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Why Is Mack-Cali Realty (CLI) Up 12.9% Since Its Last Earnings Report?

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A month has gone by since the last earnings report for Mack-Cali Realty Corporation (CLI - Free Report) . Shares have added about 12.9% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is CLI 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 Q1 FFO & Revenues Beat Estimates

Mack-Cali Realty reported first-quarter 2018 core FFO per share of 50 cents, beating the Zacks Consensus Estimate of 48 cents. Results reflect better-than-expected revenue numbers for the quarter. The company also reaffirmed its 2018 guidance.

In fact, total revenues of around $139 million comfortably exceeded the Zacks Consensus Estimate of $130.2 million.

However, on a year-over-year basis, core FFO per share fell 10.7%, while revenues declined 7.3%.

Quarter in Detail

As of Mar 31, 2018, Mack-Cali’s consolidated core office properties were 85.2% leased, which shrunk 240 basis points (bps) from the prior-quarter end. Same-store cash revenues for the office portfolio descended 2.8%, while same-store cash net operating income (NOI) fell 8.7%. 

During the reported quarter, Mack-Cali executed 41 lease deals, spanning around 265,885 square feet of space, at the company’s consolidated in-service commercial portfolio. This comprised 21% for new leases, and 79% for lease renewals and other tenant-retention deals.

Further, for the core portfolio, rental rate roll up for first-quarter 2018 deals was 5.1% on a cash basis. For new transactions, rental rate roll up was 4% on a cash basis, while for renewals and other tenant retention deals, it was 5.3% on a cash basis.

Moreover, for the company’s residential same-store portfolio, which comprised 3,156 units and 97.3% leased at the quarter’s end, NOI inched up 1.3% in the quarter.

Portfolio Activity

Mack-Cali completed dispositions of 20 properties, comprising 1.7 million square feet of space, for $232 million. Further, the company expects additional dispositions of $170 million to be accomplished by year end.

Liquidity

Mack-Cali exited first-quarter 2018 with cash and cash equivalents of $25.3 million, down from $28.2 million recorded at the end of the prior quarter.

In addition, as of Mar 31, 2018, the company had a debt-to-undepreciated assets ratio of 44.5% compared with 46.5% as of Dec 31, 2017.

Guidance

Mack-Cali projects core FFO per share of $1.80-$1.90.

The company projects office occupancy (year-end % leased) of 84-86%, and dispositions of $375-$425 million for full-year 2018. This will mark completion of the company’s major disposition program. Sales in future will occur on a select one-off basis.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.

Mack-Cali Realty Corporation Price and Consensus

VGM Scores

At this time, CLI has an average Growth Score of C, though it is lagging a bit on the momentum front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of this revision looks promising. Notably, CLI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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