Mack-Cali Leases Property - Analyst Blog

Mack-Cali Realty Corp. (CLI), a fully integrated real estate investment trust (REIT), has recently extended its lease agreement with Frenkel & Co.Inc., an insurance brokerage company which provides insurance and risk management services for businesses and individuals in the U.S. and internationally.

 

Mack-Cali would lease about 23,516 square feet of space in Harborside Financial Center Plaza 3 building to Frenkel for 11 years. With the deal, the lessee would relocate its office to the mixed-use property in Jersey City, New Jersey.

 

Spanning across 3.1 million square feet of space, the leased property is located in a thriving business district on the Jersey City waterfront, and offers a premier office environment with state-of-the-art facilities. In addition, the property offers easy access to mass transportation services with nearby PATH (Port Authority Trans-Hudson) and ferry services to downtown and midtown Manhattan, and Hudson-Bergen Light Rail service to the surrounding New Jersey communities.

 

 Port Authority Trans-Hudson is a rapid transit railroad linking Manhattan, New York with New Jersey.

 

Mack-Cali is primarily engaged in owning, leasing, managing, and developing Class A office and industrial/flex properties.

 

The company focuses on high-barrier markets mostly in the suburban areas in the northeast and mid-Atlantic regions in the U.S., and derives most of its annualized base rents from New Jersey.

 

With debt-free ownership of the bulk of its portfolio, Mack-Cali offers a faster and more streamlined leasing process. In addition, the company is structured as a vertically integrated company, providing a full range of leasing, property management, construction, legal, space planning, and architectural services under a single platform.

 

 However, Mack-Cali has a concentration of assets in some very competitive markets, which are getting worse in conjunction with the overall U.S. economy. As such, we think the company will have a difficult time raising rents as leases roll over the next couple of quarters. Consequently, we maintain our Neutral rating on Mack-Cali with a Zacks #3 Rank, which translates to a short-term ‘Hold’ recommendation.