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Mack-Cali Sheds Non-Core Asset, Aims for Premium Properties

Zacks Equity Research

Mack-Cali Realty Corporation (CLI) disclosed the divestiture of commercial office property in Montebello, NY for around $28.3 million. The move comes as part of the company’s efforts to shed its non-core properties and invest the proceeds in strategic premium assets.

The sold asset, positioned at 400 Rella Boulevard, is a three-story building spanning 195,375-square-foot. This 75.8% leased property was the only asset of Mack-Cali in Rockland County. Notably, Cushman & Wakefield represented this real estate investment trust (:REIT) in the deal.

As a matter of fact, Mack-Cali has been divesting a substantial part of its office portfolio amid continued weakness in the company's core office markets. Last week, the company disposed 3 New Jersey office properties to a joint venture led by Keystone Property Group for around $71.6 million (Read: Mack-Cali Sheds Office Assets, Reuses Cap in Multi-Family).

Such transactions helped the company reap decent capital, which it is redeploying to expand its holdings in the multi-family residential sector that has traditionally been more of a stable product type.

While Mack-Cali’s venture into the multi-family residential sector is expected to drive long-term growth, in the short run, the aggressive disposition of office assets is anticipated to continue to lead to earnings dilution.

Mack-Cali currently carries a Zacks Rank #4 (Sell). However, investors interested in the REIT industry may consider stocks like Chatham Lodging Trust (CLDT), Terreno Realty Corp. (TRNO) and Parkway Properties Inc. (PKY). All these stocks carry a Zacks Rank #1 (Strong Buy).

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