Back to top

Image: Bigstock

Why Is Mack-Cali (CLI) Down 7.2% Since its Last Earnings Report?

Read MoreHide Full Article

A month has gone by since the last earnings report for Mack-Cali Realty Corporation . Shares have lost about 7.2% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is CLI due for a breakout? 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

Mack-Cali reported fourth-quarter 2017 core FFO per share of 50 cents, missing the Zacks Consensus Estimate of 53 cents. The figure also compared unfavorably with the prior-year quarter tally of 56 cents.

In addition to this, total revenues of $143.5 million missed the Zacks Consensus Estimate of $146.2 million and came in 6.6% lower than the year-ago quarter as well.

Results indicate fall in same-store revenues and NOI.

For full-year 2017, core FFO per share came in at $2.23, up from the prior-year tally of $2.15. This was backed by 0.5% year-over-year growth in total revenues to nearly $616.2 million.

Quarter in Detail

Same-store cash revenues for the office portfolio for fourth-quarter 2017 descended 3.4%, while same-store cash NOI fell 5.0%.  

During the quarter, Mack-Cali executed 38 lease deals, spanning around 439,070 square feet of space, at the company’s consolidated in-service commercial portfolio. This comprised 18% for new leases, and 82% for lease renewals and other tenant-retention deals. Further, rental rate roll up for the fourth-quarter transactions was 9.6% on a cash basis and 17.9% on GAAP basis.

As of Dec 31, 2017, Mack-Cali’s consolidated core office properties were 87.6% leased, which shrunk 250 basis points (bps) from the prior-quarter end.

Portfolio Activity

Mack-Cali completed $56 million of property sales in the reported quarter, bringing the tally for full-year property sales to $528 million. The figure included $416 million of property sales and $112 million of joint venture interests.

Further, the company has additional dispositions of around $400 million planned for 2018 and expects those to be completed by the end of the second quarter. This will mark completion of the company’s major disposition program. Sales in future will occur on a select one-off basis.

On the other hand, during the fourth quarter, the company accomplished the acquisition of a residential development site on the Jersey City waterfront — 25 Christopher Columbus — for $53 million. The purchase was funded with proceeds from the dispositions as part of a 1031 exchange.

Liquidity

Mack-Cali exited 2017 with cash and cash equivalents of $28.2 million, down from $31.6 million recorded at the end of the prior year.

In addition, as of Dec 31, 2017, the company had a debt-to-undepreciated assets ratio of 46.5% compared with 46.2% as of Sep 30, 2017.

Guidance

Mack-Cali provided its guidance for full-year 2018. The company projects core FFO per share in the band of $1.80-$1.90.

The company projects office occupancy (year-end % leased) in the band of 84-86% and dispositions of $375-$425 million for full-year 2018.

Furthermore, Mack-Cali expects around 889,000 square feet of tenant move-outs in its Waterfront portfolio throughout 2018.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.

VGM Scores

At this time, CLI has a subpar Growth Score of D, however its Momentum is doing a lot better with a B. However, the stock was also allocated a grade of D on the value side, putting it in the bottom 40% 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.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

CLI has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Published in