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Why Is Mack-Cali (CLI) Down 11.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Mack-Cali Realty (CLI). Shares have lost about 11.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Mack-Cali due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Mack-Cali Realty Q3 FFO & Revenues Beat Estimates

Mack-Cali’s third-quarter 2021 core FFO per share of 17 cents topped the Zacks Consensus Estimate of 13 cents.

However, the figure compares unfavorably with the year-ago quarter’s 30 cents.

Results reflect a year-over-year increases in the same-store NOI for the office portfolio and the multi-family portfolio. However, consolidated core office properties were leased down.

In fact, per management, “I am pleased to announce another active quarter during which we further simplified the business, continued to enhance our operational platform and capitalized on the continued strength in multifamily leasing demand. We continue to see strong interest in our high quality assets, with occupancy in our multifamily portfolio now above pre-Covid levels."

Quarterly revenues of $83.7 million surpassed the Zacks Consensus Estimate of $77.1 million. Further, the revenue figure came in 5.7% higher than the prior-year quarter’s number.

Quarter in Detail

As of Sep 30, 2021, Mack-Cali’s consolidated core office properties were 73.5% leased, down from 74.7% as of Jun 30, 2021. The Waterfront portfolio was 73.3% leased, down from the 75.4% seen as of the second-quarter end.

While same-store revenues for the office portfolio decreased 2.1%, the same-store cash NOI was up 3.4% year over year, backed by savings in operating expenses.

In the reported quarter, Mack-Cali executed new or renewal/extension lease deals, spanning 176,100 square feet, in the company’s office portfolio.

Further, the company’s subsidiary, Roseland, which engages in multi-family residential operations, reported that its overall operating portfolio was 96.5% occupied as of Oct 24, up from the prior-quarter end’s 92.3%.

The same store multi-family portfolio, which comprised 5,499 units, witnessed same-store NOI growth of 6.5% from the prior-year period, reflecting higher revenues from the recovering leasing activity, resulting inlower vacancy and higher in-place rents.

Portfolio Activity

During the third quarter, the company completed the disposal of its joint-venture interest in the Crystal Lake office property and 7 Giralda Farms, for $1.9 million $29 million, respectively.

In addition, the company entered into separate definitive agreements to sell two of its waterfront office properties for a combined sales price of $590 million.

Balance Sheet Position

Mack-Cali exited third-quarter 2021 with $23.3 million in cash, down from $38.1 million as of Dec 31, 2020.

The company’s net debt to adjusted EBITDA was 15.2X for the reported quarter compared with the prior-year quarter’s 12.1X.

How Have Estimates Been Moving Since Then?

Estimates revision followed a downward path over the past two months.

VGM Scores

Currently, Mack-Cali has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Mack-Cali has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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