Continuing with the effort to diversify its business and venture into the multifamily apartment sector, Mack Cali Realty Corp (NYSE:CLI) – a real estate investment trust (REIT) – disclosed the acquisition of 200-unit multi-family residential properties in New Brunswick, N.J. The company shelled out $41.1 million for purchasing the properties from an affiliate of Ironstate Holdings.
Known as Riverwatch Commons and Richmond Court, the three-building properties are 95% leased and includes studio, and one- and two-bedroom luxury apartments. Located near the NJ TRANSIT train station, offering accessibility to the NJ Turnpike, I-287, and Route 18, the property is in proximity to shopping centers, restaurants, nightlife, theaters, Johnson & Johnson’s headquarters, and Rutgers University. The property is offering a good amenity package and Mack-Cali’s Roseland subsidiary is in charge of managing and leasing the property.
With the continued weakness in the company’s core office markets, Mack Cali Realty Corp (NYSE:CLI) has been divesting a notable part of its office portfolio and targeting to expand its holdings in the multi-family residential sector that has traditionally been more of a stable product type. The growth in the echo boomers population is particularly expected to drive the demand for these properties.
In tandem with this, recently Mack Cali Realty Corp (NYSE:CLI) and Fisher Brothers formed a joint venture to purchase a 377-unit multi-family residential development project in Washington, D.C. Mack-Cali will shell out around $46.5 million for acquiring a 50% stake in the project.
Moreover, in November, Mack-Cali disclosed the acquisition of a 159-unit multi-family residential property – Park Square – in Rahway, N.J., for $46.5 million from Landmark Companies of Keasbey, N.J. Earlier this year, Mack Cali Realty Corp (NYSE:CLI) also acquired Alterra at Overlook Ridge 1A and 1B – luxury multi-family properties containing 722 rental units in the master planned community of Overlook Ridge in Revere and Malden, Mass., from a joint venture of Prudential Insurance Company of America, an operational arm of Prudential Financial Inc (NYSE:PRU).
While the portfolio repositioning efforts through multifamily apartment buyouts and office assets divestiture are encouraging, we believe that the aggressive disposition efforts are continuing 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 #4 (Sell) stock lacks sufficient growth momentum. But we believe that these strategic initiatives will benefit Mack Cali Realty Corp (NYSE:CLI) in the long run.
However, investors interested in the REIT industry may consider stocks like Getty Realty Corp. (NYSE:GTY) and Sabra Health Care REIT Inc (NASDAQ:SBRA). Both these stocks carry a Zacks Rank #1 (Strong Buy).
Disclaimer: This article is written by Zacks Equity Research and originally published at Zacks.com.
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Tags: Getty Realty Corp. (NYSE:GTY), Mack Cali Realty Corp (NYSE:CLI), Prudential Financial Inc. (NYSE:PRU), Sabra Health Care REIT Inc (NASDAQ