It has been about a month since the last earnings report for Mack-Cali Realty . Shares have added about 6.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Mack-Cali due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Mack-Cali Q4 FFO & Revenues Miss Estimates, NOI Declines
Mack-Cali’s fourth-quarter 2020 core FFO per share of 16 cents missed the Zacks Consensus Estimate of 24 cents. Also, the figure compares unfavorably with the year-ago quarter’s 44 cents.
Results reflect a decrease in same-store cash NOI for the office portfolio. Moreover, lease rate decreased in the multi-family portfolio.
Quarterly revenues of $76.6 million missed the Zacks Consensus Estimate of $105.3 million. The revenue figure was also 13.2% lower than the prior-year quarter’s number.
For 2020, Mack-Cali reported core FFO per share of $1.07, down 34% year over year. Also, the figure missed the Zacks Consensus Estimate of $1.15. Total revenues of $313.6 million decreased 12.2% year over year.
Quarter in Detail
As of Dec 31, 2020, Mack-Cali’s consolidated core office properties were 78.7% leased, reflecting an increase from 78.2% as of Sep 30, 2020. Notably, the Class A suburban portfolio was leased 86.6%, while Suburban and Waterfront portfolios were leased 74.2% and 77.3%, respectively, as of the same date.
Same-store cash revenues for the office portfolio declined 1.1% and the same-store cash NOI was down 4.4% year over year.
During the reported quarter, Mack-Cali executed 10 lease deals, spanning 122,574 square feet, in the company’s core office portfolio. Three deals for 8,413 square feet were new leases, while seven leases for 114,161 square feet were lease renewals and other tenant retention transactions.
Further, Roseland, the company’s subsidiary engaged in multi-family residential operations, reported that its overall operating portfolio was 90.2% leased at the end of the quarter, contracting 70 basis points (bps) from the prior quarter’s end. The multi-family portfolio, which comprised 3,813 units, witnessed a same-store NOI decline of 32.8% from the prior-year quarter.
Portfolio Activity
During the fourth quarter, the company sold four office buildings and land in its Suburban portfolio.
Subsequent to 2020-end, it completed the sale of 100 Overlook Center for $38 million. The office property in Princeton, NJ, spans 149,600 square feet.
Balance Sheet Position
The company exited fourth-quarter 2020 with $38.1 million in cash, up from $25.6 million as of Dec 31, 2019.
Mack-Cali’s net debt to adjusted EBITDA was 15.8 X for the reported quarter compared with the prior-year quarter’s 9.7X.
Dividend Update
On Sep 30, the company announced the suspension of its dividend payments for the third and fourth quarters of 2020. The move has been taken to support its financial flexibility amid the uncertainties due to the pandemic.
Notably, the dividend suspension will enhance Mack-Cali’s financial flexibility during the pandemic. It will also help preserve the incremental capital required to support leasing initiatives at the company’s Harborside campus on the Jersey City waterfront.
Since Mack-Cali satisfied the dividend obligation on taxable income expected for 2020, the move does not affect the company’s REIT status.
Outlook
The Company provided core FFO guidance of 12-15 cents per share for first-quarter 2021.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. The consensus estimate has shifted -49.38% due to these changes.
VGM Scores
Currently, Mack-Cali has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Mack-Cali has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Image: Bigstock
Why Is Mack-Cali (CLI) Up 6.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Mack-Cali Realty . Shares have added about 6.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Mack-Cali due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Mack-Cali Q4 FFO & Revenues Miss Estimates, NOI Declines
Mack-Cali’s fourth-quarter 2020 core FFO per share of 16 cents missed the Zacks Consensus Estimate of 24 cents. Also, the figure compares unfavorably with the year-ago quarter’s 44 cents.
Results reflect a decrease in same-store cash NOI for the office portfolio. Moreover, lease rate decreased in the multi-family portfolio.
Quarterly revenues of $76.6 million missed the Zacks Consensus Estimate of $105.3 million. The revenue figure was also 13.2% lower than the prior-year quarter’s number.
For 2020, Mack-Cali reported core FFO per share of $1.07, down 34% year over year. Also, the figure missed the Zacks Consensus Estimate of $1.15. Total revenues of $313.6 million decreased 12.2% year over year.
Quarter in Detail
As of Dec 31, 2020, Mack-Cali’s consolidated core office properties were 78.7% leased, reflecting an increase from 78.2% as of Sep 30, 2020. Notably, the Class A suburban portfolio was leased 86.6%, while Suburban and Waterfront portfolios were leased 74.2% and 77.3%, respectively, as of the same date.
Same-store cash revenues for the office portfolio declined 1.1% and the same-store cash NOI was down 4.4% year over year.
During the reported quarter, Mack-Cali executed 10 lease deals, spanning 122,574 square feet, in the company’s core office portfolio. Three deals for 8,413 square feet were new leases, while seven leases for 114,161 square feet were lease renewals and other tenant retention transactions.
Further, Roseland, the company’s subsidiary engaged in multi-family residential operations, reported that its overall operating portfolio was 90.2% leased at the end of the quarter, contracting 70 basis points (bps) from the prior quarter’s end. The multi-family portfolio, which comprised 3,813 units, witnessed a same-store NOI decline of 32.8% from the prior-year quarter.
Portfolio Activity
During the fourth quarter, the company sold four office buildings and land in its Suburban portfolio.
Subsequent to 2020-end, it completed the sale of 100 Overlook Center for $38 million. The office property in Princeton, NJ, spans 149,600 square feet.
Balance Sheet Position
The company exited fourth-quarter 2020 with $38.1 million in cash, up from $25.6 million as of Dec 31, 2019.
Mack-Cali’s net debt to adjusted EBITDA was 15.8 X for the reported quarter compared with the prior-year quarter’s 9.7X.
Dividend Update
On Sep 30, the company announced the suspension of its dividend payments for the third and fourth quarters of 2020. The move has been taken to support its financial flexibility amid the uncertainties due to the pandemic.
Notably, the dividend suspension will enhance Mack-Cali’s financial flexibility during the pandemic. It will also help preserve the incremental capital required to support leasing initiatives at the company’s Harborside campus on the Jersey City waterfront.
Since Mack-Cali satisfied the dividend obligation on taxable income expected for 2020, the move does not affect the company’s REIT status.
Outlook
The Company provided core FFO guidance of 12-15 cents per share for first-quarter 2021.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. The consensus estimate has shifted -49.38% due to these changes.
VGM Scores
Currently, Mack-Cali has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Mack-Cali has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.