Mack-Cali on the Road to Recovery


On May 16, 2014, we issued an updated research report on the real estate investment trust (:REIT) – Mack-Cali Realty Corp. (CLI).

Mack-Cali is currently focusing on expanding its holdings in the multi-family residential sector that has traditionally been more of a stable product type. Notably, the rise in demand for apartments driven by ‘echo boomers’ – children of the baby boomer generation – promises bright prospects for Mack-Cali in this sector.

Also, while weakness in its core office markets remains a concern and asset dispositions have a dilutive effect on earnings, we believe that the negatives have already been factored in the current valuation.

However, on Apr 24, Mack-Cali reported first-quarter 2014 funds from operations (:FFO) of 46 cents per share, a penny short of the Zacks Consensus Estimate. Higher expenses, especially related to cold winters, dampened the quarterly results of Mack-Cali and the company trimmed its 2014 FFO per share outlook.

Nevertheless, we believe that the company’s strong presence in high barrier-to-entry markets in the Northeast region and the improving fundamentals in the apartment sector would drive its top line in the subsequent years.

Over the past 7 days, the Zacks Consensus Estimate remained stable at $1.72 and $1.83 per share for 2014 and 2015, respectively. Mack-Cali currently carries a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Investors interested in the REIT sector may consider stocks like The GEO Group, Inc. (GEO), Terreno Realty Corp. (TRNO) and W. P. Carey Inc. (WPC). All three stocks have a Zacks Rank #1 (Strong Buy).

Note: FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation, amortization and other non-cash expenses to net income.

Read the Full Research Report on CLI
Read the Full Research Report on TRNO
Read the Full Research Report on WPC
Read the Full Research Report on GEO

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