Mack-Cali EPS In Line, Revs Lag

Mack-Cali Realty Corp. (CLI - Analyst Report) reported second quarter 2011 FFO (fund from operations) of $69.1 million or 69 cents per share, compared  with $66.1 million or 71 cents per share in the year-earlier quarter.

Funds from operations, 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. FFO per share in the quarter was in line with the Zacks Consensus Estimate.

Total revenue was $181.1 million during the quarter versus $202.8 million in the year-ago period.

Despite challenging market conditions, Mack-Cali executed strong leasing activities during the quarter. The company signed 162 leases for its consolidated in-service portfolio spanning over 1,081,690 square feet, including 912,739 square feet of office space and 168,951 square feet of office/flex space.

 About 408,717 square feet of the total leases executed during the quarter were new leases, while 672,973 million square feet were renewals and other tenant transactions. The consolidated in-service portfolio of the company was 88.1% leased at the end of the quarter compared with 88.2% in the previous quarter.

 At the end of the second quarter of 2011, the company had a total debt burden of $1.9 billion, with a debt-to-undepreciated assets ratio of 33.1%, an interest coverage ratio of 3.2x, and cash and cash equivalents of $18.1 million.

 With continued strong leasing activities, Mack-Cali anticipates the gradual recovery of the overall capital market. For full-year 2011, the company expects FFO in the range of $2.68 to $2.78 per share.

 Mack-Cali currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Boston Properties Inc. (BXP - Analyst Report) currently retains a Zacks #2 Rank, which translates into a short-term Buy rating.

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