Merrill Cuts Mack-Cali Rating
Merrill Lynch lowered its investment rating on Mack-Cali Realty (CLI ), a real estate investment trust, to near and long term accumulate from buy, as a couple of real estate deals appear to have collapsed. Analyst Steve Sakwa said two handshake deals to lease remaining space at its new Harborside Plaza 5 project fell through. He said that as a result, pre-leasing on this project budged modestly, rising to 40% in the third quarter from 18% in the first quarter. Given the slowdown in economy, he now assumes it will not start contributing to earnings per share figures until early 2003.
Despite the frenzied scramble for office space in the Tri-State areas after September 11, Mack-Cali's same-store occupancy rate actually fell 170 basis points from a year ago. He cut his 2002 funds from operations estimate to $3.74 from $3.94.