Mack-Cali Realty Corp.
) - a real estate investment trust (REIT) - reported
first-quarter 2014 funds from operations (FFO) of 46 cents per
share, a penny short of the Zacks Consensus Estimate and 27.0%
below the year-ago quarter figure of 63 cents.
Higher expenses again dampened the quarterly results of
Mack-Cali. Consequently, the company trimmed its 2014 FFO per
guidance for the second time this year. As a result, Mack-Cali's
share price fell 0.29% during yesterday's regular session on the
Total revenue dipped 0.8% year over year to $169.6 million.
Nevertheless, it exceeded the Zacks Consensus Estimate of $150.0
million. However, expenses moved up 19.1% year over year to
During the quarter, Mack-Cali executed 102 lease deals,
spanning 645,041 square feet, at its consolidated in-service
portfolio. This included around 53,700 square feet of
industrial/warehouse space, 497,810 square feet of office space
and 93,531 square feet of office/flex space. Of the total leased
space, 220,288 square feet were for new lease deals and 424,753
square feet were related to lease renewals and other tenant
As of Mar 31, 2014, the consolidated in-service portfolio of
the company was 83.6% leased, down from 86.1% at the end of the
Notable Portfolio Activity
During the quarter under review, Mack-Cali penned a deal with
the Keystone Property Group to divest its 15 office assets
located across Northern New Jersey, New York and Connecticut for
around $230.8 million. As per the deal terms, Mack-Cali will take
part in the portfolio management fees as well as a percentage of
value creation over certain hurdle rates. It would also keep a
senior pari-passu equity position at 3 of the properties in
Elmsford, New York.
Also, the company inked a deal to divest a New Jersey-based
office property for about $96.6 million, during the first
Subsequent to the quarter end, in April, Mack-Cali disclosed
the acquisition of a 220-unit multi-family residential asset in
Andover, MA. The company shelled out $37.7 million for purchasing
As of Mar 31, 2014, Mack-Cali had cash and cash equivalents of
$58.7 million, down from $221.7 million at the end of the prior
year. The company had total debt of $2.2 billion, with a weighted
average annual interest rate of 5.54%.
Moreover, Mack-Cali's debt-to-undepreciated assets ratio was
38.8% as of Mar 31, 2014, compared with 39.9% as of the end of
the last quarter. Interest coverage ratio was 2.0 times for the
reported quarter, compared to 2.7 times in the prior quarter.
For full-year 2014, Mack-Cali lowered its FFO per share
guidance and now expects it in the range of $1.62 - $1.72 per
share compared to its previous outlook of $1.75 - $1.95 per
share. The guidance range is also well below the Zacks Consensus
Estimate of $1.85 per share for 2014.
The persisting weakness in the company's core office markets
continues to impact Mack-Cali's business. Although the company is
aiming at strengthening its portfolio base through multifamily
apartment buyouts and office assets divestiture, its aggressive
disposition efforts would continue to have a dilutive impact on
its financials in the near-to-medium term.
Mack-Cali, which has reported disappointing earnings and
guided low in last quarter too, now carries a Zacks Rank #4
However, some better-ranked REIT stocks include
Duke Realty Corporation
SL Green Realty Corp.
). All these stocks carry a Zacks Rank #2 (Buy).
FFO, a widely used metric to gauge the performance of REITs,
is obtained after adding depreciation and amortization and other
non-cash expenses to net income.
MACK CALI CORP (CLI): Free Stock Analysis
DUKE REALTY CP (DRE): Free Stock Analysis
PUBLIC STORAGE (PSA): Free Stock Analysis
SL GREEN REALTY (SLG): Free Stock Analysis
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