         

    Notwithstanding the foregoing, gain from the sale or exchange of shares of
stock not otherwise subject to FIRPTA will be taxable to a Non-U.S. Stockholder 
if either (i) investment in the stock is effectively connected with the Non-U.S.
Stockholder's United States trade or business, in which case the Non-U.S.       
Stockholder will be subject to the same treatment as a U.S. Stockholder with    
respect to such gain (a Non-U.S. Stockholder that is a foreign corporation may  
also be subject to a 30 percent branch profits tax, as discussed above), or (ii)
the Non-U.S. Stockholder is a nonresident alien individual who is present in the
United States for 183 days or more during the taxable year and has a "tax home" 
in the United States, in which case the nonresident alien individual will be    
subject to a 30 percent United States withholding tax on the amount of such     
individual's gain. If the gain on the sale of stock were to be subject to       
taxation under FIRPTA, the Non-U.S. Stockholder would be subject to the same    
treatment as U.S. Stockholders with respect to such gain (subject to applicable 
alternative minimum tax, possible withholding tax and a special alternative     
minimum tax in the case of nonresident alien individuals).                      

   NEW WITHHOLDING REGULATIONS.  Final regulations pertaining to withholding
tax on income paid to foreign persons and related matters (the "New Withholding 
Regulations") were issued by the Treasury Department on October 6, 1997 and     
published in the Federal Register on October 14, 1997. The New Withholding      
Regulations will generally be effective for payments made after December 31,    
1999, subject to certain transition rules. In general, the New Withholding      
Regulations do not significantly alter the substantive withholding and          
information reporting requirements,                                             

        S-18

424B4
20th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 20th
but unify current certification procedures and forms and clarify reliance       
standards. The New Withholding Regulations, however, adopt a certification rule 
applicable to distributions after December 31, 1999, subject to special         
transitional rules, under which a Non-U.S. Stockholder who wishes to claim the  
benefit of an applicable tax treaty rate with respect to dividends from a U.S.  
corporation will be required to satisfy certain additional certification and    
other requirements. Certain pass-through entities (i.e., partnerships) also may 
be subject to different requirements under the New Withholding Regulations. In  
addition, the New Withholding Regulations impose more stringent conditions on   
the ability of financial intermediaries acting for Non-U.S. Stockholders to     
provide certifications on behalf of Non-U.S. Stockholders, which may include    
entering into an agreement with the IRS to audit certain documentation with     
respect to such certifications. The New Withholding Regulations also require a  
corporation that is a REIT to treat as a dividend the portion of a distribution 
that is not designated as a capital gain dividend or return of basis and apply  
the 30 percent withholding tax (subject to any applicable deduction or          
exemption) to such portion, and to apply the FIRPTA withholding rules (discussed
above) with respect to the portion of the distribution designated by the REIT as
capital gain dividend. EXCEPT AS NOTED, THE DISCUSSION SET FORTH ABOVE IN       
"TAXATION OF FOREIGN SHAREHOLDERS" DOES NOT TAKE THE NEW WITHHOLDING REGULATIONS
INTO ACCOUNT. PROSPECTIVE FOREIGN SHAREHOLDERS ARE STRONGLY URGED TO CONSULT    
THEIR OWN TAX ADVISORS WITH RESPECT TO THE NEW WITHHOLDING REGULATIONS.         

OTHER TAX CONSEQUENCES                                                          

    The Company and its stockholders may be subject to state or local taxation
in various state or local jurisdictions, including those in which it or they    
transact business or reside. The state and local tax treatment of the Company   
and its stockholders may not conform to the United States federal income tax    
consequences discussed above. Consequently, prospective stockholders should     
consult their own tax advisors regarding the effect of state and local tax laws 
on an investment in the Company.                                                

PROPOSED TAX LEGISLATION                                                        

On February 2, 1998, the Clinton administration released its budget   
proposal for fiscal year 1999.  The proposal includes a number of provisions    
affecting REITs.  One proposed provision would amend the REIT asset tests with  
respect to subsidiary corporations other than qualified REIT subsidiaries or    
corporations that qualify as REITs (each, an "Affected Subsidiary").  Under     
current law, a REIT is precluded from owning more than 10% of the voting        
securities of any Affected Subsidiary.  Pursuant to the Clinton administration  
proposal, a REIT would remain subject to this restriction and would be precluded
from owning more than 10% of the VALUE of all classes of stock of any Affected  
Subsidiary.  If the proposal were enacted as currently drafted, existing        
Affected Subsidiaries would be "grandfathered," I.E., a REIT would be subject   
only to current law with respect to such subsidiaries.  The grandfathered status
would terminate with respect to an Affected Subsidiary if : (i) the subsidiary  
engaged in a new trade or business; (ii) the subsidiary acquired substantial new
assets; or (iii) the REIT made a substantial contribution to the capital of the 
subsidiary.                                                                     

 Although the administration's budget proposals may affect the manner in
which the Company conducts its business (particularly with respect to the       
Company's ability to conduct third party management services and/or other       
non-customary services), the proposals should not materially affect either the  
status of the Company for federal income tax purposes or its business           
operations.                                                                     

        S-19

424B4
21st Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 21st
        UNDERWRITING

    Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriter") has
agreed, subject to the terms and conditions contained in the Underwriting       
Agreement, to purchase from the Company the 994,228 shares of Common Stock      
offered hereby. The Company is obligated to sell, and the Underwriter is        
obligated to purchase, all of the shares of Common Stock offered hereby if any  
are purchased.                                                                  

 The Underwriter has advised the Company that it proposes to deposit the
shares of Common Stock offered hereby, valued at the last reported sales price, 
into the Trust, a registered unit investment trust under the Investment Company 
Act of 1940, as amended, for which the Underwriter acts as sponsor and depositor
in exchange for units of the Trust.  The Underwriter is an affiliate of the     
Trust. As of December 31, 1997, Cohen & Steers Capital Management, Inc., an     
affiliate of the Trust, beneficially owned approximately 10.40% of the          
outstanding shares of Common Stock of the Company.                              

     Pursuant to the Underwriting Agreement, the Company has agreed to indemnify
the Underwriter or to contribute to losses arising out of certain liabilities,  
including liabilities under the Securities Act.                                 

In the ordinary course of their businesses, the Underwriter and its   
affiliates have engaged, and may in the future engage, in investment banking or 
commercial banking transactions with the Company.                               

 In connection with the Offering, the rules of the Commission permit the
Underwriter and its affiliates to engage in transactions that stabilize,        
maintain or otherwise affect the market price of the Common Stock.  Such        
transactions may include stabilization transactions effected in accordance with 
Rule 104 of Regulation M promulgated by the Commission, pursuant to which such  
persons may bid for or purchase Common Stock for the purpose of pegging, fixing 
or maintaining its market price. The Underwriter also may create a short        
position for its account by selling more Common Stock in connection with the    
Offering than it is committed to purchase from the Company, and in such case may
purchase Common Stock in the open market following the closing of the Offering  
to cover all or a portion of such short position.  In general, purchases of a   
security for the purposes of stabilization or to reduce a short position could  
cause the price of the security to be higher than it might otherwise be in the  
absence of such purchases.  Neither the Company nor the Underwriter makes any   
representation or prediction as to the direction or magnitude of any effect that
the transactions described herein may have on the price of the Company's Common 
Stock.  In addition, neither the Company nor the Underwriter makes any          
representation that the Underwriter will engage in the transactions described in
this paragraph, or that such transactions, if they are undertaken, will not be  
discontinued at any time without notice.                                        

   The Company has applied for listing of the shares of Common Stock offered
hereby with the NYSE.                                                           

        S-20

424B4
22nd Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 22nd
         EXPERTS

The financial statements incorporated by reference in this Prospectus 
Supplement by reference to the Annual Report on Form 10-K of the Company for the
year ended December 31, 1997, have been so incorporated in reliance on the      
report of Price Waterhouse LLP, independent accountants, given on the authority 
of said firm as experts in auditing and accounting.  Such combined financial    
statements are incorporated herein by reference in reliance upon such report    
given upon the authority of such firm as experts in accounting and auditing.    
The financial statements incorporated by reference in this Prospectus Supplement
by reference to the Current Report on Form 8-K of the Company dated January 16, 
1998, have been so incorporated in reliance on the report of Schonbraun Safris  
McCann Bekritsky, & Co., LLC, independent accountants, given on the authority of
said firm as experts in auditing and accounting.  Such financial statements have
been so included in reliance upon the reports of such independent accountants   
given upon the authority of such firm as experts in accounting and auditing.    

         LEGAL MATTERS

     Certain legal matters in connection with the shares of Common Stock offered
hereby will be passed upon for the Company by Pryor Cashman Sherman & Flynn LLP,
New York, New York.  Certain legal matters relating to Maryland law, including  
the validity of the issuance of the securities registered hereby, will be passed
upon for the Company by Ballard Spahr Andrews & Ingersoll, LLP. Certain legal   
matters will be passed upon for the Underwriter by Skadden, Arps, Slate, Meagher
and Flom LLP, New York, New York.                                               

    No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in or     
incorporated by reference in this Prospectus Supplement and the accompanying    
Prospectus in connection with the offer made by this Prospectus Supplement and  
the accompanying Prospectus, and, if given or made, such information or         
representations must not be relied upon as having been authorized by the Company
or the Underwriter. Neither this Prospectus Supplement nor the accompanying     
Prospectus constitutes an offer to sell or a solicitation of any offer to buy   
any security other than the securities offered hereby, nor do they constitute an
offer to sell or a solicitation of any offer to buy any of the securities       
offered hereby by anyone in any jurisdiction in which such offer or solicitation
is not authorized, or in which the person making such offer or solicitation is  
not qualified to do so, or to any person to whom it is unlawful to make such    
offer or solicitation. Neither the delivery of this Prospectus Supplement and   
the accompanying Prospectus, nor any sale made hereunder shall, under any       
circumstances, create any implication that information contained herein is      
correct as of any time subsequent to the date hereof.                           

        S-21

424B4
23rd Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 23rd
PROSPECTUS                                                                      

CALI REALTY CORPORATION 
$1,000,000,000
PREFERRED STOCK, COMMON STOCK AND WARRANTS

   Cali Realty Corporation (together with its subsidiaries, the "Company") may
from time to time offer in one or more series (i) shares or fractional shares of
its preferred stock, par value $.01 per share (the "Preferred Stock"), (ii)     
shares of its common stock, par value $.01 per share (the "Common Stock"), or   
(iii) warrants to purchase Common Stock or Preferred Stock (the "Warrants"),    
with an aggregate initial public offering price of up to $1,000,000,000 on terms
to be determined at the time of offering. The Preferred Stock, Common Stock and 
Warrants (collectively, the "Offered Securities") may be offered, separately or 
together, in separate series in amounts, at prices and on terms to be set forth 
in a supplement to this Prospectus (a "Prospectus Supplement").                 

The specific terms of the Offered Securities in respect of which this   
Prospectus is being delivered will be set forth in the applicable Prospectus    
Supplement and will include, where applicable: (i) in the case of Preferred     
Stock, the specific title and stated value, any dividend, liquidation,          
redemption, conversion, voting and other rights and the initial public offering 
price; (ii) in the case of Common Stock, the initial public offering price; and 
(iii) in the case of Warrants, the securities as to which such Warrants may be  
exercised, the duration, offering price, exercise price and detachability. In   
addition, such specific terms may include limitations on direct or beneficial   
ownership and restrictions on transfer of the Offered Securities, in each case  
as may be appropriate to preserve the status of the Company as a real estate    
investment trust ("REIT") for United States federal income tax purposes. See    
"Restrictions on Ownership of Capital Stock".                                   

 The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations       
relating to, and any listing on a securities exchange of, the Offered Securities
covered by such Prospectus Supplement.                                          

 The Offered Securities may be offered directly, through agents designated
from time to time by the Company, or to or through underwriters or dealers. If  
any agents or underwriters are involved in the sale of any of the Offered       
Securities, their names, and any applicable purchase price, fee, commission or  
discount arrangement between or among them, will be set forth, or will be       
calculable from the information set forth, in the applicable Prospectus         
Supplement. See "Plan of Distribution." No Offered Securities may be sold       
without delivery of the applicable Prospectus Supplement describing the method  
and terms of the offering of such series of Offered Securities.                 

    THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES   
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE      
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.                                                               
------------------------

   THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.    
------------------------

   The date of this Prospectus is January 7, 1997.

424B4
24th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 24th
AVAILABLE INFORMATION 

  The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance        
therewith files reports, proxy statements and other information with the        
Securities and Exchange Commission (the "Commission"). The Registration         
Statement, the exhibits and schedules forming a part thereof and the reports,   
proxy statements and other information filed by the Company with the Commission 
in accordance with the Exchange Act can be inspected and copied at the          
Commission's public reference section, 450 Fifth Street, N.W., Room 1024,       
Washington, D.C. 20549, and at the following regional offices of the Commission:
Seven World Trade Center, 13th Floor, New York, New York 10048 and Northwestern 
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois           
60661-2511. Copies of such material can also be obtained at prescribed rates by 
writing to the public reference section of the Commission, 450 Fifth Street,    
N.W., Washington, D.C. 20549, at prescribed rates. The Commission maintains a   
Web site that contains reports, proxy and information statements and other      
information regarding registrants that file electronically with the Commission. 
The address of the Commission's Web site is: http://www.sec.gov. In addition,   
the Company's Common Stock is listed on the New York Stock Exchange (the "NYSE")
and similar information concerning the Company can be inspected and copied at   
the offices of the NYSE, 20 Broad Street, New York, New York 10005.             

The Company has filed with the Commission a registration statement (the 
"Registration Statement") (of which this Prospectus is a part) under the        
Securities Act of 1933, as amended (the "Securities Act"), with respect to the  
Offered Securities. This Prospectus does not contain all of the information set 
forth in the Registration Statement, certain portions of which have been omitted
as permitted by the rules and regulations of the Commission. Statements         
contained in this Prospectus as to the contents of any contract or other        
document are not necessarily complete, and in each instance reference is made to
the copy of such contract or other document filed as an exhibit to the          
Registration Statement, each such statement being qualified in all respects by  
such reference and the exhibits and schedules thereto. For further information  
regarding the Company and the Offered Securities, reference is hereby made to   
the Registration Statement and such exhibits and schedules which may be obtained
from the Commission at its principal office in Washington, D.C. upon payment of 
the fees prescribed by the Commission.                                          

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 

    The documents listed below have been filed by the Company (File No. 1-13274)
under the Exchange Act with the Commission and are incorporated herein by       
reference:                                                                      

  a.  The Company's Current Reports on Form 8-K dated July 16, 1996,
August 12, 1996, October 8, 1996, October 28, 1996, October 29, 1996,   
November 18, 1996, November 21, 1996, December 30, 1996 and December 31,
1996;                                                                   

      b.  The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;                                                      

        c.  The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 1996, June 30, 1996 and September 30, 1996;             

   d.  The Company's Proxy Statement relating to the Annual Meeting of
Shareholders held on May 13, 1996;                                      

      e.  The description of the Common Stock and the description of certain
  provisions of Maryland Law and the Company's Articles of Incorporation and
   Bylaws, both contained in the Company's Registration Statement on Form 8-A,
dated August 9, 1994.                                                   

    All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Offered Securities shall be deemed to be 
incorporated by reference in this Prospectus and to be part hereof from         

2 

424B4
25th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 25th
the date of filing such documents (provided, however, that the information      
referred to in Item 402(a)(8) of Regulation S-K of the Commission shall not be  
deemed specifically incorporated by reference herein).                          

    Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded   
for purposes of this Prospectus to the extent that a statement contained herein 
(or in the applicable Prospectus Supplement) or in any other subsequently filed 
document which also is or is deemed to be incorporated by reference herein      
modifies or supersedes such statement. Any such statement so modified or        
superseded shall not be deemed, except as so modified or superseded, to         
constitute a part of this Prospectus.                                           

Copies of all documents which are incorporated herein by reference (not 
including the exhibits to such information, unless such exhibits are            
specifically incorporated by reference in such information) will be provided    
without charge to each person, including any beneficial owner of the Offered    
Securities, to whom this Prospectus is delivered, upon written or oral request. 
Requests should be made to Barry Lefkowitz, Vice President-Finance and Chief    
Financial Officer of the Company, 11 Commerce Drive, Cranford, New Jersey       
07016-3510 (telephone number: (908) 272-8000).                                  

3 

424B4
26th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 26th
THE COMPANY 

    Cali Realty Corporation (together with its subsidiaries, the "Company") is a
fully-integrated real estate investment trust ("REIT") that owns and operates a 
portfolio comprised predominantly of Class A office and office/flex buildings   
located primarily in New Jersey, as well as commercial real estate leasing,     
management, acquisition, development and construction businesses. As of         
September 30, 1996, the Company owned 100 percent of 44 office and office/flex  
properties encompassing approximately 4.3 million net rentable square feet and  
one 327 unit multifamily residential property (collectively, the "Properties"). 
The 44 office and office/flex properties are comprised of 27 office buildings   
containing an aggregate of 3.6 million square feet (the "Office Properties") and
17 office/flex buildings containing an aggregate of approximately 700,000 square
feet (the "Office/Flex Properties"). The Company believes that its Properties   
have excellent locations and access and are well-maintained and professionally  
managed. As a result, the Company believes that its properties attract high     
quality tenants and achieve among the highest rent, occupancy and tenant        
retention rates within their markets. As of September 30, 1996, the Office      
Properties and Office/Flex Properties were approximately 97 percent leased to   
over 430 tenants.                                                               

  On November 4, 1996, the Company acquired Harborside, a 1.9 million square
foot office complex located in Jersey City, New Jersey for an initial           
acquisition cost of approximately $286.7 million. The purchase price included   
the assumption of existing and seller-provided financing aggregating            
approximately $150.0 million. The balance of the acquisition cost, totaling     
approximately $137.4 million, was paid in cash and was financed substantially   
through drawings on the Company's existing credit facilities. As part of the    
purchase, the Company also acquired 11.3 acres of land fully zoned and permitted
for an additional 4.1 million square feet of development and the water rights   
associated with 27.4 acres of land extending into the Hudson immediately east of
Harborside, including two piers with an area of 5.8 acres. The terms of the     
acquisition of the vacant parcels at Harborside provide for payments (with an   
estimated net present value of approximately $5.3 million) to be made to the    
seller for development rights if and when the Company commences construction on 
the site during the next several years. However, the agreement provides, among  
other things, that even if the Company does not commence construction, the      
seller may nevertheless require the Company to acquire these rights during the  
six-month period after the end of the sixth year. After such period, the        
seller's option lapses, but any development in years 7 through 30 will require a
payment, on an increasing scale, for the development rights.                    

  In addition, on November 7, 1996, the Company acquired Five Sentry Parkway
East & West ("Five Sentry"), a two-building office complex comprised of         
approximately 131,000 net rentable square feet located in Plymouth Meeting,     
Montgomery County, Pennsylvania, for approximately $12.4 million in cash, which 
was drawn from one of the Company's credit facilities. Such borrowing was       
subsequently repaid from the net proceeds received from the Company's public    
common stock offering of 17,537,500 shares (the "November Offering") on November
23, 1996. On December 10, 1996, the Company acquired 300 Tice Boulevard         
("Whiteweld"), a 230,000 net rentable square foot office building located in    
Woodcliff Lake, Bergen County, New Jersey, for approximately $35.0 million in   
cash, made available from the net proceeds received from the November Offering. 
On December 16, 1996, the Company acquired One Bridge Plaza, a 200,000 net      
rentable square foot office building located in Fort Lee, Bergen County, New    
Jersey, for approximately $26.8 million in cash, made available from the net    
proceeds received from the November Offering. On December 17, 1996, the Company 
acquired the International Court at Airport Business Center ("Airport Center"), 
a three-building office complex comprised of approximately 370,000 net rentable 
square feet located in Lester, Delaware County, Pennsylvania for approximately  
$43.0 million in cash, made available from the net proceeds received from the   
November Offering.                                                              

 The Company's strategy has been to focus its development and ownership of
properties in sub-markets where it is, or can become, a significant and         
preferred owner and operator. The Company will continue this strategy by        
expanding, primarily through acquisitions, into sub-markets where it has, or can
achieve, similar status. Management believes that the recent trend towards      
increasing rental and occupancy rates in Class A office buildings in the        
Company's sub-markets presents significant opportunities for                    

4 

424B4
27th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 27th
growth. The Company may also develop properties in such sub-markets. Management 
believes that its extensive market knowledge provides the Company with a        
significant competitive advantage which is further enhanced by its strong       
reputation for and emphasis on delivering highly responsive management services,
including direct and continued access to the Company's senior management. The   
Company performs substantially all construction, leasing, management and tenant 
improvements on an "in-house" basis and is self-administered and self-managed.  

 Cali Associates, the entity whose business the Company succeeded in 1994,
was founded by John J. Cali, Angelo R. Cali and Edward Leshowitz (the           
"Founders"), who have been involved in the development, leasing, management,    
operation and disposition of commercial and residential properties in Northern  
and Central New Jersey for over 40 years and have been primarily focusing on    
office building development for the past 17 years. In addition to the Founders, 
the Company's executive officers have been employed by the Company and its      
predecessor for an average of approximately ten years. The Company and its      
predecessor have built approximately four million square feet of office space,  
more than one million square feet of industrial facilities and over 5,500       
residential units.                                                              

The Company has elected to be taxed as a REIT for federal income tax    
purposes and expects to continue to elect such status. Although the Company     
believes that it was organized and has been operating in conformity with the    
requirements for qualification under the Internal Revenue Code of 1986, as      
amended (the "Code"), no assurance can be given that the Company will continue  
to qualify as a REIT. Qualification as a REIT involves the application of highly
technical and complex Code provisions of which there are only limited judicial  
or administrative interpretations. If in any taxable year the Company were to   
fail to qualify as a REIT, the Company would not be allowed a deduction for     
distributions to stockholders in computing taxable income and would be subject  
to federal taxation at regular corporate rates. As a result, such a failure     
would adversely affect the Company's ability to make distributions to its       
stockholders and could have an adverse affect on the market value and           
marketability of the Offered Securities.                                        

 To ensure that the Company qualifies as a REIT, the transfer of shares of
Common Stock and Preferred Stock (as defined below) is subject to certain       
restrictions, and ownership of capital stock by any single person is limited to 
9.8 percent of the value of such capital stock, subject to certain exceptions.  
The Company's Articles of Incorporation provide that any purported transfer in  
violation of the above-described ownership limitations shall be void ab initio. 

  The shares of Common Stock of the Company are listed on the NYSE under the
symbol "CLI." The Company has paid regular quarterly distributions on its Common
Stock since it commenced operations as a REIT in 1994. The Company intends to   
continue making regular quarterly distributions to its Common Stockholders.     
Distributions depend upon a variety of factors, and there can be no assurance   
that distributions will be made.                                                

All of the Company's interests in the Properties are held by, and its   
operations are conducted through, Cali Realty, L.P., a Delaware limited         
partnership (the "Operating Partnership"), or by entities controlled by the     
Operating Partnership. The Company owned, as of November 30, 1996, approximately
93.1 percent of the Operating Partnership's outstanding units of partnership    
interest ("Units"), and is the sole general partner of the Operating            
Partnership.                                                                    

    The Company was incorporated under the laws of Maryland on May 24, 1994. Its
executive offices are located at 11 Commerce Drive, Cranford, New Jersey 07016, 
and its telephone number is (908) 272-8000.                                     

5 

424B4
28th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 28th
RATIOS OF EARNINGS TO FIXED CHARGES 

    The following tables set forth the Company's consolidated ratios of earnings
to fixed charges for the periods shown:                                         

                                                                [Download Table]

   FOR THE NINE         FOR THE YEAR         FOR THE PERIOD    
   MONTHS ENDED             ENDED            AUGUST 31, 1994   
SEPTEMBER 30, 1996    DECEMBER 31, 1995   TO DECEMBER 31, 1994 
-------------------  -------------------  ---------------------
                                                               
    3.08x.....                2.69x                 3.13x      

The following tables set forth the amounts by which the Company's       
predecessor's earnings were inadequate to cover fixed charges:                  

                                                                [Download Table]

 FOR THE PERIOD     FOR THE YEARS ENDED DECEMBER   
 JANUARY 1, 1994                 31,               
       TO          ------------------------------- 
 AUGUST 30, 1994     1993       1992       1991    
-----------------  ---------  ---------  --------- 
                                                   
                       (DOLLARS IN THOUSANDS)      
       $(110)      $  (1,064) $  (2,172) $  (1,125)

  The ratios of earnings to fixed charges were computed by dividing earnings
before fixed charges by fixed charges. For this purpose, earnings consist of    
pre-tax income (loss) from continuing operations before minority interest plus  
fixed charges excluding capitalized interest. Fixed charges consist of interest 
costs, both expensed and capitalized, debt issuance costs and the interest      
portion of ground rents on land leases. To date, the Company has not issued any 
Preferred Stock, therefore, the ratios of earnings to combined fixed charges and
preferred stock dividend requirements are the same as the ratios of earnings to 
fixed charges presented above. For the nine months ended September 30, 1996, the
calculation of the ratio of earnings to fixed charges excludes a gain on sale of
rental property of $5,658. The ratio of earnings to fixed charges, including    
gain on sale of rental property, for the same period was 4.64.                  

USE OF PROCEEDS 

  The Company is required by the terms of the Amended and Restated Agreement
of Limited Partnership of the Operating Partnership to invest the net proceeds  
of any sale of Common Stock or Preferred Stock in the Operating Partnership in  
exchange for additional Units. Unless otherwise described in the applicable     
Prospectus Supplement, the Company intends to use the net proceeds from the sale
of the Offered Securities for general corporate purposes, including the leasing,
management, acquisition, development and construction of office, office/flex,   
industrial, multi-family residential or other properties as suitable            
opportunities arise, the expansion and improvement of certain properties in the 
Company's portfolio, and the repayment of indebtedness.                         

DESCRIPTION OF COMMON STOCK 

The Company has the authority to issue up to 95,000,000 shares of common
stock, par value $.01 per share (the "Common Stock"). At November 30, 1996, the 
Company had outstanding 36,318,894 shares of Common Stock.                      

The following description of the Common Stock sets forth certain general
terms and provisions of the Common Stock to which any Prospectus Supplement may 
relate, including a Prospectus Supplement providing that Common Stock will be   
issuable upon conversion of Preferred Stock of the Company or upon the exercise 
of Warrants to purchase Common Stock issued by the Company. The statements below
describing the Common Stock are in all respects subject to and qualified in     
their entirety by reference to the applicable provisions of the Company's       
Articles of Incorporation and bylaws.                                           

 Each outstanding share of Common Stock entitles the holder to one vote on
all matters presented to stockholders for a vote, subject to the provisions of  
the Company's Articles of Incorporation regarding the                           

6 

424B4
29th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 29th
ownership of shares of Common Stock in excess of the Ownership Limit described  
below under "Restrictions on Ownership of Offered Securities". Holders of shares
of Common Stock have no preemptive rights or cumulative voting rights. All      
shares of Common Stock will, when issued, be duly authorized, fully paid, and   
nonassessable. Distributions may be paid to the holders of shares of Common     
Stock if and when declared by the Board of Directors of the Company out of funds
legally available therefor.                                                     

   Under Maryland law, stockholders are generally not liable for the Company's
debts or obligations. If the Company is liquidated, subject to the right of any 
holders of Preferred Stock to receive preferential distributions, each holder of
Common Stock will be entitled to participate PRO RATA in the assets remaining   
after payment of, or adequate provision for, all known debts and liabilities of 
the Company, including debts and liabilities arising out of its status of       
general partner of the Operating Partnership.                                   

RESTRICTIONS ON OWNERSHIP                                                       

With certain exceptions, the Company's Articles of Incorporation provide
that no person may own, or be deemed to own by virtue of the attribution rules  
of the Code, more than 9.8 percent of the value of the Company's issued and     
outstanding shares of capital stock. See "Restrictions on Ownership of Offered  
Securities".                                                                    

TRANSFER AGENT                                                                  

The registrar and transfer agent for the Company's Common Stock is Chase
Mellon Shareholder Services, LLC.                                               

DESCRIPTION OF PREFERRED STOCK

The Company is authorized to issue up to 5,000,000 shares of preferred  
stock, par value $.01 per share (the "Preferred Stock"). No shares of Preferred 
Stock are outstanding as of the date hereof.                                    

    Under the Company's Articles of Incorporation, shares of Preferred Stock may
be issued from time to time, in one or more series, as authorized by the Board  
of Directors. Prior to the issuance of shares of each series, the Board of      
Directors is required by the Maryland General Corporation Law (the "MGCL") and  
the Company's Articles of Incorporation to adopt resolutions and file Articles  
Supplementary (the "Articles Supplementary") with the State Department of       
Assessments and Taxation of Maryland, setting for each such series the          
designations, powers, preferences and rights of the shares of such series and   
the qualifications, limitations or restrictions thereon, including, but not     
limited to, dividend rights, dividend rate or rates, conversion rights, voting  
rights, rights and terms of redemption (including sinking fund provisions), the 
redemption price or prices, and the liquidation preferences as are permitted by 
Maryland law. Because the Board of Directors has the power to establish the     
terms and conditions of each series of Preferred Stock, it may afford the       
holders of any series of Preferred Stock power, preferences and rights, voting  
or otherwise, senior to the rights of holders of shares of Common Stock. The    
issuance of Preferred Stock could have the effect of delaying or preventing a   
change in control of the Company.                                               

   The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement  
may relate. The statements below describing the Preferred Stock are in all      
respects subject to and qualified in their entirety by reference to the         
applicable provisions of the Company's Articles of Incorporation (including the 
applicable Articles Supplementary) and bylaws.                                  

GENERAL                                                                         

    Subject to limitations prescribed by Maryland law and the Company's Articles
of Incorporation and bylaws, the Board of Directors is authorized to fix the    
number of shares constituting each series of Preferred Stock and the            
designations, powers, preferences and relative, participating, optional or other

7 

424B4
30th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 30th
special rights and qualifications, limitations or restrictions thereon,         
including such provisions as may be desired concerning voting, redemption,      
dividends, dissolution or the distribution of assets, conversion or exchange,   
and such other subjects or matters as may be fixed by resolution of the Board of
Directors or a duly authorized committee thereof. The Preferred Stock will, when
issued, be fully paid and nonassessable.                                        

Reference is made to the Prospectus Supplement relating to the series of
Preferred Stock offered thereby for specific terms, including:                  

(1) the title and stated value of such Preferred Stock;                 

 (2) the number of shares of such Preferred Stock offered, the liquidation
  preference per share and the offering price of such Preferred Stock;

  (3) the dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculation thereof applicable to such Preferred Stock;           

(4) whether dividends shall be cumulative or non-cumulative and, if     
     cumulative, the date from which dividends on such Preferred Stock shall
     accumulate; (5) the procedures for any auction and remarketing, if any,
for such Preferred Stock;                                         

(6) the provisions for a sinking fund, if any, for such Preferred Stock;

(7) any voting rights of such Preferred Stock;                          

  (8) the provisions for redemption, if applicable, of such Preferred Stock;

(9) any listing of such Preferred Stock on any securities exchange;     

(10) the terms and conditions, if applicable, upon which such Preferred 
       Stock will be convertible into Common Stock of the Company, including the
conversion price (or manner of calculation thereof) and conversion
period;                                                           

(11) if appropriate, a discussion of United States federal income tax   
considerations applicable to such Preferred Stock;                

  (12) any limitations on direct or beneficial ownership and restrictions on
    transfer, in each case as may be appropriate to preserve the status of
the Company as a REIT;                                            

(13) the relative ranking and preferences of such Preferred Stock as to 
       dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company;                                       

 (14) any limitations on issuance of any series of Preferred Stock ranking
senior to or on a parity with such series of Preferred Stock as to
       dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company; and                                   

(15) any other specific terms, preferences, rights, limitations or      
restrictions of such Preferred Stock.                             

RANK                                                                            

    Unless otherwise specified in the Prospectus Supplement, the Preferred Stock
will, with respect to dividend rights and rights upon liquidation, dissolution  
or winding up of the Company, rank (i) senior to all classes or series of Common
Stock of the Company, and to all equity securities ranking junior to such       
Preferred Stock with respect to dividend rights or rights upon liquidation,     
dissolution or winding up of the Company; (ii) on a parity with all equity      
securities issued by the Company the terms of which specifically provide that   
such equity securities rank on a parity with the Preferred Stock with respect to
dividend rights or rights upon liquidation, dissolution or winding up of the    
Company; and (iii) junior to all equity securities issued by the Company the    
terms of which specifically provide that such equity securities rank senior to  
the Preferred Stock with respect to dividend rights or rights upon liquidation, 
dissolution or winding up of the                                                

8 

424B4
31st Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 31st
Company. As used in the Company's Articles of Incorporation for these purposes, 
the term "equity securities" does not include convertible debt securities.      

DIVIDENDS                                                                       

    Unless otherwise specified in the Prospectus Supplement, the Preferred Stock
will have the rights with respect to payment of dividends set forth below.      

    Holders of shares of the Preferred Stock of each series shall be entitled to
receive, when, as and if declared and authorized by the Board of Directors of   
the Company, out of assets of the Company legally available for payment, cash   
dividends at such rates and on such dates as will be set forth in the applicable
Prospectus Supplement. Each such dividend shall be payable to holders of record 
as they appear on the stock transfer books of the Company on such record dates  
as shall be fixed by the Board of Directors of the Company.                     

Dividends on any series of the Preferred Stock may be cumulative or     
non-cumulative, as provided in the applicable Prospectus Supplement. Dividends, 
if cumulative, will accumulate from and after the date set forth in the         
applicable Prospectus Supplement. If the Board of Directors of the Company fails
to declare a dividend payable on a dividend payment date on any series of the   
Preferred Stock for which dividends are noncumulative, then the holders of such 
series of the Preferred Stock will have no right to receive a dividend in       
respect of the dividend period ending on such dividend payment date, and the    
Company will have no obligation to pay the dividend accrued for such period,    
whether or not dividends on such series are declared payable on any future      
dividend payment date.                                                          

   If any shares of the Preferred Stock of any series are outstanding, no full
dividends shall be declared or paid or set apart for payment on the Preferred   
Stock of the Company of any other series ranking, as to dividends, on a parity  
with or junior to the Preferred Stock of such series for any period unless (i)  
if such series of Preferred Stock has a cumulative dividend, full cumulative    
dividends have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof irrevocably set apart for such payment on
the Preferred Stock of such series for all past dividend periods and the then   
current dividend period or (ii) if such series of Preferred Stock does not have 
a cumulative dividend, full dividends for the then current dividend period have 
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof irrevocably set apart for such payment on the Preferred 
Stock of such series. When dividends are not paid in full (or a sum sufficient  
for such full payment is not so irrevocably set apart) upon the shares of       
Preferred Stock of any series and the shares of any other series of preferred   
stock ranking on a parity as to dividends with the Preferred Stock of such      
series, all dividends declared upon shares of Preferred Stock of such series and
any other series of preferred stock ranking on a parity as to dividends with    
such Preferred Stock shall be declared PRO RATA so that the amount of dividends 
declared per share on the Preferred Stock of such series and such other series  
of preferred stock shall in all cases bear to each other the same ratio that    
accrued and unpaid dividends per share on the shares of Preferred Stock of such 
series (which shall not include any accumulation in respect of unpaid dividends 
for prior dividend periods if such Preferred Stock does not have a cumulative   
dividend) and such other series of preferred stock bear to each other. Except as
may otherwise be set forth in the applicable Prospectus Supplement, no interest,
or sum of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on Preferred Stock of such series which may be in arrears.  

Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Stock has a cumulative dividend, full cumulative       
dividends on the Preferred Stock of such series have been or contemporaneously  
are declared and paid or declared and a sum sufficient for the payment thereof  
irrevocably set apart for payment for all past dividend periods and the then    
current dividend period or (ii) if such series of Preferred Stock does not have 
a cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof irrevocably set apart for payment for the then current  
dividend period,                                                                

9 

424B4
32nd Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 32nd
no dividends (other than in Common Stock or other capital stock ranking junior  
to the Preferred Stock of such series as to dividends and upon liquidation,     
dissolution or winding up of the Company) shall be declared or paid or set aside
for payment or other distribution shall be declared or made upon the Common     
Stock or any other capital stock of the Company ranking junior to or on a parity
with the Preferred Stock of such series as to dividends or upon liquidation,    
dissolution or winding up of the Company, nor shall any Common Stock or any     
other capital stock of the Company ranking junior to or on a parity with the    
Preferred Stock of such series as to dividends or upon liquidation, dissolution 
or winding up of the Company be redeemed, purchased or otherwise acquired for   
any consideration (or any moneys be paid to or made available for a sinking fund
for the redemption of any shares of any such stock) by the Company (except by   
conversion into or exchange for other capital stock of the Company ranking      
junior to the Preferred Stock of such series as to dividends and upon           
liquidation, dissolution or, winding up of the Company).                        

Any dividend payment made on shares of a series of Preferred Stock shall
first be credited against the earliest accrued but unpaid dividend due with     
respect to shares of such series which remains payable.                         

REDEMPTION                                                                      

If so provided in the applicable Prospectus Supplement, the shares of   
Preferred Stock will be subject to mandatory redemption or redemption at the    
option of the Company, as a whole or in part, in each case upon the terms, at   
the times and at the redemption prices set forth in such Prospectus Supplement. 

 The Prospectus Supplement relating to a series of Preferred Stock that is
subject to mandatory redemption will specify the number of shares of such       
Preferred Stock that shall be redeemed by the Company in such year commencing   
after a date to be specified, at a redemption price per share to be specified,  
together with an amount equal to all accrued and unpaid dividends thereon (which
shall not, if such Preferred Stock does not have a cumulative dividend, include 
any accumulation in respect of unpaid dividends for prior dividend periods) to  
the date of redemption. The redemption price may be payable in cash or other    
property, as specified in the applicable Prospectus Supplement.                 

   Notwithstanding the foregoing, unless (i) if such series of Preferred Stock
has a cumulative dividend, full cumulative dividends on all shares of any series
of Preferred Stock shall have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof irrevocably set apart for 
payment for all past dividend periods and the then current dividend period or   
(ii) if such series of Preferred Stock does not have a cumulative dividend, full
dividends on the Preferred Stock of any series have been or contemporaneously   
are declared and paid or declared and a sum sufficient for the payment thereof  
irrevocably set apart for payment for the then current dividend period, no      
shares of any series of Preferred Stock shall be redeemed unless all outstanding
shares of Preferred Stock of such series are simultaneously redeemed; provided, 
however, that the foregoing shall not prevent the purchase or acquisition of    
shares of Preferred Stock of such series pursuant to a purchase or exchange     
offer made on the same terms to holders of all outstanding shares of Preferred  
Stock of such series. In addition, unless (i) if such series of Preferred Stock 
has a cumulative dividend, full cumulative dividends on all outstanding shares  
of any series of Preferred Stock have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof irrevocably set   
apart for payment for all past dividend periods and the then current dividend   
period and (ii) if such series of Preferred Stock does not have a cumulative    
dividend, full dividends on the Preferred Stock of any series have been or      
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof irrevocably set apart for payment for the then current dividend 
period, the Company shall not purchase or otherwise acquire directly or         
indirectly any shares of Preferred Stock of such series (except by conversion   
into or exchange for capital stock of the Company ranking junior to the         
Preferred Stock of such series as to dividends and upon liquidation, dissolution
or winding up of the Company); provided, however, that the foregoing shall not  
prevent the purchase or acquisition of shares of Preferred Stock of such series 
to preserve the REIT status of the                                              

10

424B4
33rd Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 33rd
Company or pursuant to a purchase or exchange offer made on the same terms to   
holders of all outstanding shares of Preferred Stock of such series.            

    If fewer than all of the outstanding shares of Preferred Stock of any series
are to be redeemed, the number of shares to be redeemed will be determined by   
the Company and such shares may be redeemed PRO RATA from the holders of record 
of such shares in proportion to the number of such shares held by such holders  
(with adjustments to avoid redemption of fractional shares) or any other        
equitable method determined by the Company that will not result in violation of 
the ownership limitations set forth in the Articles of Incorporation.           

 Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of a share of Preferred
Stock of any series to be redeemed at the address shown on the stock transfer   
books of the Company. Each notice shall state: (i) the redemption date; (ii) the
number of shares and series of the Preferred Stock to be redeemed; (iii) the    
redemption price; (iv) the place or places where certificates for such Preferred
Stock are to be surrendered for payment of the redemption price; (v) that       
dividends on the shares to be redeemed will cease to accrue on such redemption  
date; and (vi) the date upon which the holder's conversion rights, if any, as to
such shares shall terminate. If fewer than all the shares of Preferred Stock of 
any series are to be redeemed, the notice mailed to each such holder thereof    
shall also specify the number of shares of Preferred Stock to be redeemed from  
each such holder. If notice of redemption of any shares of Preferred Stock has  
been given and if the funds necessary for such redemption have been irrevocably 
set apart by the Company in trust for the benefit of the holders of any shares  
of Preferred Stock so called for redemption, then from and after the redemption 
date dividends will cease to accrue on such shares of Preferred Stock, such     
shares of Preferred Stock shall no longer be deemed outstanding and all rights  
of the holders of such shares will terminate, except the right to receive the   
redemption price.                                                               

LIQUIDATION PREFERENCE                                                          

   Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, then, before any distribution or payment shall be   
made to the holders of any Common Stock or any other class or series of capital 
stock of the Company ranking junior to the Preferred Stock in the distribution  
of assets upon any liquidation, dissolution or winding up of the Company, the   
holders of each series of Preferred Stock shall be entitled to receive out of   
assets of the Company legally available for distribution to stockholders        
liquidating distributions in the amount of the liquidation preference per share 
(set forth in the applicable Prospectus Supplement and Articles Supplementary), 
plus an amount equal to all dividends accrued and unpaid thereon (which shall   
not include any accumulation in respect of unpaid dividends for prior dividend  
periods if such Preferred Stock does not have a cumulative dividend). Except as 
may otherwise be set forth in the applicable Prospectus Supplement, after       
payment of the full amount of the liquidating distributions to which they are   
entitled, the holders of Preferred Stock will have no right or claim to any of  
the remaining assets of the Company. In the event that, upon any such voluntary 
or involuntary liquidation, dissolution or winding up, the legally available    
assets of the Company are insufficient to pay the amount of the liquidating     
distributions on all outstanding shares of Preferred Stock and the corresponding
amounts payable on all shares of other classes or series of capital stock of the
Company ranking on a parity with the Preferred Stock in the distribution of     
assets upon liquidation, dissolution or winding up of the Company, then the     
holders of the Preferred Stock and all other such classes or series of capital  
stock shall share ratably in any such distribution of assets in proportion to   
the full liquidating distributions to which they would otherwise be respectively
entitled.                                                                       

   If liquidating distributions shall have been made in full to all holders of
shares of Preferred Stock, the remaining assets of the Company shall be         
distributed among the holders of any other classes or series of capital stock   
ranking junior to the Preferred Stock upon liquidation, dissolution or winding  
up of the Company, according to their respective rights and preferences and in  
each case according to their respective number of shares. For such purposes, the
consolidation or merger of the Company with or into                             

11

424B4
34th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 34th
any other corporation, or the sale, lease, transfer or conveyance of all or     
substantially all of the property or business of the Company, shall not be      
deemed to constitute a liquidation, dissolution or winding up of the Company.   

VOTING RIGHTS                                                                   

 Holders of the Preferred Stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as         
indicated in the applicable Prospectus Supplement.                              

Except as may otherwise be set forth in the applicable Prospectus       
Supplement, whenever dividends on any shares of Preferred Stock shall be in     
arrears for the equivalent of six or more quarterly periods, the holders of such
shares of Preferred Stock (voting separately as a class with all other series of
preferred stock upon which like voting rights have been conferred and are       
exercisable) will be entitled to vote for the election of two additional        
directors of the Company at the next annual meeting of stockholders, and at each
subsequent annual meeting, until (i) if such series of Preferred Stock has a    
cumulative dividend, all dividends accumulated on such shares of Preferred Stock
for the past dividend periods and the then current dividend period shall have   
been fully paid or declared and a sum sufficient for the payment thereof        
irrevocably set apart for payment or (ii) if such series of Preferred Stock does
not have a cumulative dividend, four consecutive quarterly dividends shall have 
been fully paid or declared and a sum sufficient for the payment thereof        
irrevocably set apart for payment. In such case, the entire Board of Directors  
of the Company will be increased by two directors.                              

   Unless provided otherwise for any series of Preferred Stock, so long as any
shares of Preferred Stock remain outstanding, the Company shall not, without the
affirmative vote or consent of the holders of at least 66 percent of the shares 
of each series of Preferred Stock outstanding at the time, given in person or by
proxy, either in writing or at a meeting (each such series voting separately as 
a class), (i) authorize or create, or increase the authorized or issued amount  
of, any class or series of capital stock ranking senior to such series of       
Preferred Stock with respect to payment of dividends or the distribution of     
assets upon liquidation, dissolution or winding up of the Company or reclassify 
any authorized capital stock of the Company into any such shares, or create,    
authorize or issue any obligation or security convertible into or evidencing the
right to purchase any such shares; or (ii) amend, alter or repeal the provisions
of the Company's Articles of Incorporation (including the Articles Supplementary
for such series of Preferred Stock), whether by merger, consolidation or        
otherwise, so as to materially and adversely affect any right, preference,      
privilege or voting power of such series of Preferred Stock or the holders      
thereof; provided, however, that any increase in the amount of the authorized   
preferred stock or the creation or issuance of any other series of preferred    
stock, or any increase in the amount of authorized shares of such series or any 
other series of Preferred Stock, in each case ranking on a parity with or junior
or to the Preferred Stock of such series with respect to payment of dividends   
and the distribution of assets upon liquidation, dissolution or winding up of   
the Company, shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.                                       

  The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall  
be effected, all outstanding shares of such series of Preferred Stock shall have
been redeemed or called for redemption upon proper notice and sufficient funds  
shall have been irrevocably deposited in trust to effect such redemption.       

CONVERSION RIGHTS                                                               

The terms and conditions, if any, upon which shares of any series of    
Preferred Stock are convertible into Common Stock will be set forth in the      
applicable Prospectus Supplement relating thereto. Such terms will include the  
number of shares of Common Stock into which the Preferred Stock is convertible, 
the conversion price (or manner of calculation thereof), the conversion period, 
provisions as to whether conversion will be at the option of the holders of the 
Preferred Stock or the Company, the events requiring                            

12

424B4
35th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 35th
an adjustment of the conversion price and provisions affecting conversion in the
event of the redemption of such Preferred Stock.                                

RESTRICTIONS ON OWNERSHIP                                                       

With certain exceptions, the Company's Articles of Incorporation provide
that no person may own, or be deemed to own by virtue of the attribution rules  
of the Code, more than 9.8 percent of the value of the Company's issued and     
outstanding shares of capital stock. See "Restrictions on Ownership of Offered  
Securities". These ownership limitations could have the effect of discouraging a
takeover or other transaction in which holders of some, or a majority, of shares
of capital stock of the Company might receive a premium for their shares over   
the then prevailing market price or which such holders might believe to be      
otherwise in their best interest.                                               

13

424B4
36th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 36th
DESCRIPTION OF WARRANTS 

    The Company may issue Warrants for the purchase of Preferred Stock or Common
Stock. Warrants may be issued independently or together with any Offered        
Securities and may be attached to or separate from such securities. Each series 
of Warrants will be issued under a separate warrant agreement (each, a "Warrant 
Agreement") to be entered into between the Company and a warrant agent specified
therein ("Warrant Agent"). The Warrant Agent will act solely as an agent of the 
Company in connection with the Warrants of such series and will not assume any  
obligation or relationship of agency or trust for or with any holders or        
beneficial owners of Warrants.                                                  

The applicable Prospectus Supplement will describe the following terms, 
where applicable, of the Warrants in respect of which this Prospectus is being  
delivered: (1) the title of such Warrants; (2) the aggregate number of such     
Warrants; (3) the price or prices at which such Warrants will be issued; (4) the
currencies in which the price or prices of such Warrants may be payable; (5) the
designation, amount and terms of the Offered Securities purchasable upon        
exercise of such Warrants; (6) the designation and terms of the other Offered   
Securities, if any, with which such Warrants are issued and the number of such  
Warrants issued with each such security; (7) if applicable, the date on and     
after which such Warrants and the Offered Securities purchasable upon exercise  
of such Warrants will be separately transferable; (8) the price or prices at    
which and currency or currencies in which the Offered Securities purchasable    
upon exercise of such Warrants may be purchased; (9) the date on which the right
to exercise such Warrants shall commence and the date on which such right shall 
expire; (10) the minimum or maximum amount of such Warrants which may be        
exercised at any one time; (11) information with respect to book-entry          
procedures, if any; (12) a discussion of certain federal income tax             
considerations; and (13) any other material terms of such Warrants, including   
terms, procedures and limitations relating to the exchange and exercise of such 
Warrants.                                                                       

RESTRICTIONS ON OWNERSHIP                                                       

With certain exceptions, the Company's Articles of Incorporation provide
that no person may own, or be deemed to own by virtue of the attribution rules  
of the Code, more than 9.8 percent of the value of the Company's issued and     
outstanding shares of capital stock. See "Restrictions on Ownership of Offered  
Securities". These ownership limitations could have the effect of discouraging a
takeover or other transaction in which holders of some, or a majority, of shares
of capital stock of the Company might receive a premium for their shares over   
the then prevailing market price or which such holders might believe to be      
otherwise in their best interest.                                               

14

424B4
37th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 37th
RESTRICTIONS ON OWNERSHIP OF OFFERED SECURITIES 

For the Company to qualify as a REIT under the Code, not more than 50   
percent in value of its outstanding capital stock may be owned, directly or     
indirectly, by five or fewer individuals (as defined in the Code to include     
certain entities) during the last half of a taxable year, and its capital stock 
must be beneficially owned by 100 or more persons during at least 335 days of a 
taxable year of 12 months or during a proportionate part of a shorter taxable   
year.                                                                           

The Company's Articles of Incorporation provide, subject to certain     
exceptions specified therein, that no holder may own, or be deemed to own by    
virtue of the attribution rules of the Code, more than 9.8 percent by value (the
"Ownership Limit") of the outstanding capital stock of the Company. Any transfer
of Offered Securities that would create a direct or indirect ownership of shares
of Common Stock and/or Preferred Stock (collectively the "Stock") in excess of  
the Ownership Limit or result in the Company being "closely held" within the    
meaning of Code Section 856(h) shall be null and void, and the intended         
transferee will acquire no rights to the Offered Securities. Any transfer of    
Stock that would result in the capital stock of the Company being beneficially  
owned by fewer than 100 persons shall be null and void, and the interested      
transferee will acquire no rights to such shares of Stock.                      

  The constructive ownership rules are complex and may cause Common Stock or
Preferred Stock owned directly or constructively by a group of related          
individuals and/or entities to be deemed constructively owned by one individual 
or entity. As a result, the acquisition of less than 9.8 percent of the value of
the capital stock of the Company (or the acquisition of an interest in an entity
which owns such capital stock) by an individual or entity could cause that      
individual or entity (or another individual or entity) to own constructively in 
excess of 9.8 percent of the value of the capital stock, and thus subject such  
capital stock to the Ownership Limit. Moreover, an individual or an entity which
owns Warrants to acquire Stock will be deemed to own such Stock for purposes of 
applying the Ownership Limit.                                                   

The Board of Directors may, upon receipt of either a certified copy of a
ruling from the Internal Revenue Service or an opinion of counsel satisfactory  
to the Board of Directors, but shall in no case be required to, exempt a person 
(the "Exempted Holder") from the Ownership Limit if the ruling or opinion       
concludes that no person who is an individual as defined in Section 542(a)(2) of
the Code will, as the result of the ownership of shares by the Exempted Holder, 
be considered to have Beneficial Ownership of an amount of capital stock that   
will violate the Ownership Limit.                                               

  The foregoing restrictions on transferability and ownership will not apply
if the Board of Directors determines that it is no longer in the best interests 
of the Company to attempt to qualify, or to continue to qualify, as a REIT.     

All certificates representing shares of Common Stock and Preferred Stock
will bear a legend referring to the restrictions described above.               

  All stockholders of record who own more than a specified percentage of the
outstanding capital stock of the Company must file a written statement with the 
Company containing certain information specified in Treasury Regulations,       
pertaining to the actual ownership of capital stock of the Company, within 30   
days after December 31 of each year. In addition, each holder of capital stock  
of the Company and/or Warrants shall, upon demand, be required to disclose to   
the Company in writing such information with respect to the direct, indirect and
constructive ownership of capital stock of the Company as the Board of Directors
deems necessary to comply with the provisions of the Code applicable to a REIT  
or to comply with the requirements of any taxing authority or governmental      
agency.                                                                         

In addition to preserving the Company's status as a REIT, the Ownership 
Limit may have the effect of precluding an acquisition of control of the REIT   
without the approval of the Board of Directors. These ownership limitations     
could have the effect of discouraging a takeover or other transaction in which  
holders of some, or a majority, of shares of capital stock of the Company might 
receive a premium for their                                                     

15

424B4
38th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 38th
shares over the then prevailing market price or which such holders might believe
to be otherwise in their best interest.                                         

CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS TO THE COMPANY OF ITS REIT ELECTION

Pryor, Cashman, Sherman & Flynn, which has acted as tax counsel to the  
Company in connection with the formation of the Company and the Company's       
election to be taxed as a REIT, has reviewed the following discussion and is of 
the opinion that it fairly summarizes the federal income tax considerations     
relevant to the Company's status as a REIT. The following summary of certain    
federal income tax considerations is based on current law, is for general       
information only, and is not tax advice. The tax treatment of a holder of any of
the Offered Securities will vary depending upon the terms of the specific       
securities acquired by such holder, as well as his particular situation.        

THE REIT PROVISIONS OF THE CODE ARE HIGHLY TECHNICAL AND COMPLEX.  The  
following sets forth the material aspects of the sections that govern the       
federal income tax treatment of a REIT. This summary is qualified in its        
entirety by the applicable Code provisions, rules and regulations promulgated   
thereunder, and administrative and judicial interpretations thereof, all of     
which are subject to change (which change may apply retroactively).             

    EACH INVESTOR IS ADVISED TO CONSULT THE APPLICABLE PROSPECTUS SUPPLEMENT, AS
WELL AS HIS OWN TAX ADVISOR, REGARDING THE TAX CONSEQUENCES OF THE ACQUISITION, 
OWNERSHIP AND SALE OF THE OFFERED SECURITIES, INCLUDING THE FEDERAL, STATE,     
LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH ACQUISITION, OWNERSHIP AND    
SALE AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.                           

TAXATION OF THE COMPANY AS A REIT                                               

  GENERAL.  The Company has elected to be taxed as a REIT under Sections 856
through 860 of the Code, commencing with its taxable year ended December 31,    
1994. The Company believes that it has been organized and operated in such a    
manner as to qualify for taxation as a REIT under the Code for such taxable year
and for the current taxable year and the Company intends to continue to operate 
in such a manner in the future, but no assurance can be given that it will      
operate in a manner so as to qualify or remain qualified.                       

In the opinion of Pryor, Cashman, Sherman & Flynn, the Company has been 
organized in conformity with the requirements for qualification and taxation as 
a REIT, commencing with its taxable year ended December 31, 1994, and for all   
subsequent taxable years to date, and its method of operation will enable it to 
continue to meet the requirements for qualification and taxation as a REIT under
the Code. It must be emphasized that this opinion is based on various           
assumptions and is conditioned upon such assumptions and certain representations
made by the Company as to factual matters. Pryor, Cashman, Sherman & Flynn is   
not aware of any facts or circumstances that are inconsistent with these        
representations and assumptions. Moreover, such qualification and taxation as a 
REIT depends upon the Company's ability to meet, through actual annual operating
results, distribution levels and diversity of stock ownership, the various      
qualification tests imposed under the Code and discussed below, the results of  
which will not be reviewed by Pryor, Cashman, Sherman & Flynn. Accordingly, no  
assurance can be given that the actual results of the Company's operation of any
particular taxable year will satisfy such requirements. See "-- Failure to      
Qualify."                                                                       

 If the Company qualifies for taxation as a REIT, it generally will not be
subject to federal corporate income taxes on its net income that is currently   
distributed to stockholders. This treatment substantially eliminates the "double
taxation" (at the corporate and stockholder levels) that generally results from 
investment in a regular corporation. However, the Company will be subject to    
federal income tax as                                                           

16

424B4
39th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 39th
follows: First, the Company will be taxed at regular corporate rates on any     
undistributed REIT taxable income, including undistributed net capital gains.   
Second, under certain circumstances, the Company may be subject to the          
"corporate alternative minimum tax" on its items of tax preference. Third, if   
the Company has (i) net income from the sale or other disposition of            
"foreclosure property" which is held primarily for sale to customers in the     
ordinary course of business or (ii) other non-qualifying net income from        
foreclosure property, it will be subject to tax at the highest corporate rate on
such income. Fourth, if the Company has net income from prohibited transactions 
(which are, in general, certain sales or other dispositions of property held    
primarily for sale to customers in the ordinary course of business, other than  
foreclosure property), such income will be subject to a 100 percent tax. Fifth, 
if the Company should fail to satisfy the 75 percent gross income test or the 95
percent gross income test (as discussed below), but has nonetheless maintained  
its qualification as a REIT because certain other requirements have been met, it
will be subject to a 100 percent tax on an amount equal to (a) the gross income 
attributable to the greater of the amount by which the Company fails the 75     
percent or 95 percent test, multiplied by (b) a fraction intended to reflect the
Company's profitability. Sixth, if the Company should fail to distribute during 
each calendar year at least the sum of (i) 85 percent of its REIT ordinary      
income for such year, (ii) 95 percent of its REIT capital gain net income for   
such year, and (iii) any undistributed taxable income from prior years, the     
Company would be subject to a 4 percent excise tax on the excess of such        
required distribution over the amounts actually distributed. Seventh, with      
respect to an asset (a "Built-In Gain Asset") acquired by the Company from a    
corporation which is or has been a C corporation (i.e., generally, a corporation
subject to full corporate-level tax) in a transaction in which the basis of the 
Built-In Gain Asset in the hands of the Company is determined by reference to   
the basis of the asset in the hands of the C corporation, if the Company        
recognizes gain on the disposition of such asset during the ten-year period (the
"Recognition Period") beginning on the date on which such asset was acquired by 
the Company, then, to the extent of the Built-In Gain (i.e., the excess of (a)  
the fair market value of such asset over (b) the Company's adjusted basis in    
such asset, determined as of the beginning of the Recognition Period), such gain
will be subject to tax at the highest corporate tax rate pursuant to Internal   
Revenue Service ("IRS") regulations that have not yet been promulgated. The     
results described above with respect to the recognition of Built-In Gain assume 
that the Company will make an election pursuant to IRS Notice 88-19. In         
addition, Cali Services, Inc. is taxed on its income at regular corporate rates.

  REQUIREMENTS FOR QUALIFICATION.  The Code defines a REIT as a corporation,
trust or association (1) which is managed by one or more trustees or directors, 
(2) the beneficial ownership of which is evidenced by transferable shares, or by
transferable certificates of beneficial interest, (3) which would be taxable as 
a domestic corporation, but for Code Sections 856 through 859, (4) which is     
neither a financial institution nor an insurance company subject to certain     
provisions of the Code, (5) the beneficial ownership of which is held by 100 or 
more persons (determined without reference to any rules of attribution), (6)    
during the last half of each taxable year, not more than 50 percent in value of 
the outstanding stock of which is owned, directly or constructively, by five or 
fewer individuals (as defined in the Code to include certain entities) and (7)  
which meets certain other tests, described below, regarding the matter of its   
income and assets. The Code provides that conditions (1) to (4), inclusive, must
be met during the entire taxable year and that condition (5) must be met during 
at least 335 days of a taxable year of 12 months, or during a proportionate part
of a taxable year of less than 12 months.                                       

  The Company has previously issued sufficient shares to allow it to satisfy
conditions (5) and (6). In addition, the Company's Articles of Incorporation    
provide for restrictions regarding ownership and transfer of the Company's      
capital stock, which restrictions are intended to assist the Company in         
continuing to satisfy the share owner-ship requirements described in (5) and (6)
above. The ownership and transfer restrictions are described in "Restrictions on
Ownership of Offered Securities."                                               

   The Company owns and operates all of the properties through partnerships in
which the Operating Partnership and six direct, wholly-owned subsidiaries (the  
"Cali Subs") are partners. Code Section 856 (i) provides that a corporation,    
100% of whose stock is held by a REIT at all times during the corporation's     

17

424B4
40th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 40th
existence, is a "qualified REIT subsidiary." A "qualified REIT subsidiary" shall
not be treated as a separate corporation, and all assets, liabilities, and items
of income, deduction, and credit of a "qualified REIT subsidiary" shall be      
treated as assets, liabilities and such items (as the case may be) of the REIT. 
Thus, in applying the requirements described herein, the Company's "qualified   
REIT subsidiaries" will be ignored, and all assets, liabilities and items of    
income, deduction, and credit of such subsidiaries will be treated as assets,   
liabilities and items of the Company. The Company has not, however, sought or   
received a ruling from the IRS that any of the Cali Subs is a "qualified REIT   
subsidiary."                                                                    

  In the case of a REIT that is a partner in a partnership, either directly,
or indirectly through a "qualified REIT subsidiary," IRS regulations provide    
that the REIT will be deemed to own its proportionate share of the assets of the
partnership and will be deemed to be entitled to the income of the partnership  
attributable to such share. In addition, the character of the assets and gross  
income of the partnership will retain the same character in the hands of the    
REIT for purposes of Code Section 856, including satisfying the gross income    
tests and the asset tests. Thus, the Company's proportionate share of the       
assets, liabilities and items of income of the partnerships in which the Company
is a partner, directly or indirectly, will be treated as the assets, liabilities
and items of income of the Company for purposes of applying the requirements    
described herein.                                                               

INCOME TESTS.  In order to maintain qualification as a REIT, the Company
annually must satisfy three gross income requirements. First, at least 75       
percent of the Company's gross income (excluding gross income from prohibited   
transactions) for each taxable year must be derived directly or indirectly from 
investments relating to real property or mortgages on real property (including  
"rents from real property" and, in certain circumstances, interest) or from     
certain types of temporary investments.                                         

  Second, at least 95 percent of the Company's gross income (excluding gross
income from prohibited transactions) for each taxable year must be derived from 
such real property investments, dividends, interest and gain from the sale or   
disposition of stock or securities (or from any combination of the foregoing).  

Third, short-term gain from the sale or other disposition of stock or   
securities, gain from prohibited transactions and gain on the sale or other     
disposition of real property held for fewer than four years (apart from         
involuntary conversions and sales of foreclosure property) must represent less  
than 30 percent of the Company's gross income (including gross income from      
prohibited transactions) for each taxable year. See "--Sales or Dispositions of 
Assets."                                                                        

   Rents received by the Company will qualify as "rents from real property" in
satisfying the gross income requirements for a REIT described above only if     
several conditions are met. First, the amount of rent must not be based in whole
or in part on the income or profits derived by any person from such property.   
However, an amount received or accrued generally will not be excluded from the  
term "rents from real property" solely by reason of being based on a fixed      
percentage or percentages of receipts or sales. Second, the Code provides that  
rents received from a tenant will not qualify as "rents from real property" in  
satisfying the gross income tests if the REIT, or a direct or constructive owner
of 10 percent or more of the REIT, directly or constructively owns 10 percent or
more of such tenant (a "Related Party Tenant"). Third, if rent attributable to  
personal property leased in connection with a lease of real property is greater 
than 15 percent of the total rent received under the lease, then the portion of 
rent attributable to such personal property will not qualify as "rents from real
property." Finally, for rents received to qualify as "rents from real property,"
the REIT generally must not operate or manage the property or furnish or render 
services to the tenants of such property, other than through an independent     
contractor from whom the REIT derives no revenue; provided, however, the Company
may directly perform certain services that are "usually or customarily rendered"
in connection with the rental of space for occupancy only and are not otherwise 
considered "rendered to the occupant" of the property. The Company does not and 
will not (i) charge rent for any property that is based in whole or in part on  
the income or profits of any person (except by reason of being based on a fixed 
percentage of receipts or sales, as described above), (ii) rent any property to 
a Related Party Tenant, (iii) derive rental income attributable to personal     
property (other                                                                 

18

424B4
41st Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 41st
than personal property leased in connection with the lease of real property, the
amount of which is less than 15 percent of the total rent received under the    
lease), or (iv) perform services which are not usually or customarily rendered  
and which are considered to be rendered to the occupant of the property, other  
than through an independent contractor from whom the Company derives no revenue.

The term "interest" generally does not include any amount received or   
accrued (directly or indirectly) if the determination of such amount depends in 
whole or in part on the income or profits of any person. However, an amount     
received or accrued generally will not be excluded from the term "interest"     
solely by reason of being based on a fixed percentage or percentages of receipts
or sales.                                                                       

The Operating Partnership may receive fees in consideration of the      
performance of management and administrative services with respect to Properties
that are not owned entirely by the Operating Partnership. Although a portion of 
such management and administrative fees generally will not qualify under the 75 
percent or 95 percent gross income tests, the Company believes that the         
aggregate amount of such fees (and any other non-qualifying income) in any      
taxable year will not cause the Company to exceed the limits on non-qualifying  
income under the 75 percent and 95 percent gross income tests.                  

    In the opinion of Pryor, Cashman, Sherman & Flynn, the Company has satisfied
the 75 percent and 95 percent gross income tests for taxable years ending prior 
to the date of this Prospectus. The Company intends to operate in such a manner 
as will enable it to satisfy such tests in the future. If the Company fails to  
satisfy one or both of the 75 percent or 95 percent gross income tests for any  
taxable year, it may nevertheless qualify as a REIT for such year if it is      
entitled to relief under certain provisions of the Code. These relief provisions
will generally be available if the Company's failure to meet such tests is due  
to reasonable cause and not due to willful neglect, the Company attaches a      
schedule of the sources of its income to its federal income tax return, and any 
incorrect information on the schedule is not due to fraud with intent to evade  
tax. It is not possible, however, to state whether in all circumstances the     
Company would be entitled to the benefit of these relief provisions. As         
discussed above under "--General," even if these relief provisions were to      
apply, a tax would be imposed with respect to the excess net income.            

SALES OR DISPOSITIONS OF ASSETS.  The Company, as a REIT, is generally  
subject to two restrictions that limit its ability to sell real property. First,
as previously discussed, to qualify as a REIT, the Company must satisfy the 30  
Percent Limitation, as described above. Second, the Company is subject to a tax 
of 100 percent on its gain (i.e., the excess, if any, of the amount realized    
over the Company's adjusted basis in the property) from each sale of property   
(excluding certain property obtained through foreclosure) in which it is a      
dealer. In calculating its gains subject to the 100 percent tax, the Company is 
not allowed to offset gains on sales of property against losses on other sales  
of property in which it is a dealer.                                            

The Company may be subject to an entity level tax with respect to gain  
recognized from the sale of property the Company held either prior to its       
electing REIT status or which the Company acquired in a carryover basis         
transaction. The tax is triggered if the property sold has a build-in-gain and  
is sold within 10 years of the Company's qualification as a REIT.               

  Under the Code, the Company would be deemed to be a dealer in any property
that the Company holds primarily for sale to customers in the ordinary course of
its business. Such determination is a factual inquiry, and absolute legal       
certainty of the Company's status generally cannot be provided. However, the    
Company will not be treated as a dealer in real property for the 30 percent     
gross income limitation if (i) it has held the property for at least four years 
for the production of rental income, (ii) capitalized expenditures on the       
property in the four years preceding sale do not exceed 30 percent of the net   
selling price of the property, and (iii) the Company either (a) has seven or    
fewer sales of property (excluding certain property obtained through            
foreclosure) for the year, (b) the aggregate tax basis of property sold during  
the taxable year is 10 percent or less of the aggregate tax basis of all assets 
of the Company as of the beginning of the taxable year, or (c) substantially all
of the marketing and development expenditures with respect to the property sold 
are made through an independent contractor from whom the Company derives no     
income. The sale of more than one property to one buyer as part of one          
transaction constitutes one                                                     

19

424B4
42nd Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 42nd
sale. However, the failure of the Company to meet these "safe harbor"           
requirements does not necessarily mean that it is a dealer in real property for 
purposes of the 100 percent tax.                                                

    ASSET TESTS.  The Company, at the close of each quarter of its taxable year,
must also satisfy three tests relating to the nature of its assets. First, at   
least 75 percent of the value of the Company's total assets must be represented 
by real estate assets (including (i) assets held by the Company's qualified REIT
subsidiaries and the Company's allocable share of real estate assets held by    
partnerships in which the Company owns an interest and (ii) stock or debt       
instruments held for not more than one year purchased with the proceeds of a    
stock offering or long-term (at least five years) debt offering of the Company),
cash, cash items and government securities. Second, not more than 25 percent of 
the Company's total assets may be represented by securities other than those in 
the 75 percent asset class. Third, of the investments included in the 25 percent
asset class, the value of any one issuer's securities owned by the Company may  
not exceed (at the end of the quarter in which such securities are acquired) 5  
percent of the value of the Company's total assets and the Company may not own  
more than 10 percent of any one issuer's outstanding voting securities.         

ANNUAL DISTRIBUTION REQUIREMENTS.  The Company, in order to qualify as a
REIT, is required to distribute dividends (other than capital gain dividends) to
its stockholders in an amount at least equal to (A) the sum of (i) 95 percent of
the Company's "REIT taxable income" (computed without regard to the dividends   
paid deduction and the Company's net capital gain) and (ii) 95 percent of the   
net income (after tax), if any, from foreclosure property, minus (B) the sum of 
certain items of non-cash income. In addition, if the Company disposes of any   
Built-In Gain Asset during its Recognition Period, the Company will be required,
pursuant to IRS regulations which have not yet been promulgated, to distribute  
at least 95 percent of the Built-in Gain (after tax), if any, recognized on the 
disposition of such asset. Such distributions must be paid in the taxable year  
to which they relate, or in the following taxable year if declared before the   
Company timely files its tax return for such prior year and if paid on or before
the first regular dividend payment after such declaration. To the extent that   
the Company does not distribute all of its net capital gain or distributes at   
least 95 percent, but less than 100 percent, of its "REIT taxable income," as   
adjusted, it will be subject to tax thereon at regular ordinary and capital gain
corporate tax rates. Furthermore, if the Company should fail to distribute      
during each calendar year at least the sum of (i) 85 percent of its REIT        
ordinary income for such year, (ii) 95 percent of its REIT capital gain income  
for such year, and (iii) any undistributed taxable income from prior periods,   
the Company would be subject to a 4 percent excise tax on the excess of such    
required distribution over the amounts actually distributed.                    

    In the opinion of Pryor, Cashman, Sherman & Flynn, the Company has satisfied
the annual distribution requirements for taxable years ended prior to the date  
of this Prospectus. The Company intends to continue to make timely distributions
sufficient to satisfy this annual distribution requirement in the future. It is 
possible that the Company, from time to time, may not have sufficient cash or   
other liquid assets to meet the 95 percent distribution requirement due to      
timing differences between (i) the actual receipt of income and actual payment  
of deductible expenses and (ii) the inclusion of such income and deduction of   
such expenses in arriving at the taxable income of the Company, or if the amount
of nondeductible expenses, such as principal amortization or capital            
expenditures exceeds the amount of noncash deductions. In the event that such   
timing differences occur, in order to meet the 95 percent distribution          
requirement, the Company may find it necessary to arrange for short-term, or    
possibly long-term, borrowing or to pay dividends in the form of taxable stock  
dividends.                                                                      

    Under certain circumstances, the Company may be able to rectify a failure to
meet the distribution requirement for a year by paying "deficiency dividends" to
stockholders in a later year, which may be included in the Company's deduction  
for dividends paid for the earlier year. Thus, the Company may be able to avoid 
being taxed on amounts distributed as deficiency dividends; however, the Company
will be required to pay interest to the IRS based upon the amount of any        
deduction taken for deficiency dividends.                                       

20

424B4
43rd Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 43rd
FAILURE TO QUALIFY                                                              

   If the Company fails to qualify for taxation as a REIT in any taxable year,
and the relief provisions do not apply, the Company will be subject to tax      
(including any applicable corporate alternative minimum tax) on its taxable     
income at regular corporate rates. Such a failure could have an adverse effect  
on the market value and marketability of the Offered Securities. Distributions  
to stockholders in any year in which the Company fails to qualify will not be   
deductible by the Company nor will they be required to be made. In such event,  
to the extent of current and accumulated earnings and profits, all distributions
to stockholders will be taxable as ordinary income and, subject to certain      
limitations of the Code, corporate distributees may be eligible for the         
dividends received deduction. Unless entitled to relief under specific statutory
provisions, the Company will also be disqualified from taxation as a REIT for   
the four taxable years following the year during which qualification was lost.  
It is not possible to state whether in all circumstances the Company would be   
entitled to such statutory relief.                                              

TAXATION OF STOCKHOLDERS                                                        

    TAXATION OF TAXABLE DOMESTIC STOCKHOLDERS.  As long as the Company qualifies
as a REIT, distributions made to the Company's taxable domestic stockholders out
of current or accumulated earnings and profits (and not designated as capital   
gain dividends) will be taken into account by them as ordinary income and will  
not be eligible for the dividends received deduction for corporations.          
Distributions that are designated as capital gain dividends will be taxed as    
long-term capital gains (to the extent they do not exceed the Company's actual  
net capital gain for the taxable year) without regard to the period for which   
the stockholder has held its stock. However, corporate stockholders may be      
required to treat up to 20 percent of certain capital gain dividends as ordinary
income. Distributions in excess of current and accumulated earnings and profits 
will not be taxable to a stockholder to the extent that they do not exceed the  
adjusted basis of the stockholder's shares, but rather will reduce the adjusted 
basis of such shares. To the extent that such distributions exceed the adjusted 
basis of a stockholder's shares, they will be included in income as long-term   
capital gain (or short-term capital gain if the shares have been held for one   
year or less), assuming the shares are a capital asset in the hands of the      
stockholder. In addition, any dividend declared by the Company in October,      
November or December of any year payable to a stockholder of record on a        
specific date in any such month shall be treated as both paid by the Company and
received by the stockholder on December 31 of such year, provided that the      
dividend is actually paid by the Company during January of the following        
calendar year. Stockholders may not include in their individual income tax      
returns any net operating losses or capital losses of the Company.              

   In general, any loss upon a sale or exchange of shares by a stockholder who
has held such shares for six months or less (after applying certain holding     
period rules) will be treated as a long-term capital loss to the extent of      
distributions from the Company required to be treated by such stockholder as    
long-term capital gain.                                                         

 BACKUP WITHHOLDING.  The Company will report to its domestic stockholders
and the IRS the amount of dividends paid during each calendar year, and the     
amount of tax withheld, if any, with respect thereto. Under the backup          
withholding rules, a stockholder may be subject to backup withholding at the    
rate of 31 percent with respect to dividends paid unless such holder (a) is a   
corporation or comes within certain other exempt categories and, when required, 
demonstrates this fact or (b) provides a taxpayer identification number,        
certifies as to no loss of exemption from backup withholding and otherwise      
complies with applicable requirements of the backup withholding rules. A        
stockholder who does not provide the Company with its correct taxpayer          
identification number may also be subject to penalties imposed by the IRS. Any  
amount paid as backup withholding will be creditable against the stockholder's  
income tax liability. In addition, the Company may be required to withhold a    
portion of capital gain distributions made to any stockholders who fail to      
certify their non-foreign status to the Company. See "--Taxation of Foreign     
Stockholders" below.                                                            

21

424B4
44th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 44th
    Taxation of Tax-Exempt Stockholders. Under the Revenue Reconciliation Act of
1993 (the "1993 Act"), in applying the REIT stock ownership test under the Code,
a pension trust generally is not treated as a single individual as it would have
been under prior law. Rather, the 1993 Act treats beneficiaries of certain      
pension trusts as holding the shares of a REIT in proportion to their actuarial 
interests in such trust, and thus permits certain pension trusts to acquire more
concentrated ownership of a REIT.                                               

   In addition, under the 1993 Act, a pension fund owning more than 10 percent
of a REIT must treat a percentage of dividends from the REIT as "unrelated      
business taxable income" ("UBTI"). The percentage is determined by dividing the 
REIT's gross income derived from an unrelated trade or business for the year by 
the gross income of the REIT for the year in which the dividends are paid. If   
this percentage is less than five percent, however, dividends are not treated as
UBTI. In general, the UBTI rule applies to a REIT where the REIT qualifies as a 
REIT by reason of the above modification of the stock ownership test and (i) one
pension trust owns more than 25 percent of the value of the REIT; or (ii) a     
group of pension trusts individually holding more than 10 percent of the value  
of the REIT collectively own more than 50 percent of the value of the REIT.     

    The provisions of the 1993 Act apply to taxable years of a REIT beginning on
or after January 1, 1994.                                                       

  TAXATION OF FOREIGN STOCKHOLDERS.  The rules governing U.S. federal income
taxation of nonresident alien individuals, foreign corporations, foreign        
partnerships and other foreign stockholders (collectively, "Non-U.S.            
Stockholders") are complex, and no attempt will be made herein to provide more  
than a limited summary of such rules. Prospective Non-U.S. Stockholders should  
consult with their own tax advisors to determine the impact of U.S. federal,    
state and local income tax laws with regard to an investment in the Offered     
Securities, including any reporting requirements.                               

  Distributions that are not attributable to gain from sales or exchanges by
the Company of U.S. real property interests and not designated by the Company as
capital gain dividends will be treated as dividends of ordinary income to the   
extent that they are made out of current or accumulated earnings and profits of 
the Company. Such distributions will ordinarily be subject to a withholding tax 
equal to 30 percent of the gross amount of the distribution unless an applicable
tax treaty reduces that tax. However, if income from the investment in the      
Offered Securities is treated as effectively connected with the Non-U.S.        
Stockholder's conduct of a U.S. trade or business, the Non-U.S. Stockholder     
generally will be subject to a tax at graduated rates, in the same manner as    
U.S. stockholders are taxed with respect to such dividends (and may, subject to 
possible treaty relief, the 30 percent branch profits tax if the stockholder is 
a foreign corporation). The Company expects to withhold U.S. income tax at the  
rate of 30 percent on the gross amount of any dividends paid to a Non-U.S.      
Stockholder unless (i) a lower treaty rate applies and the required form        
evidencing eligibility for that reduced rate is filed with the Company or (ii)  
the Non-U.S. Stockholder files an IRS Form 4224 with the Company claiming that  
the distribution is "effectively connected" income. Distributions in excess of  
current and accumulated earnings and profits of the Company will not be taxable 
to a stockholder to the extent that they do not exceed the adjusted basis of the
stockholder's shares, but rather will reduce the adjusted basis of such shares. 
To the extent that such distributions exceed the adjusted basis of a Non-U.S.   
Stockholder's shares, they will give rise to tax liability if the Non-U.S.      
Stockholder would otherwise be subject to tax on any gain from the sale or      
disposition of his shares, as described below. If it cannot be determined at the
time a distribution is made whether or not such distribution will be in excess  
of current and accumulated earnings and profits, the distribution will be       
subject to withholding at the rate applicable to dividends. However, the        
Non-U.S. Stockholder may seek a refund of such amounts from the IRS if it is    
subsequently determined that such distribution was, in fact, in excess of       
current and accumulated earnings and profits of the Company.                    

  Under recently proposed Treasury Regulations, withholding procedures would
be revised. Should the proposal be adopted, withholding generally would be at   
either 31 percent or 30 percent unless a new Form W-8 is filed with the Company 
by the beneficial owner to establish entitlement to treaty benefits or          

22

424B4
45th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 45th
exemption based upon the income being "effectively connected". In some          
instances, additional documentation might be required from the beneficial owner,
including an individual taxpayer identification number from the U.S. Internal   
Revenue Service and a certification of tax status from the tax authorities of   
the beneficial owner's country of residence.                                    

 For any year in which the Company qualifies as a REIT, distributions that
are attributable to gain from sales or exchanges by the Company of U.S. real    
property interests will be taxed to a Non-U.S. Stockholder under the provisions 
of the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"). Under    
FIRPTA, these distributions are taxed to a Non-U.S. Stockholder as if such gain 
were effectively connected with a U.S. business. Thus, Non-U.S. Stockholders    
would be taxed at the normal capital gain rates applicable to U.S. stockholders 
(subject to applicable alternative minimum tax and a special alternative minimum
tax in the case of nonresident alien individuals). Also, distributions subject  
to FIRPTA may be subject to a 30 percent branch profits tax in the hands of a   
corporate Non-U.S. Stockholder not entitled to treaty relief or exemption. The  
Company is required by applicable Treasury Regulations to withhold 35 percent of
any distribution to a Non-U.S. Stockholder that could be designated by the      
Company as a capital gain dividend. This amount is creditable against the       
Non-U.S. Stockholder's FIRPTA tax liability.                                    

Gain recognized by a Non-U.S. Stockholder upon a sale of stock generally
will not be taxed under FIRPTA if a REIT is a "domestically controlled REIT,"   
defined generally as a REIT in which at all times during a specified testing    
period less than 50 percent in value of the stock was held directly or          
indirectly by foreign persons. It is currently anticipated that the Company will
be a "domestically controlled REIT," and therefore the sale of stock will not be
subject to taxation under FIRPTA. However, gain not subject to FIRPTA will be   
taxable to a Non-U.S. Stockholder if (i) investment in the Stock is "effectively
connected" with the Non-U.S. Stockholder's U.S. trade or business, in which case
the Non-U.S. Stockholder will be subject to the same treatment as U.S.          
stockholders with respect to such gain, or (ii) the Non-U.S. Stockholder is a   
nonresident alien individual who was present in the United States for 183 days  
or more during the taxable year and has a "tax home" in the United States, in   
which case the nonresident alien individual will be subject to a 30 percent tax 
on the individual's capital gains. If the gain on the sale of stock were to be  
subject to taxation under FIRPTA, the Non-U.S. Stockholder would be subject to  
the same treatment as U.S. stockholders with respect to such gain (subject to   
applicable alternative minimum tax, possible withholding tax and a special      
alternative minimum tax in the case of nonresident alien individuals).          

OTHER TAX MATTERS                                                               

Certain of the Company's investments are through partnerships which may 
involve special tax risks. Such risks include possible challenge by the IRS of  
(a) allocations of income and expense items, which could affect the computation 
of income of the Company and (b) the status of the partnerships as partnerships 
(as opposed to associations taxable as corporations) for income tax purposes.   
This partnership status risk should be substantially diminished by Treasury     
Regulations issued on December 17, 1996, permitting election of partnership     
status effective January 1, 1997 by the filing of Form 8823 or in certain other 
ways specified in the new Regulations. With respect to the Company existing     
partnership investments, the new Regulations provide that (1) previously claimed
partnership status, if supported by a reasonable basis for classification, will 
generally be respected for all periods prior to January 1, 1997; and (2)        
previously claimed partnership status will be generally retained after January  
1, 1997, without the need to file a formal election. If any of the partnerships,
however, should be treated as an association, it would be taxable as a          
corporation. In such a situation, if the Company's ownership in any of the      
partnerships exceeded 10 percent of the partnership's voting interests or the   
value of such interest exceeded 5 percent of the value of the Company's assets, 
the Company would cease to qualify as a REIT. Furthermore, in such a situation, 
distributions from any of the partnerships to the Company would be treated as   
dividends, which are not taken into account in satisfying the 75 percent gross  
income test described above and which could therefore make it more difficult for
the Company to qualify as a REIT for the taxable year in which                  

23

424B4
46th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 46th
such distribution was received. In addition, in such a situation, the interest  
in any of the partnerships held by the Company would not qualify as a "real     
estate asset," which could make it more difficult for the Company to meet the 75
percent asset test described above. Finally, in such a situation, the Company   
would not be able to deduct its share of losses generated by the partnerships in
computing its taxable income. See "Failure to Qualify" above for a discussion of
the effect of the Company's failure to meet such tests for a taxable year. The  
Company believes that each of the partnerships will be treated for tax purposes 
as a partnership (and not as an association taxable as a corporation). However, 
no assurance can be given that the IRS may not successfully challenge the tax   
status of any of the partnerships.                                              

    TAX ALLOCATIONS WITH RESPECT TO CONTRIBUTED PROPERTIES.  Pursuant to Section
704(c) of the Code, income, gain, loss, and deduction attributable to           
appreciated property that is contributed to a partnership in exchange for an    
interest in the partnership must be allocated for Federal income tax purposes in
a manner such that the contributor is charged with the unrealized gain          
associated with the property at the time of the contribution. The amount of such
unrealized gain is generally equal to the difference between the fair market    
values of the contributed property at the time of contribution and the adjusted 
tax basis of such property at the time of contribution (the "Book-Tax           
Difference"). In general, the fair market value of the interests in the various 
Partnerships contributed to the Operating Partnership are substantially in      
excess of their adjusted tax bases. The Partnership Agreements of each of the   
Operating Partnership, the Existing Partnerships and the Holding Partnerships   
require that allocations attributable to each item of contributed property be   
made so as to allocate the tax depreciation available with respect to such      
property first to the partners other than the partner that contributed the      
property, to the extent of, and in proportion to, their book depreciation, and  
then, if any tax depreciation remains, to the partner that contributed the      
property. Upon the disposition of any item of contributed property, any gain    
attributable to an excess, at such time, of basis for book purposes over basis  
for tax purposes would be allocated for tax purposes to the contributing        
partner. These allocations are intended to be consistent with the Treasury      
Regulations under Section 704(c) of the Code.                                   

In general, certain persons who acquired interests in the Operating     
Partnership in connection with the formation of the Company are allocated       
disproportionately lower amounts of depreciation deductions for tax purposes    
relative to their percentage interests in the Operating Partnership, and        
disproportionately greater shares relative to their percentage interests in the 
Operating Partnership of the taxable income and gain on the sale by the         
Partnerships of one or more of the contributed properties. These tax allocations
will tend to reduce or eliminate the Book-Tax Difference over the life of the   
Partnerships. The Partnership Agreements of the Partnerships adopt the          
"traditional method" of making allocations under Section 704(c) of the Code,    
unless otherwise agreed to between the Company and the contributing partner.    
Under the traditional method the amounts of the special allocations of          
depreciation and gain under the special rules of Section 704(c) of the Code will
be limited by the so-called "ceiling rule" and will not always eliminate the    
Book-Tax Difference on an annual basis or with respect to a specific transaction
such as a sale. Thus, the carryover basis of the contributed assets in the hands
of the partnerships will cause the Company to be allocated less depreciation    
than would be available for newly purchased properties.                         

  STATE AND LOCAL TAXES.  The Company and its stockholders may be subject to
state or local taxation in various state or local jurisdictions, including those
in which it or they transact business or reside. The state and local tax        
treatment of the Company and its stockholders may not conform to the federal    
income tax consequences discussed above. Consequently, prospective stockholders 
should consult their own tax advisors regarding the effect of state and local   
tax laws on an investment in the Offered Securities.                            

24

424B4
47th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 47th
PLAN OF DISTRIBUTION

   The Company may sell the Offered Securities to one or more underwriters for
public offering and sale by them or may sell the Offered Securities to investors
directly or through agents. Any such underwriter or agent involved in the offer 
and sale of the Offered Securities will be named in the applicable Prospectus   
Supplement.                                                                     

  Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, at prices related to the prevailing market prices 
at the time of sale or at negotiated prices. The Company also may, from time to 
time, authorize underwriters acting as the Company's agents to offer and sell   
the Offered Securities upon the terms and conditions as are set forth in the    
applicable Prospectus Supplement. In connection with the sale of Offered        
Securities, underwriters may be deemed to have received compensation from the   
Company in the form of underwriting discounts or commissions and may also       
receive commissions from any entity for whom they may act as agent. Underwriters
may sell Offered Securities to or through dealers, and such dealers may receive 
compensation in the form of discounts, concessions or commissions from the      
underwriters and/or commissions from the purchasers for whom they may act as    
agent.                                                                          

   Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Offered Securities, and any discounts,       
concessions or commissions allowed by underwriters to participating dealers,    
will be set forth in the applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Securities may be   
deemed to be underwriters, and any discounts, concessions and commissions       
received by them and any profit realized by them on resale of the Offered       
Securities may be deemed to be underwriting discounts and commissions, under the
Securities Act. Underwriters, dealers and agents may be entitled, under         
agreements entered into with the Company, to indemnification against and        
contribution toward certain civil liabilities, including liabilities under the  
Securities Act.                                                                 

 If so indicated in the applicable Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain   
institutions to purchase Offered Securities from the Company at the public      
offering price set forth in such Prospectus Supplement pursuant to Delayed      
Delivery Contracts ("Contracts") providing for payment and delivery on the date 
or dates stated in such Prospectus Supplement. Each Contract will be for an     
amount not less than, and the aggregate principal amount of Offered Securities  
sold pursuant to Contracts shall be not less nor more than, the respective      
amounts stated in the applicable Prospectus Supplement. Institutions with whom  
Contracts, when authorized, may be made include commercial and savings banks,   
insurance companies, pension funds, investment companies, educational and       
charitable institutions, and other institutions but will in all cases be subject
to the approval of the Company. Contracts will not be subject to any conditions 
except (i) the purchase by an institution of the Offered Securities covered by  
its Contracts shall not at the time of delivery be prohibited under the laws of 
any jurisdiction in the United States to which such institution is subject, and 
(ii) if the Offered Securities are being sold to underwriters, the Company shall
have sold to such underwriters the total principal amount of the Offered        
Securities less the principal amount thereof covered by Contracts.              

    Certain of the underwriters and their affiliates may be customers of, engage
in transactions with and perform services for the Company and its subsidiaries  
in the ordinary course of business.                                             

EXPERTS 

    The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K of the Company for the year ended December 31, 1995  
have been so incorporated in reliance on the report of Price Waterhouse LLP,    
independent accountants, given on the authority of said firm as experts in      
auditing and accounting. The financial statements incorporated in this          
Prospectus by reference to the Current Reports on Form 8-K of the Company, dated
July 16, 1996, October 8, 1996, October 29, 1996                                

25

424B4
48th Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 48th
(two reports) and December 31, 1996, have been so incorporated in reliance on   
the reports of Schonbraun Safris Sternlieb & Co., L.L.C., independent           
accountants, given on the authority of said firm as experts in auditing and     
accounting. The Statements of Revenues and Certain Operating Expenses of the    
property known as Harborside Financial Center for each of the three years in the
period ended December 31, 1995, incorporated by reference in this Prospectus to 
the Current Report on Form 8-K of the Company, dated October 29, 1996, have been
incorporated herein in reliance on the report of Coopers & Lybrand L.L.P.,      
independent auditors, given on the authority of said firm as experts in auditing
and accounting. The combined statement of revenue and certain expenses of the   
International Court at Airport Business Center for the year ended December 31,  
1995 included in the Company's Current Report on Form 8-K, dated October 29,    
1996 has been audited by Ernst & Young, LLP, independent auditors, as set forth 
in their report thereon included therein and incorporated herein by reference.  
Such financial statement is incorporated herein by reference in reliance on such
report given upon the authority of such firm as experts in accounting and       
auditing.                                                                       

LEGAL MATTERS 

  Certain legal matters in connection with the Offered Securities as well as
certain legal matters described under "Certain United States Federal Income Tax 
Considerations to the Company of its REIT Election" will be passed upon for the 
Company by Pryor, Cashman, Sherman & Flynn, New York, New York. Certain legal   
matters relating to Maryland law, including the validity of the issuance of the 
securities registered hereby, will be passed upon for the Company by Swidler &  
Berlin, Chartered, Washington, D.C.                                             

26

424B4
Last Page of 49
TOC
1st
Previous
Next
↓Bottom
Just 49th
========================================     ================================== 
NO DEALER, SALESPERSON OR ANY OTHER                                             
PERSON HAS BEEN AUTHORIZED TO GIVE                                              
ANY INFORMATION OR TO MAKE ANY                                                  
REPRESENTATIONS OTHER THAN THOSE                                                
CONTAINED IN THIS PROSPECTUS SUPPLEMENT                                         
AND THE ACCOMPANYING PROSPECTUS IN                                              
CONNECTION WITH THE OFFER MADE BY                                               
THIS PROSPECTUS SUPPLEMENT AND THE                     994,228 SHARES           
ACCOMPANYING PROSPECTUS AND, IF                                                 
GIVEN OR MADE, SUCH INFORMATION OR                                              
REPRESENTATIONS MUST NOT BE RELIED                                              
UPON AS HAVING BEEN AUTHORIZED BY                                               
THE COMPANY OR THE UNDERWRITER.                                                 
NEITHER THIS PROSPECTUS SUPPLEMENT                                              
NOR THE ACCOMPANYING PROSPECTUS                                                 
CONSTITUTES AN OFFER TO SELL OR A               MACK-CALI REALTY CORPORATION    
SOLICITATION OF ANY OFFER TO BUY                                                
ANY SECURITY OTHER THAN THE                                                     
SECURITIES OFFERED HEREBY, NOR DO                                               
THEY CONSTITUTE AN OFFER TO SELL                                                
OR A SOLICITATION OF ANY OFFER TO                                               
BUY ANY OF THE SECURITIES OFFERED                                               
HEREBY BY ANYONE IN ANY JURISDICTION                                            
IN WHICH SUCH OFFER OR SOLICITATION                                             
IS NOT AUTHORIZED, OR IN WHICH THE                      COMMON STOCK            
PERSON MAKING SUCH OFFER OR                                                     
SOLICITATION IS NOT QUALIFIED TO DO                                             
SO, OR TO ANY PERSON TO WHOM IT                                                 
IS UNLAWFUL TO MAKE SUCH OFFER OR                                               
SOLICITATION. NEITHER THE DELIVERY                                              
OF THIS PROSPECTUS SUPPLEMENT AND                                               
THE ACCOMPANYING PROSPECTUS NOR ANY                                             
SALE MADE HEREUNDER SHALL, UNDER                                                
ANY CIRCUMSTANCES, CREATE ANY                                                   
IMPLICATION THAT ANY INFORMATION                                                
CONTAINED HEREIN IS CORRECT AS OF                                               
ANY TIME SUBSEQUENT TO THE DATE HEREOF.                                         

__________________________                                        

TABLE OF CONTENTS                                       
                                             _________________________
                              PAGE           PROSPECTUS SUPPLEMENT
                                             _________________________
PROSPECTUS SUPPLEMENT                                       
Available Information . . . . . . . .S-3                                        
Incorporation of                                                                
Certain Documents                                                               
by Reference. . . . . . . . . . . .S-3                                      
Risk Factors. . . . . . . . . . . . .S-4                                        
The Company . . . . . . . . . . . . .S-9                                        
Recent Developments . . . . . . . . .S-9                                        
Use of Proceeds . . . . . . . . . . .S-11                                       
Price Range of Common                                                           
Stock and Distributions . . . . . . .S-11                                       
Federal Income                                                                  
Tax Considerations . . . . . . . . .S-12                                      
Underwriting. . . . . . . . . . . . .S-20            MERRILL LYNCH & CO.        
Experts . . . . . . . . . . . . . . .S-21                                       
Legal Matters . . . . . . . . . . . .S-21                                       

PROSPECTUS                                        
Available Information . . . . . . . .2                                          
Incorporation of Certain                                                        
Documents by Reference. . . . . . . .2                                          
The Company . . . . . . . . . . . . .4                                          
Ratios of Earnings to                                                           
Fixed Charges . . . . . . . . . . . .6                                          
Use of Proceeds . . . . . . . . . . .6                                          
Description of Common Stock . . . . .6                                          
Description of Preferred Stock. . . .7                                          
Description of Warrants . . . . . . .14                                         
Restrictions on Ownership of                                                    
Offered Securities. . . . . . . . . .15                                         
Certain United States                                                           
Federal Income Tax                                                              
Considerations to the                                                           
Company of its REIT Election. . . .16                                       
Plan of Distribution. . . . . . . . .25                                         
Experts . . . . . . . . . . . . . . .25                                         
Legal Matters . . . . . . . . . . . .26                APRIL 23, 1998           

========================================     ================================== 

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B4’ Filing		Date		First		Last			Other Filings
		12/31/99		19		20			10-K/A,  10-K405
		5/21/98		3					DEF 14A,  PRE 14A
		4/29/98		1
Filed on:		4/27/98
		4/23/98		1		49
		4/17/98		10
		4/15/98		1		12
		3/30/98		10
		3/27/98		9
		2/2/98		20
		1/16/98		3		22			8-K,  S-3,  S-8
		1/1/98		13		16
		12/31/97		3		22			10-K405,  10-K405/A,  3/A,  4
		10/14/97		19
		10/6/97		19
		9/16/97		12
		7/28/97		16
		1/7/97		1		23
		1/1/97		45
		12/31/96		12		48			10-K,  8-K,  S-3
		12/30/96		24					8-K
		12/17/96		26		45
		12/16/96		26
		12/10/96		26
		11/30/96		27		28
		11/23/96		26
		11/21/96		24					8-K
		11/18/96		24					8-K
		11/7/96		26					8-K
		11/4/96		26					8-K
		10/29/96		24		48			8-K
		10/28/96		24
		10/8/96		24		47			8-K
		9/30/96		24		28			10-Q
		8/20/96		15
		8/19/96		15
		8/12/96		24					8-K
		7/16/96		24		47			8-K
		6/30/96		24					10-Q
		5/13/96		24
		3/31/96		24					10-Q
		12/31/95		24		48
		12/31/94		8		38
		8/31/94		28
		8/9/94		3		24
		5/24/94		9		27
		1/1/94		44
									List all Filings