Mack-Cali Realty Corp.
) - a real estate investment trust (REIT) - reported
third-quarter 2013 funds from operations (FFO) of 57 cents per
share, in line with the Zacks Consensus Estimate.
However, this came below the year-ago quarter figure by 8
cents. The quarterly results reflected the impact of tough
operating environment and declining occupancy rate. Though, total
revenue increased 3.6% year over year to $162.5 million, it fell
short of the Zacks Consensus Estimate of $169.0 million.
During the quarter, Mack-Cali inked 131 lease deals, spanning
980,600 square feet, at its consolidated in-service portfolio.
This included around 783,218 square feet of office space, 5,995
square feet of industrial/warehouse space and 191,387 square feet
of office/flex space. Of the total leased space, 265,455 square
feet were for new lease deals and 715,145 square feet were
related to lease renewals and other tenant retention deals.
As of Sep 30, 2013, the consolidated in-service portfolio of
the company was 86.1% leased, down from 86.2 % in the previous
Portfolio Restructuring Activity
During the quarter under review, Mack-Cali closed the
divestiture of its Pennsylvania office portfolio (1.66 million
square foot) and 3 developable land parcels for roughly $233
million. The properties were sold to a joint venture between
Mack-Cali and the Keystone Property Group's affiliates. Notably,
as part of the sales deal, the company possesses rights to own a
land parcel at the 150 Monument Road property in Bala Cynwyd for
development of a multi-family residential property.
In addition, Mack-Cali offloaded another office asset -
Liberty Corner Corporate Center, 106 Allen Road - in Bernards
Township, N.J., for around $18.0 million.
On the other hand, Mack-Cali started initial operations on
Weehawken, N.J.-based parking/retail asset, during the
As of Sep 30, 2013, Mack-Cali's cash and cash equivalents
stood at $308.0 million, up significantly from $177.9 million as
of Jun 30, 2013. The company had total debt of $2.4 billion, with
a weighted average annual interest rate of 5.62%.
Moreover, Mack-Cali's debt-to-undepreciated assets ratio was
39.5% as of Sep 30, 2013, compared with 38.8% as of the end of
the last quarter. Interest coverage ratio was 2.9 times for the
reported quarter, compared to 3.1 times in the prior quarter.
During the third-quarter, Mack-Cali amended and restated its
unsecured revolving credit facility worth $600 million with a
cluster of 17 lenders. The facility, which will mature in Jul
2017, can now be expanded to $1 billion. The unsecured revolving
credit facility has two six month extension options, on the
payment of a 7.5 basis point fee.
For full-year 2013, Mack-Cali narrowed its FFO per share
guidance and now expects it in the range of $2.35-$2.39 per share
(previous one being $2.32-$2.42).
Though Mack-Cali's FFO came in line, we note that continued
weakness in the company's core office markets carry on affecting
its business. Consequently, following the earnings release, the
Mack-Cali's share price fell 0.69% during yesterday's regular
session on NYSE.
Although the company is aiming at strengthening its portfolio
base through multifamily apartment buyouts and office assets
divestiture, its aggressive disposition efforts had a dilutive
impact on its financials in the reported quarter. However, we
believe that these strategic initiatives will benefit Mack-Cali
in the long run.
Mack-Cali currently carries a Zacks Rank #4 (Sell). However,
REITs that are performing well include
Parkway Properties Inc.
Getty Realty Corp.
Sotherly Hotels Inc.
). All stocks carry a Zacks Rank #1 (Strong Buy).
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.
MACK CALI CORP (CLI): Free Stock Analysis
GETTY REALTY CP (GTY): Free Stock Analysis
PARKWAY PPTY (PKY): Free Stock Analysis
SOTHERLY HOTELS (SOHO): Get Free Report
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