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Mack-Cali Leases NJ Office Asset

Zacks Equity Research

Mack-Cali Realty Corp. (NYSE:CLI) along with The Praedium Group, its joint venture (:JV) partner, disclosed a new lease agreement with Sedgwick, LLP for 26,074 square feet of space at Class A office tower – One Newark Center – in New Jersey. Sedgwick, LLP is a San Francisco-based international litigation and business law firm.

One Newark Center, located advantageously at downtown Newark, is a 24-story building spanning 416,429 square foot. The fully furnished property is situated close to Newark Penn Station as well as Newark Liberty International Airport. The 98.4% leased office property is occupied by the IRS, the Newark Club, Seton Hall University Law School, The United States Trustees office and Kirkpatrick & Lockhart.

In the transaction, executives of Studley, Inc. represented Sedgwick. On the other hand, Mack-Cali and The Praedium Group were represented by personnel’s of Jones Lang LaSalle Inc. (NYSE:JLL), which is the exclusive leasing agent for One Newark Center.

We expect this leasing transaction of Mack-Cali to boost its strong tenant base and prove accretive to its earnings going forward. Notably, to counter the continued weakness in the company's core office markets, Mack-Cali has been divesting a notable part of its office portfolio and deploying its capital to expand its holdings in the multi-family residential sector that has traditionally been more of a stable product type.

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Yet, the aggressive disposition of office assets would continue to have a dilutive impact on its financials in the near-to-medium term. Moreover, with rents on the renewals rolling down in its core office portfolio, this Zacks Rank #5 (Strong Sell) stock lacks sufficient growth momentum.

Investors interested in the REIT industry may consider stocks like Getty Realty Corp. (NYSE:GTY) and Pebblebrook Hotel Trust (NYSE:PEB). Both these stocks carry a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on JLL
Read the Full Research Report on CLI
Read the Full Research Report on PEB
Read the Full Research Report on GTY


Zacks Investment Research