Fair Valuation on Mack-Cali
Zacks senior real estate investment trust [REIT] analyst Greg Sukenik is keeping his Hold rating on
Mack-Cali Realty (CLI) shares for the time being. Here's why:
'CLI pays an above average dividend and on a P/FFO [price-to-funds from operations] basis the company trades at a significant discount to peers. We rate the shares a Hold due to the company's asset base, which is located in mostly suburban submarkets which still suffer from high vacancies.
'We think consistent rent growth will be difficult in the coming year. In addition, recent national employment numbers are not encouraging, as the fortunes of office landlords are highly correlated with job growth and corporate expansion.
'At 11.4x our 2007 FFO estimates, the company is trading at a 30% discount to the Zacks office REIT weighted average of 16.4x 2007 FFO estimates. Due to a recent sell off, CLI is trading at a 13% discount to our calculated NAV [net asset value] vs. a peer group average discount of 10%.'
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