Shares of Mack-Cali Realty Corp. CLI climbed 2.35% during yesterday’s regular trading session on the NYSE following its announcement of better-than-expected results for first-quarter 2015.
In particular, Mack-Cali’s funds from operations (“FFO”) per share of 43 cents exceeded the Zacks Consensus Estimate by a penny, and came above the prior-year quarter figure of 30 cents.
Total revenue came in at $153.7 million, down 9.4% year over year. However, it surpassed the Zacks Consensus Estimate of $145 million.
Quarter in Detail
During the quarter, Mack-Cali executed 123 lease deals spanning 758,919 square feet at its consolidated in-service portfolio. Of the total leased space, 276,656 square feet pertained to new lease deals; while 482,263 square feet consisted of lease renewals and other tenant retention deals.
As of Mar 31, 2015, the company’s consolidated commercial in-service portfolio was 84.3% leased, edging up from 84.2% at the prior-quarter end.
Notably, Mack-Cali reaped net sales proceeds of around $1.1 million, with a gain of about $0.1 million from the sale of its 21,600 square-feet office/flex property at 1451 Metropolitan Drive in West Deptford, NJ in Jan 2015.
Liquidity
As of Mar 31, 2015, Mack-Cali had cash and cash equivalents of $19.3 million, down from $29.5 million at the end of the prior quarter. Also, as of the same date, the company had total debt of $2.1 billion, same as the preceding quarter. Its weighted average annual interest rate stood at 5.65%.
Moreover, Mack-Cali’s debt-to-undepreciated assets ratio was 37.5% as of Mar 31, 2015, compared with 37.3% at the end of the last quarter. Interest coverage ratio was 2.6 times for the reported quarter, up from 2.2 times in the preceding quarter.
2015 Guidance
For full-year 2015, Mack-Cali has reaffirmed its FFO per share guidance in the range of $1.66–$1.78. The Zacks Consensus Estimate of $1.72 for the same lies within this range.
Our Take
Mack-Cali’s earnings beat is encouraging, leading to price appreciation as expected. We believe the company has adequate scope for improvement, given its strong presence in high barrier-to-entry markets in the Northeast region as well as diversification in the multifamily apartment sector.
Mack-Cali currently carries a Zacks Rank #3 (Hold). We presently await the results of other REITs like Avalonbay Communities Inc. AVB, Boston Properties Inc. BXP and General Growth Properties, Inc. GGP which are scheduled to release in the next week.
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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