Mack-Cali Realty Corp.
), a real estate investment trust (REIT), reported FFO (funds
from operations) of $65.0 million or 65 cents per share in the
third quarter of 2012, compared with $72.9 million or 73 cents in
the year-earlier quarter. The reported FFO per share in the
quarter beat the Zacks Consensus Estimate by 3 cents.
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Total revenues during the reported quarter were $173.2 million
versus $175.4 million in the year-ago period. Total revenues
during third quarter 2012 fell short of the Zacks Consensus
Estimate of $174 million.
Mack-Cali executed strong leasing activities during the quarter.
The company executed 121 leases at its consolidated in-service
portfolio spanning over 0.9 million square feet, including 0.5
million square feet of office space, 0.3 million square feet of
office/flex space, and 0.1 million square feet of
Of the total leased space, 0.4 million square feet were for new
leases and 0.5 million were for lease renewals and other tenant
retention transactions. The consolidated in-service portfolio of
the company was 87.5% leased at quarter end compared with 87.6%
in the previous quarter.
Subsequent to the quarter-end, Mack-Cali acquired the real estate
development and management businesses of Roseland Partners,
L.L.C., a leading multi-family residential community developer
and operator in the Northeast. The transaction worth $134.6
million was funded through a combination of cash on hand and debt
under its $600 million unsecured revolving credit facility.
The acquired portfolio included ownership interests in six
multi-family properties totaling 1,769 apartments; one
condo-residential property totaling four units; four commercial
properties totaling approximately 212,000 square feet; and nine
multi-family properties totaling 2,149 apartments. The list also
included two garages totaling 1,591 parking spaces; two retail
properties totaling approximately 35,400 square feet; land
parcels which may support approximately 5,980 apartments; about
736,000 square feet of commercial space; and a 321-key
hotel. The properties were primarily located in New Jersey.
During the reported quarter, Mack-Cali authorized a share
repurchase program under which it might purchase up to $150
million worth of shares over a period of time in open market
transactions or through privately negotiated transactions. The
company maintained its quarterly cash dividend of 45 cents per
share, which equates to an annualized distribution of $1.80.
At quarter-end, the company had total debt of $2.0 billion, with
a debt-to-undepreciated assets ratio of 34.4%, an interest
coverage ratio of 3.1x, and cash and cash equivalents of $21.5
million. For full year 2012, the company has increased its FFO
guidance from the earlier range of $2.52 -$2.62 to $2.63 -$2.67
per share. For full year 2013, Mack-Cali expects FFO of $2.40
-$2.60 per share.
Mack-Cali currently retains a Zacks #3 Rank, which translates
into a short term Hold rating. We maintain our long-term Neutral
recommendation on the stock. One of its competitors,
Boston Properties Inc.
) also holds a Zacks #3 Rank.
Note: 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.