Mack-Cali Realty Corporation is well poised for growth with its strong presence in high barrier-to-entry markets, and focus on waterfront and transit-oriented office and multi-family properties. However, its substantially-leveraged balance sheet is a concern.
In recent years, the company has made efforts to transform from a sub-urban office REIT into a residential and geographically-focused office REIT. The company’s transformational plan entailed emphasis on the New Jersey Hudson River waterfront as well as a regional ownership of luxury multi-family residential properties. Its Harborside portfolio-repositioning strategy is focused on capturing the attention of people who prefer to live, work and play in the same area — a trend that drove development in several other cities in the United States.
A diversified tenant base also helps the company enjoy a steady revenue stream and avoid shortcomings related to any particular sector.
The core office markets of the company are witnessing an improvement in rental rates. Ample government stimulus, pent-up demand, recovering labor markets and office occupiers’ planned post-pandemic office returns are likely to support office real estate fundamentals and drive leasing activity at the company’s portfolio.
Mack-Cali’s rejuvenation efforts and investments in high barrier-to-entry Hudson River waterfront assets are a strategic fit as it has enhanced the quality of its office space offering and will help the company capture the demand spike for highly-amenitized office spaces in business districts outside Manhattan.
Apart from these, Mack-Cali’s focus on multi-family assets acts as a tailwind. This asset class is likely to contribute more toward the company’s cash flows in the upcoming period.
Shares of this Zacks Rank #3 (Hold) company have gained 24.4% over the past six months, outperforming the industry's gain of 16.9%. In addition to this, the trend in estimate revisions for 2021 funds from operations (FFO) per share indicates a favorable outlook for the company as it has been revised marginally upward over the past month.
The non-core asset dispositions are a strategic fit for the long run. However, earnings dilution from sub-urban office portfolio sales might act as deterrent in the near term.
Moreover, Mack-Cali’s substantially-leveraged balance sheet limits its strength to withstand any future credit crisis and unexpected negative externalities.
Stocks to Consider
CubeSmart’s (CUBE - Free Report) Zacks Consensus Estimate for 2021 FFO per share moved up 1.6% in the past week. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Iron Mountain’s (IRM - Free Report) FFO per share estimate for the ongoing year has been revised upward by 4.2% in the past week. The company carries a Zacks Rank of 2, currently.
Extra Space Storage Inc’s (EXR - Free Report) Zacks Consensus Estimate for the current-year FFO per share moved 3.4% north in the past month. The company carries a Zacks Rank of 2, at present.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Mack-Cali Realty Corporation is well poised for growth with its strong presence in high barrier-to-entry markets, and focus on waterfront and transit-oriented office and multi-family properties. However, its substantially-leveraged balance sheet is a concern.
In recent years, the company has made efforts to transform from a sub-urban office REIT into a residential and geographically-focused office REIT. The company’s transformational plan entailed emphasis on the New Jersey Hudson River waterfront as well as a regional ownership of luxury multi-family residential properties. Its Harborside portfolio-repositioning strategy is focused on capturing the attention of people who prefer to live, work and play in the same area — a trend that drove development in several other cities in the United States.
A diversified tenant base also helps the company enjoy a steady revenue stream and avoid shortcomings related to any particular sector.
The core office markets of the company are witnessing an improvement in rental rates. Ample government stimulus, pent-up demand, recovering labor markets and office occupiers’ planned post-pandemic office returns are likely to support office real estate fundamentals and drive leasing activity at the company’s portfolio.
Mack-Cali’s rejuvenation efforts and investments in high barrier-to-entry Hudson River waterfront assets are a strategic fit as it has enhanced the quality of its office space offering and will help the company capture the demand spike for highly-amenitized office spaces in business districts outside Manhattan.
Apart from these, Mack-Cali’s focus on multi-family assets acts as a tailwind. This asset class is likely to contribute more toward the company’s cash flows in the upcoming period.
Shares of this Zacks Rank #3 (Hold) company have gained 24.4% over the past six months, outperforming the industry's gain of 16.9%. In addition to this, the trend in estimate revisions for 2021 funds from operations (FFO) per share indicates a favorable outlook for the company as it has been revised marginally upward over the past month.
The non-core asset dispositions are a strategic fit for the long run. However, earnings dilution from sub-urban office portfolio sales might act as deterrent in the near term.
Moreover, Mack-Cali’s substantially-leveraged balance sheet limits its strength to withstand any future credit crisis and unexpected negative externalities.
Stocks to Consider
CubeSmart’s (CUBE - Free Report) Zacks Consensus Estimate for 2021 FFO per share moved up 1.6% in the past week. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Iron Mountain’s (IRM - Free Report) FFO per share estimate for the ongoing year has been revised upward by 4.2% in the past week. The company carries a Zacks Rank of 2, currently.
Extra Space Storage Inc’s (EXR - Free Report) Zacks Consensus Estimate for the current-year FFO per share moved 3.4% north in the past month. The company carries a Zacks Rank of 2, at present.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Buy 5 Stocks BEFORE Election Day
Biden or Trump? Zacks is releasing a FREE Special Report, Profit from the 2024 Presidential Election (no matter who wins).
Since 1950, presidential election years have been strong for the market. This report names 5 timely stocks to ride the wave of electoral excitement.
They include a medical manufacturer that gained +11,000% in the last 15 years… a rental company absolutely crushing its sector… an energy powerhouse planning to grow its already large dividend by 25%... an aerospace and defense standout that just landed a potentially $80 billion contract… and a giant chipmaker building huge plants in the U.S.
Don’t Wait. Download FREE >>
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