Mack-Cali Realty Corp (CLI) disclosed its plan of slashing its second quarter common stock dividend by a third to 30 cents from 45 cents per share paid earlier. The move comes as the company plans to retain its cash for meeting investment needs that would help expand its multi-family residential platform.
While the dividend cut at this Edison, NJ-based real estate investment trust (:REIT) is being cited as a wise one by the company, the news triggered a 2.97% decline in Mack-Cali’s stock price during Monday’s regular session. The stock price further fell 3.38% during Tuesday’s regular trading session. Notably, the declaration of the company’s dividend is expected to take place at the board of directors’ May 15, 2013 board meeting.
In the midst of the current demand for office space, Mack-Cali has been focusing on expanding its multi-family apartment portfolio. The company has been inking various acquisition deals in this respect. In the recent months, Mack-Cali acquired both Alterra IA and Alterra IB at Overlook Ridge – in Metro Boston from a joint venture of Prudential Insurance Company of America, an operational arm of Prudential Financial Inc. (PRU).
Also, the company entered the DC multifamily market, through the buyout of Crystal House. The property was acquired through a joint venture (:JV) with a fund advised by UBS Global Asset Management of UBS AG (UBS).
We believe that though the news of the dividend cut is discouraging for the shareholders in the near term, the move will ultimately help Mack-Cali diversify its business and stay on the growth trajectory in the long term.
Mack-Cali currently owns or has interests in 279 properties, comprising 270 offices and office/flex properties and 9 multi-family rental properties comprising over 3,300 residential units, all located in the Northeast.
Mack-Cali currently carries a Zacks Rank #2 (Buy). Another REIT that is also performing well and is worth a look includes Cousins Properties Incorporated (CUZ) that carries a Zacks Rank #2.
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