On Feb 20, 2015, we issued an updated research report on Mack-Cali Realty Corp. ( CLI ). The Edison, NJ-based real estate investment trust ("REIT") focuses on expanding multi-family community portfolio over key markets and at the same time shedding off office and office/flex assets. Further, the company's strong commercial tenant base, coupled with a rise in demand for apartments driven by 'echo boomers,' children of the baby boomer generation, promise bright prospects.
Amid persistent weakness in core suburban office markets, Mack-Cali has been selling its office and office/flex assets and deploying the sale proceeds to fund multi-family apartment investments. Consequently, in fourth-quarter 2014, the company opened a new luxury multi-family community, Portside, at East Pier in East Boston, MA.
This portfolio repositioning initiative is expected to benefit the company going forward. Further, the multi-family residential sector has traditionally been more of a stable product type and therefore, expansion into this sector served as a strategic fit for Mack-Cali.
On Feb 19, 2015, Mack-Cali reported fourth-quarter 2014 FFO of 47 cents per share which exceeded the Zacks Consensus Estimate by 2 cents, but came in lower than the prior-year quarter figure of 52 cents.
As part of its long-term strategy, Mack-Cali continues to pursue multi-family residential investments, which involves significant upfront operating expenses and hence, limit its growth momentum. Further, aggressive disposition of assets causes a dilutive impact on the company's earnings.
Over the past 7 days, the Zacks Consensus Estimate for both 2015 and 2016 edged down by a cent to settle at $1.71 and $1.85, respectively.
Mack-Cali currently carries a Zacks Rank #3 (Hold).
Investors interested in the equity trusts-others industry sector may consider stocks like CareTrust REIT, Inc. ( CTRE ), Sotherly Hotels Inc. ( SOHO ) and Summit Hotel Properties, Inc. ( INN ). All these stocks sport 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.