Stifel Just Upgraded Mack-Cali To Buy, Notes 'Room To Roam'

In a report published Friday, Stifel analyst John W Guinee upgraded the rating on

from Hold to Buy, with a price target of $23. Mack-Cali is a fully integrated, self-administered, self-managed REIT providing management, leasing, development, construction, and other tenant-related services for its class A-/B+ real estate portfolio. In the report Stifel noted, "…CLI trades at roughly $130/SF of office relative to gross/adjusted replacement costs of $358/$200/SF indicating a significant discount." The rating upgrade also reflects Mack-Call's aggressive actions on mortgage debt, a reinvigorated corporate culture working to create shareholder value, increased dispositions in the office portfolio and the expected decline in G&A. "We have revisited Net Asset Value and Replacement Cost premiums/discounts in an effort to determine if the range or margin of error is sufficient to give investors breathing room. Based on our findings, we believe this to be true," analyst John W Guinee mentioned "Excluding its Jersey City, Lower Manhattan and Washington, D.C., CBD assets, we believe Mack-Cali' 15mm SF commodity office and 4.8mm SF flex portfolios could be addressed on a case-by-case basis via the following strategies: 1) capex infusion assuming a hold, 2) capex infusion assuming a sale, 3) outright sale, 4) conveyance to lenders, or 5) re-purposing involving wrecking balls and bulldozers," Guinee added.