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Mack-Cali (CLI) Shares Tumble With 2021 Dividend Suspension

·4 min read

Shares of Mack-Cali Realty Corporation CLI tanked 1.3% during Mar 22 regular trading session after the company announced that it will continue to suspend its common dividend for the remainder of 2021.

Nonetheless, its board will likely reconsider the resumption of the quarterly dividend in first-quarter 2022. On Sep 30, 2020, the company announced the suspension of its dividend payments for the third and fourth quarters of 2020. On Jul 1, 2020, it announced the second-quarter 2020 cash dividend of 20 cents per share on its common stock. This dividend was paid out on Jul 24, 2020.

In light of the ongoing pandemic-led economic uncertainty and based on the company's projected 2021 taxable income estimates, the company has decided not to pay quarterly common stock dividends for the remainder of 2021. This move allows greater financial flexibility and enables it to preserve capital for its other strategic efforts like the repositioning of its Harborside campus.

Mack-Cali's Harborside portfolio-repositioning strategy is focused on capturing the attention of people who prefer to live, work and play in the same area — a trend that drove development in several other cities in the United States. The group also gives much importance to transit options and, hence, focusing on such areas remains a strategic choice for the company.

Hence, Mack-Cali’s Harborside Class A office campus on the waterfront in Jersey City is likely to witness strong demand for space, given its strategic location and diverse offerings.

Also, its focus on multi-family assets is a strategic fit. The asset class is comparatively stable and is likely to contribute more toward the company’s cash flows in the upcoming period. In fact, its $1-billion waterfront residential development pipeline is well-positioned to deliver 1,942 residential units over the next two years, with no remaining equity funding. This enhances growth prospects for the company.

Moreover, as part of a strategic shift in its operations, the company announced its plan to sell the entire suburban New Jersey office portfolio. It intends to use sales proceeds to repay corporate-level, unsecured debt. Moreover, Mack-Cali is selling residential properties in non-core markets. Although such non-core asset dispositions are strategic fits for the long run, the dilutive impacts on earnings in the near term cannot be bypassed.

Additionally, the demand for office space is likely to remain limited in the upcoming period due to the pandemic, and this is likely to affect leasing volumes at the company’s office portfolio.

Shares of this Zacks Rank #4 (Sell) company have edged down 0.7% over the past month against the industry’s growth of 0.4%.

Stocks to Consider

Alpine Income Property Trust, Inc.’s PINE funds from operations (“FFO”) per share estimates for the current year have moved up 3.8% to $1.61 in the past month. The company sports a Zacks Rank of 1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Extra Space Storage Inc.’s EXR Zacks Consensus Estimate for 2021 FFO per share has moved up 8.1% to $5.97 in the past month. The company currently carries a Zacks Rank of 2 (Buy).

Global Net Lease, Inc. GNL has a Zacks Rank of 2 at present. The Zacks Consensus Estimate for 2021 FFO per share has been revised 4% upward to $2.10 in a month’s time.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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