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Should You Retain Mack-Cali (CLI) in Your Portfolio Now?
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We updated our research report on Mack-Cali Realty Corporation on Mar 9.
The Jersey City, NJ-based real estate investment trust (REIT) is engaged in providing management, leasing, development and other tenant-related services for office and multi-family real estate assets. Specifically, the company has two-platform operations of waterfront and transit-based office, and luxury multi-family properties.
Late in February, the company declared a better-than-expected performance for fourth-quarter 2016. Mack-Cali reported fourth-quarter 2016 core funds from operations (“FFO”) per share of 56 cents, beating the Zacks Consensus Estimate by a penny. It was also up 19.1% from the prior-year quarter tally of 47 cents. The better-than-expected result was driven by increased base rents in 2016.
The company has been making solid strides in its 20/15 strategic plan. This plan is aimed at transforming the company by focusing on waterfront and transit-based office holdings, and on luxury multi-family portfolio growth as well. It also includes planned exits from non-core markets and capital improvements in core assets. Such efforts and diversification into the apartment sector are likely to drive growth and improve cash flow.
In fact, as of Dec 31, 2016, Mack-Cali’s consolidated Core, Waterfront and Flex properties were 90.6% leased, up 30 basis points (bps) sequentially and 150 bps year over year. Further, rental rate roll up for the fourth-quarter transactions in the company’s Core, Waterfront and Flex properties was 3.5% on a cash basis and 12.2% on a GAAP basis. Moreover, Mack-Cali reaffirmed its 2017 FFO per share guidance at $2.25–$2.40.
However, as part of its portfolio repositioning efforts, Mack-Cali has been aggressively disposing its assets. The company closed $745 million of planned dispositions in 2016 and early 2017, and intends to dispose another $600 million for the remainder of 2017. While such measures are a strategic fit for the long term, the earnings-dilutive effects of huge asset sales cannot be bypassed. In addition, high expenses tied to multi-family residential investments and rise in interest rate are potential headwinds.
Shares of Mack-Cali underperformed the Zacks categorized REIT and Equity Trust – Other industry year-to-date. Over this time frame, Mack-Cali declined 7.2%, while the industry edged down 0.1%. However, over the past seven days, the Zacks Consensus Estimate for first quarter 2017 FFO per share increased 3.5% to 59 cents.
Currently, Mack-Cali carries a Zacks Rank #3 (Hold).
CoreSite Realty currently has a long-term growth rate of 19.1%.
Piedmont Office Realty’s estimates for 2017 moved north by 0.6% to $1.73, over the past 30 days.
W. P. Carey is a steady performer, having exceeded the Zacks Consensus Estimate in each of the four trailing quarters, with an average beat of 12.38%.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. 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.
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Should You Retain Mack-Cali (CLI) in Your Portfolio Now?
We updated our research report on Mack-Cali Realty Corporation on Mar 9.
The Jersey City, NJ-based real estate investment trust (REIT) is engaged in providing management, leasing, development and other tenant-related services for office and multi-family real estate assets. Specifically, the company has two-platform operations of waterfront and transit-based office, and luxury multi-family properties.
Late in February, the company declared a better-than-expected performance for fourth-quarter 2016. Mack-Cali reported fourth-quarter 2016 core funds from operations (“FFO”) per share of 56 cents, beating the Zacks Consensus Estimate by a penny. It was also up 19.1% from the prior-year quarter tally of 47 cents. The better-than-expected result was driven by increased base rents in 2016.
The company has been making solid strides in its 20/15 strategic plan. This plan is aimed at transforming the company by focusing on waterfront and transit-based office holdings, and on luxury multi-family portfolio growth as well. It also includes planned exits from non-core markets and capital improvements in core assets. Such efforts and diversification into the apartment sector are likely to drive growth and improve cash flow.
In fact, as of Dec 31, 2016, Mack-Cali’s consolidated Core, Waterfront and Flex properties were 90.6% leased, up 30 basis points (bps) sequentially and 150 bps year over year. Further, rental rate roll up for the fourth-quarter transactions in the company’s Core, Waterfront and Flex properties was 3.5% on a cash basis and 12.2% on a GAAP basis. Moreover, Mack-Cali reaffirmed its 2017 FFO per share guidance at $2.25–$2.40.
However, as part of its portfolio repositioning efforts, Mack-Cali has been aggressively disposing its assets. The company closed $745 million of planned dispositions in 2016 and early 2017, and intends to dispose another $600 million for the remainder of 2017. While such measures are a strategic fit for the long term, the earnings-dilutive effects of huge asset sales cannot be bypassed. In addition, high expenses tied to multi-family residential investments and rise in interest rate are potential headwinds.
Shares of Mack-Cali underperformed the Zacks categorized REIT and Equity Trust – Other industry year-to-date. Over this time frame, Mack-Cali declined 7.2%, while the industry edged down 0.1%. However, over the past seven days, the Zacks Consensus Estimate for first quarter 2017 FFO per share increased 3.5% to 59 cents.
Currently, Mack-Cali carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in the REIT space include CoreSite Realty Corporation (COR - Free Report) , Piedmont Office Realty Trust, Inc. (PDM - Free Report) and W. P. Carey Inc. (WPC - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CoreSite Realty currently has a long-term growth rate of 19.1%.
Piedmont Office Realty’s estimates for 2017 moved north by 0.6% to $1.73, over the past 30 days.
W. P. Carey is a steady performer, having exceeded the Zacks Consensus Estimate in each of the four trailing quarters, with an average beat of 12.38%.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. 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.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>