On Nov 26, we reaffirmed our Underperform recommendation on
Mack-Cali Realty Corp.
) owing to the continued weakness in the company's core office
markets with rent on the renewals rolling down. Also, its
aggressive disposition efforts are having a dilutive impact on
its financials in the near-to-medium term.
Mack-Cali Realty Corp. - a real estate investment trust (REIT)
that declared its third-quarter 2013 results on Oct 24 - reported
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.
With rental rates declining over the last few years in the
company's markets, we anticipate the company to experience lower
rental rates at these commercial properties on new leases than
the current rates with leases expiring in the quarters ahead.
Moreover, though the company is aiming at strengthening its
portfolio base through multifamily apartment buyouts and office
assets divestiture, its aggressive disposition efforts are
continuing to have a dilutive impact on its financials in the
Consequently, over the last 30 days, the Zacks Consensus Estimate
for 2013 moved up only 0.4% to $2.38 per share while that for
2014 declined 0.9% to $2.28 per share. Hence, Mack-Cali currently
has a Zacks Rank #4 (Sell).
Other Stocks to Consider
While we prefer to avoid Mack-Cali, investors interested in the
REIT industry may consider stocks like
Getty Realty Corp.
National Health Investors Inc.
Sabra Health Care REIT, Inc.
). All these stocks carry a Zacks Rank #1 (Strong 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
GETTY REALTY CP (GTY): Free Stock Analysis
NATL HEALTH INV (NHI): Free Stock Analysis
SABRA HEALTHCR (SBRA): Free Stock Analysis
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