Mack-Cali FFO & Revs Miss, Cuts View

Zacks

Mack-Cali Realty Corp. (CLI) – a real estate investment trust (:REIT) – reported first-quarter 2014 funds from operations (:FFO) of 46 cents per share, a penny short of the Zacks Consensus Estimate and 27.0% below the year-ago quarter figure of 63 cents.

Higher expenses again dampened the quarterly results of Mack-Cali. Consequently, the company trimmed its 2014 FFO per guidance for the second time this year. As a result, Mack-Cali's share price fell 0.29% during yesterday's regular session on the NYSE.

Total revenue dipped 0.8% year over year to $169.6 million. Nevertheless, it exceeded the Zacks Consensus Estimate of $150.0 million. However, expenses moved up 19.1% year over year to $156.4 million.

Leasing Activity

During the quarter, Mack-Cali executed 102 lease deals, spanning 645,041 square feet, at its consolidated in-service portfolio. This included around 53,700 square feet of industrial/warehouse space, 497,810 square feet of office space and 93,531 square feet of office/flex space. Of the total leased space, 220,288 square feet were for new lease deals and 424,753 square feet were related to lease renewals and other tenant retention deals.

As of Mar 31, 2014, the consolidated in-service portfolio of the company was 83.6% leased, down from 86.1% at the end of the prior-quarter.

Notable Portfolio Activity

During the quarter under review, Mack-Cali penned a deal with the Keystone Property Group to divest its 15 office assets located across Northern New Jersey, New York and Connecticut for around $230.8 million. As per the deal terms, Mack-Cali will take part in the portfolio management fees as well as a percentage of value creation over certain hurdle rates. It would also keep a senior pari-passu equity position at 3 of the properties in Elmsford, New York.

Also, the company inked a deal to divest a New Jersey-based office property for about $96.6 million, during the first quarter.

Subsequent to the quarter end, in April, Mack-Cali disclosed the acquisition of a 220-unit multi-family residential asset in Andover, MA. The company shelled out $37.7 million for purchasing the property.

Liquidity

As of Mar 31, 2014, Mack-Cali had cash and cash equivalents of $58.7 million, down from $221.7 million at the end of the prior year. The company had total debt of $2.2 billion, with a weighted average annual interest rate of 5.54%.

Moreover, Mack-Cali’s debt-to-undepreciated assets ratio was 38.8% as of Mar 31, 2014, compared with 39.9% as of the end of the last quarter. Interest coverage ratio was 2.0 times for the reported quarter, compared to 2.7 times in the prior quarter.

Guides Low

For full-year 2014, Mack-Cali lowered its FFO per share guidance and now expects it in the range of $1.62 – $1.72 per share compared to its previous outlook of $1.75 – $1.95 per share. The guidance range is also well below the Zacks Consensus Estimate of $1.85 per share for 2014.

Our Take

The persisting weakness in the company’s core office markets continues to impact Mack-Cali’s business. Although the company is aiming at strengthening its portfolio base through multifamily apartment buyouts and office assets divestiture, its aggressive disposition efforts would continue to have a dilutive impact on its financials in the near-to-medium term.

Mack-Cali, which has reported disappointing earnings and guided low in last quarter too, now carries a Zacks Rank #4 (Sell).

However, some better-ranked REIT stocks include Duke Realty Corporation (DRE), SL Green Realty Corp. (SLG) and Public Storage (PSA). All these stocks carry a Zacks Rank #2 (Buy).

Note: 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.

Read the Full Research Report on PSA
Read the Full Research Report on DRE
Read the Full Research Report on CLI
Read the Full Research Report on SLG


Zacks Investment Research

Rates

View Comments (0)

Recommended for You

  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • 1 Tip To Lose Belly Fat

    It's Hollywood's Hottest Diet And Gets Rid Of Stubborn Fat Areas Like Nothing Else.

    AdChoicesagoodcooksSponsored
  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • Tycoon's arrest sends shock wave through Russia

    Tycoon's arrest sends shock wave through Russia MOSCOW (AP) — The arrest of a Russian telecoms and oil tycoon has sent shock waves through the country's business community, with some fearing a return to the dark days of a decade ago, when the Kremlin asserted its power by imprisoning the country's…

    Associated Press
  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance
  • Costco Stores in Canada to Stop Taking American Express

    “The credit card relationship between American Express and Costco Wholesale Canada will not be renewed when it expires” on Dec. 31, the company said today in an e-mail to Canadian customers. The message was attributed to Lorelle Gilpin, vice president of marketing and membership for Costco…

    Bloomberg
  • CNBC Anchor Calls Out Fed-Hater Bill Fleckenstein In Startling Shouting Match

    CNBC Bill Fleckenstein of Fleckenstein Capital appeared on CNBC's Futures Now program on Tuesday. Futures Now host Jackie DeAngelis came out swinging, asking Fleckenstein right at the top if he was willing to admit that he had misunderstood monetary policy. Sounding taken aback, Fleckenstein…

    Business Insider
  • Beanie Babies creator's sentence debated in court

    Beanie Babies creator's sentence debated in court CHICAGO (AP) — Federal prosecutors seeking to put the billionaire creator of Beanie Babies in prison for hiding millions in Swiss bank accounts told appellate court judges Wednesday that the toymaker's sentence of probation threatens to erode the…

    Associated Press
  • Wondering How You Could Save on Home Insurance?

    Get a quote from Farmers Insurance and discover how you could save. Speak with an agent to get the knowledge you need to make an informed decision.

    AdChoicesFarmers InsuranceSponsored
  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

    Reuters
  • Gilead Stock Is Falling On These Drug Setbacks

    Gilead Stock Is Falling On These Drug Setbacks Gilead Sciences (GILD) shares are backsliding Wednesday on news that the patient drop-out rate for hepatitis C drug Sovaldi is quadruple that of clinical trials. In addition, the biotech's Phase 2 study results

    Investor's Business Daily
  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • Margaritaville casino owners seek bankruptcy

    The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property. The filing by MVB Holding LLC in U.S. Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask…

    Associated Press
  • Don't care about Alibaba? Here's why it may matter

    When the Alibaba Group Holding prices its initial public offering Thursday, small businesses in particular will be watching. Founder Jack Ma -the former English-teacher-turned-dot-com billionaire-has touted his e-commerce platform as a way for smaller merchants to expand their international…

    CNBC
  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    Cuban is the owner of the Dallas Mavericks basketball team. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • Best Womens Wrinkle Creams 2014

    Mom reveals simple wrinkle solution that has researchers very excited. Try this free solution today to look and feel years younger.

    AdChoicesBellaLabs.comSponsored
  • Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More

    Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More Stocks were firm on Wednesday morning ahead of the FOMC meeting outcome. Tuesday’s rally may have sparked higher interest again, and investors are looking for bargains

    24/7 Wall St.
  • SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

    "and like that: he's gone." This is an actual headline from a company press release: "CEO and COO disappeared, most of the company's cash missing." (Via FastFT) In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company's CEO,…

    Business Insider
  • Boeing may have outfoxed Musk, but it could have bigger problems

    Elon Musk is arguably one of the greatest entrepreneurial minds of the 21st Century, but he was outsized an old school aerospace giant. Boeing won the bulk of NASA’s contract for a space taxi.  One of the other companies vying for the deal is SpaceX, the company headed by Tesla’s Musk, will get a…

    Talking Numbers
  • Billionaire Investor Says Chinese People Work Harder And Western Companies Could Face Deep Trouble After Alibaba IPO

    Michael Moritz, the chairman of VC firm Sequoia Capital, is a huge fan of Chinese internet companies and reiterated his enthusiasm for the Chinese market in an interview with The Wall Street Journal Wednesday. The billionaire investor described the Alibaba IPO as a “major landmark event” that is as…

    Business Insider
  • Play

    Tues., Sept. 16: Watch Humana Stock

    Humana, Global X Social Media Index ETF and Majesco Entertainment are among stocks to watch. WSJ's Chris Dieterich discusses the details with Michael Casey. Photo: Humana

    WSJ Live
  • As Fed takes baby steps, Cramer's trick for profit

    In turn, Cramer says making money in the market, involves looking at the environment through the lens of the Fed. "The trick is to remember that they speak for the common person," Cramer said. "The Fed wants the common person to make money." With that backdrop always in mind, Cramer says it becomes…

    CNBC
  • Take Your Career in Law to the Next Level!

    Earn an accredited Master of Laws in only 1 year. 100% online, No LSAT required, and 5 concentrations offered, including Taxation Law. Apply today!

    AdChoicesThomas Jefferson Law Sponsored
  • 6 Things Debt Collectors Wish You Knew

    The work debt collectors do is not popular, and has become increasingly derided by those who don’t like what we do or simply don’t know the facts about debt collection. Too often, debt collection is painted with a broad brush to create a portrait that isn’t accurate, and doesn’t properly educate…

    Credit.com