Dive Brief:

• Veris Residential has identified a pipeline of $300 million to $500 million of assets, comprising the majority of its land bank and select multifamily properties, to be sold during the next 12 to 24 months, according to its fourth-quarter 2024 earnings release in late February.
• The Jersey City, New Jersey-based REIT will use the proceeds from any potential sale or sales to fund a $100 million share repurchase program. The balance will then be used to repay debt. As the transactions are completed, it is targeting leverage below 9.0x net EBITDA.
• In 2024, Veris completed $230 million of non-strategic asset sales. It also refinanced $526 million of mortgages, leaving no remaining consolidated debt maturities until 2026. All of its debt is either fixed or hedged.

Dive Insight:

Over the past four years, Veris' leadership has transformed the company into a pure-play multifamily REIT with core, class A properties in the Northeast.

However, in sentiments that echoed Denver-based REIT Aimco’s earnings report in January, the company said public markets aren’t rewarding its efforts and portfolio. 

"Despite our continued operational outperformance, we recognize that the intrinsic value of Veris Residential is not accurately reflected in our share price today,” CEO Mahbod Nia said in the earnings release. “We are keenly focused on closing this valuation gap through measures including, but not limited to, the crystallization of assets where we believe we can achieve strong pricing at or near to their intrinsic value, despite broader challenges in the investment market amidst the backdrop of heightened economic and geopolitical uncertainty.”

Both Aimco and Bethesda, Maryland-based REIT Elme Communities have made announcements in the past two months that they’re looking at options, which could include potential sales, to maximize shareholder value. 

However, Veris doesn’t appear to be considering a sale of the company yet. Instead, it is taking advantage of the dislocation between its public trading value and the intrinsic value of its real estate by repurchasing stock with sale proceeds, according to Nia. 

“Looking ahead, as we monetize these assets, we will maintain our ability to be nimble and to continue exploring any and all paths to further crystallize value for all shareholders,” Nia said.

In a research note shared with Multifamily Dive, Anthony Paolone, executive director at JPMorgan, said Veris trades at a 28% discount to net asset value.

“We currently calculate an implied cap rate of approximately 6% when stripping out the non-core assets, north of what we think the portfolio would fetch in a private market transaction,” Paolone wrote. “We think taking steps to narrow the portfolio and perhaps make it simpler could improve options to maximize shareholder value.”

Paolone wrote that Veris had an estimated land bank value of $180 million, leaving the remaining $120 million to $320 million of asset sales to come from operating multifamily assets. “In the past, the company has pointed to the possibility of selling its equity in joint ventures where it does not manage the asset or have ultimate control,” he wrote.

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