S&P Global Ratings lowered its corporate credit rating on Mack-Cali Realty Corp. to BB from BB+.
The outlook is negative.
The downgrade reflects the company's elevated debt-to-EBITDA of roughly 10x for fiscal year-end 2017. The debt-to-EBITDA is significantly higher than S&P's expectation in the 7.5x range, the ratings agency noted.
The negative outlook takes into account the prospect of increased vacancy rates in 2018 and 2019 at the company's office portfolio in the New Jersey market due to substantial lease expirations along with unfavorable operating trends. Although the multifamily segment's contribution to EBITDA is expected to increase over the same period, it will not offset the cash flow decline from the core portfolio, S&P pointed out.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.
