VRE - Earnings call 3 2023 | Veris Residential, Inc.

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Operator

Greetings, and welcome to Veris Residential Inc.

Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. pleasure your my General Taryn now Counsel. is to host, introduce Fielder, It you, Thank Ms. begin. may you Fielder,

Taryn Fielder

Good welcome to everyone, may the Conference certain morning, federal and discussed constitute Call. XXXX Third information the . I Earnings forward-looking Quarter securities statements would meaning this law. like on remind within that to everyone call Veris of Residential's

be assurance statements reasonable assumptions, on we the that anticipated Although the based believe estimates are reflected achieved. results will cannot in give these we

press company. release to with to Mahbod. company's Lombard, annual I We and risk Executive filed refer the call Mahbod you like reports and the Chief Amanda Residential's Chief factors Officer, quarterly to Financial over would Veris the hand that With who Officer. for Nia, by SEC is impact the that, joined

Mahbod Nia

Releasing debt everyone. overall year. and during preferred we assets. million repay redeeming results proceeds, loan . In third Taryn, the build the quarter, which term delivered the facility of interest to $XXX sales July, enhancing you, and closed good addressing revolving net of profile. we to credit Since of upon half the on continued Thank the we've of strong four in Rockpoint's the balance proactively first near-term debt refinanced and approximately the of and debt were $XXX maturity maturities our used million nonstrategic morning,

growth and across NOI achieving same-store rents net blended sector. same-store third XX.X% rental softening a continued of we quarter, during rate X.X% outperform multifamily Operationally, and the to despite the growth of of widespread

billion. total closed year closed value second million of but nonstrategic at the the this assets $XXX end transactions the of The over $X.X since of quarter,

Harborside two XX land Street Main and buildings. X campus. the Harborside plots, recent X office Specifically, further and transactions include two most completed X and

refinancing our loan interest from The net process. resulting the credit sales, expense savings and and balance equity of facility us the in repay operations cash these a and from months, with now term just release flow in combined from substantial HausXX to proceeds fully of X the X cash excess positive our flow enabled the realized revolving in

on are the XXX remain upon campus liquidity company Morgan closing. and binding to X anticipated contract with provide the additional and

Turning to operations.

quarter, the at and remained XX.X% respectively. XX%, retention our stable occupancy rates During and same-store

same-store remained despite end multifamily the and of rate strong marking net increases slower high-growth across rental typically blended season third rent start The quarter, growth X.X% of on from the being at XXXX. the the periods based leasing a sector

positioned mini-sized of cooling we winter leasing A further active with rents for the highly our portfolio believe anticipate we be season. to While Class peers, less well consistent continues

market, York reflects was outperformance year-over-year of XX Furthermore, to muted by which resilient in comprised operational continued and relative demand, portfolio few which New approximately to next and capturing XX moving the in Our the with from broader saw market a XX% continues Jersey the New X% nationally supply by that new of City. high-quality be New our Jersey, Class platform expected months. of A in deliveries City to very Waterfront for rise only the strength demand rents our and X%

contributed achieved third $XX.X expense XXXX, representing XX% once detail. of XX.X% is discuss we further with quarter in to will NOI during growth the guidance ended from months revenue outperformance X additional the coupled our continued of to continued in in This NOI excluding to reflected focus again generated the on September Amanda raise XX%. contribution significant sustained compared to to The management, XX, HausXX. the quarter, decision million an our this same-store NOI in growth a

for the regional in Estate actions going of performance once the update global XXXX the sustainable to benchmark, that, only of this of who one our will year GRAS participated month. again the operations, rating on XXXX the SEG, named or provide and in industry diversity and Real Benchmark, over by Despite it sector our in a Global to earned second we As leaders during our earlier well-being testament proud being be an we the to Sustainability ESG were leaders our hand Amanda, a which listed advancement With commitment and the X-star supporting I'm communities. to ongoing our residents, to performance, quarter. employees, suppliers financial we

Amanda Lombard

Thanks, Mahbod.

diluted quarter versus shareholders common third fully a available share For net to per the the loss loss quarter diluted $X.XX of third $X.XX last of fully per XXXX, share was in of year. net

quarter Rockpoint to costs includes related approximately mandatorily interest we XXXX $X.XX share third as quarter. buyout quarter $XX of last The Core compared or FFO to per third the detailed was $X.XX of per of as the interest share $X.XX million last of redeemable quarter. noncontrolling for

$X.XX for was quarter credit, which we typically as by from the reason. quarter. share $X.XX second to nonrecurring The from two estate positively was AFFO second $X.XX the tax items: quarter the two impacted real and tax of last settlement per compared the $X.XX appeals same in early receive

was up same compared year. due over our level quarter-over-quarter revenue higher related leasing costs to mitigate efforts Controllable and the Reflecting to quarter up NOI Same-store expense last peak X.X% to to continued property XX% inflation. season. growth the XX.X% expenses were

expenses up X.X% controllable year-over-year X.X%. only However, slightly ticked to from

be to to period Our noncontrollable period. expenses continue variable

our insurance the our review from of annual reduction based premiums This the and by program quarter, property self-insurance XX% increase. in insurance our increased upon we a prior renewed that year, our approximately while offset

offset adjustment increase result quarter addition, the related In the the million by City Jersey significantly prior appeal million to estate to taxes. a tax up $X.X to favorable quarter taxes the of of $X.X finalization was XXXX resolution as of QX of real related are an compared in as slightly this which

quarter to will administrative million for on noncontrollable noncash down approximately $X.XXX expenses for was Next rate In this and a adjustments, expect along quarter, than higher be severance after costs, we quarter. stock payments. general that with to regards compensation, run basis. G&A the our $X.X

in due that various quarter regularly the higher than third costs quarter may to occur fourth The quarter. be slightly that

G&A record of in a level to 'XXs. terms adjusted and over remain for However, the in lowest since lowest the decade the inflation on when nominal overall, we track

balance On sheet. to our

to repaid recently in cash a of rough into facilities sales. and loan complete interest our term credit from using Veris redemption closed facility nonstrategic During we months just from in Residential was transitional the million flow surplus proceeds these of $XXX cash-generative proceeds asset negotiated the entered balance of points operations. preferred X the The Trust. and of from Excess net refinancing HausXX quarter, now

maturity XXXX refinanced an HausXX, loan reducing quarter cost X.XX%, XXX interest proactively on by We fourth the of rate points. basis this at

XX% X our no maturity from were weighted per portfolio An in X more due XX% the able over of As ladder while increase maturing a our maturity total any X.X of years than we improving with the years. average to annum of average our to result year. debt this, next debt given of portfolio

our with As are which to of of effectively our October increasing interest constituted latest debt XX, our all hedged XX% the is average X.X% weighted fixed from refinancings, stack marginally of X.X%. and overall debt rate

Rockpoint's loans in that net debt preferred will fluctuation, has interest and debt million transitional have the to by end $X XX.Xx net prone billion addition the gradually for repayment, repayment earnings EBITDA our trended sensitive it to remain of recent having $XXX of we since While to reduced to the prioritized as redemption pro to the of approximately down forma XXXX.

refinanced Veris expect to maturities. our $XXX at we consolidated mortgages million as we has of be into ahead Looking move XXXX. upcoming

there are to evidenced estate the real financing. multifamily commercial markets the lend While like assets demand constrained, by ours high-quality recent remains for as

by loans we we reduce Accordingly, proceeds Board the operations as our from on or leverage flow determined from asset refinance sales anticipate these the utilizing required to to cash and extent Management. continued otherwise of nonstrategic is them,

our to outlook. Turning

As XX% XX% is our and Mahbod X% range market real driven NOI we to to the XX%. be This to of provided better-than-expected and renewals. estate portfolio's in largely on by flexibility guidance to higher-than-expected from mentioned, same-store to outcomes growth, has tax the us range XX% XX% our rent performance to which insurance with expect raise

expenses to nonstrategic and the Residential, asset continue further another quarter X% that, of in which for outperformance project strengthening strong for questions. demonstrate ready open our the we while range will during X%. balance multifamily We sheet. are advance Veris concludes the line end sales to year With we completion of This to the

Operator

you. Thank

be from from Citi the [Operator Wolfe of now session. a will Eric question-and-answer Research. question line We comes first Instructions] The conducting

Unknown Analyst

Nick just spent the actually Maybe growth on lease new And seeing in operating are Joseph November you trending December. where here then then are starting and with rate kind October? Eric. October on of portfolio. It's out for and renewals you today touch where for

Mahbod Nia

the for you question. Nick, thank

indicated expected the we single-digit double-digit growth, rental growth. we've prematurity. said mid- we forward. now. That's sustainable on range be had high very last that mean going not I quarter we'd rents to that So strong rental in to We moderate

digits, in longer-term rates. that. I of moderate the You've -- which seen more, come will somewhere say, think in growth let's us mid-single that is to of indicative further high end much at do we'll the

Unknown Analyst

Is there is to anything coming that? in are of off such terms metrics it impacting normal in Or just such rent of that high income or more just any you're -- other seeing rent seasonality growth? affordability

Mahbod Nia

latter -- made. you that Yes. It's actually two it's points the

So is we of to more slowing obviously now growth. about We've There disposable seen sustainable. not comes actually income just sector remain some a periods And tougher rent also XX% sustained standpoint, it's now very was at of commentary seen you're XX% whole. good below that the now that It's -- terms multifamily rent extremely entered actually to around down from income. the even the net it And we've when high period generally, that function an but in slightly more seasonally on affordability growth. of we've or in shape. lapping good

Unknown Analyst

just insurance reduction the Great. in you And on can then the quantify self-insurance? renewal, the

Amanda Lombard

Amanda. is This Sure.

up it's noncontrollable I next think I said expenses go as you'll see that $X.XXX our quarter. about earlier,

think what I that's So can expect. you

Operator

comes question of Sakwa Steve ISI. Evercore from with line the Next

Steve Sakwa

I down organization you just you've, Rockpoint, I kind moving all completed property assets, guess, guess, are you're noncore how the of of looking as really the office is that you at that now forward, one a what the sort Ma, cleanup best-in-class enterprise place? of control, company? about to essentially think a people as do how apartment stand-alone a out do this you to make your else are need the monetization but And of you organization about the of kind event in realizing thinking to

Mahbod Nia

it's of given the But in insignificant, as do there, this The That's you multifamily get strategic exiting and and phase giving we we to able to thought years, in us our unlevered transformation been office continue next seek I of allow we've would phase pivoting you. as lot And something class available not trapped an asset really to Harborside fundamentals initiatives X, and do describe to and that sold . There's in an not and is ahead whereby to in bit great more long-term I to and very class, in would have we [indiscernible] to is and a believe describe that much question optimization core value. an what really we've nonstrategic of the have number levers asset try a a little equity a What is enhancing us assets over. as thank the it. over where business. well. optimize X substantial the to office number is phase. a to that Steve, highlighted ourselves be to transformation billion building organically that's $X phase this has its as to last now of of to pure-play platform continue effectively us

with evaluating and is working those and A capital structure, part further of will it Board, number simplification on large at A some the could allocation. this corporate of touch prongs of we're that other time, different structure capital some areas. it that, involve to

today, us. generating is If you about within of the return idle either or equity significant amounts suboptimal that business think for there still is the capital a

driving capital and really couple line so accretive a given line size at has for the us. hence flow other looking and continue areas potential of bottom potentially the And down to reallocating we're a the are forward, to that more higher the business. going to of. the top use There

or or one very think and phase. whole, driving we you really continued value-add have opportunities where areas the two do the all have but there know, efficiencies, the value portfolio, a continue this we as On optimization which next there together potential platform could of of enhancing be are in potential young operational to

Steve Sakwa

steps? quick right you these place as Or the of just make maybe feel in you follow-up. need like add But a still have to like you Do of to feel kind people you sort all in I to organization? the do changes guess

Mahbod Nia

of long To absolutely got as a things towards way lean operational as We've but effective No, not. rebuilding the got very team, side you've a well. date, we've seen.

So optimization on we no, that team I'm very comfortable that phase. we've next with execute got the this can

Steve Sakwa

maybe about about Jersey you it's kind some -- high answer make rent conference you thinking And the speak of of then to all need any City kind control of there's in in is on the Or the maybe Can control this surrounding regulations? any part I just long-winded coming you that up to your and of sort the been very And and you of market that risk within just portfolio? communities. rules things sure sort the level, are imposed follow longer and there than of do rent portfolio? maybe of complicated call, Okay. kind articles know to about a are but how rent control being there some

Mahbod Nia

available necessary which the exemptions applicable the Were helps to -- that all and that taken we've a of those Look, properties and in that fortunate preserve be appropriate may let's in rent a that believe Sure. position steps we to assets. our most we've younger have ordinances, in portfolio. say, developed portfolio from vintage that control we the respect

And feel comfortable we're the in. so position with

Operator

the from Paolone of with comes Anthony line question JPMorgan. Next

Anthony Paolone

question I around guess is first noncore.

does where to things some you be the talk it there pursue you you be now what might that and might have even in sound Can other still bit X, might of. consider about getting Harborside right acceptable those Beyond liquidity a like maybe sales that's market? more rid just

Mahbod Nia

really rationalize that nonstrategic land do seek not generating return. business one. bank Yes, to question beyond the X we further idle which, is developed. Harborside just in really is the extent again Really potentially the is equity to the that obvious The a isn't

that's potential further comment. So well. was really what there capital But that of are as with pockets I referencing primarily

to use. some time. remaining If ventures reallocate over you To higher where and that a to capital use look joint it and we ventures, at may accretive a better the seek joint the of put more

Anthony Paolone

And numbers appreciate on in maybe a market. last just you give your core, the the growth done And the can just Like I the outsized. how are you then operationally. look few much just you And as in back Okay. sense over the what of can quarters, you've efforts on that's really might rent us mean or a change hunker strength just be just to the operations to if been made just big this. the part how market much trying there and down or of more was versus you understand how just you've price exist either there runway aggressive side? that maybe more

Mahbod Nia

the none. It's ongoing We've people, gone rebuilding I new it overall a and during period, great question. Look, operational is if towards new quality you Jersey look long think New do around X%. the assets we come processes, have to new we've do at rental the of was this an the I growth second that's way believe a effort. platform with technology, And that

the is there's now that of improving. property, of do how market. much make So and delivering to room it to how But still of whole is much you're seeing, what's the say the it's we people, that is on side an combination It's feel results some much to ever-evolving on go it initiative. operational difficult is how the

assets. and And team fortunate in highly capable focused favorable have great us the with a supply-demand the so that very we're those we we extracting And assets -- future. dynamics in from markets have foreseeable a is that value position great for put and

Anthony Paolone

one Okay. follow-up. And just

in I think are notices sending question maybe today? earlier, where it out with renewal but is you perhaps mixed Nick's

Mahbod Nia

up in level. months that maybe you think digit, couple will of for the the touch a assume I next should mid-single land above

Operator

Joshua Bank of Next the of from . with America. question Dennerlein comes line

Joshua Dennerlein

guess next you to over mentioned. might that benefit I want that wanted on perspective? to improve And focus maybe operating follow the kind months? from we main see you the platform XX initiatives Just what's that up what of our

Mahbod Nia

of some the and and way already go go seen revenue management. about come you've benefits about management way expense through Well, the the we we

taken driving the alluding there. take, the believe year-over-year. there's of do still our we line how to to an seek technology course -- was really things side price the margins steps us more is there those room of and in things, to plan and drive also centered we've that but some to or line. expense around they're seen to things utilizing differently, update what achieving was due goals we you've that continuing top are optimize will is what And to in that and our some But I really improvement that in go, you've and mitigate So seen top where further warranted in doing efficiently help I

Joshua Dennerlein

guess due you see pay And just Or coming plan please what's [ Okay. or in see? it's if just refi of I with debt it? down? just you And thinking then rate are what XXXX. I some kind a there's how maybe ] the refi, that about

Mahbod Nia

just lend Well, estate real debt still commercial two assets you've with ours. being challenging the on and high-quality There to appetite is seen we available liquidity the there's the announced real refinancings as such moment. markets at that estate that despite

And so very also next attractive for are the referring two properties high-quality, to that year, we assets those well-performing anticipate bids you're on. getting

appropriate proactive with that so options quarter, past And available you approach assume consistent us this those. to at to we'll look our refinance be time and at the should

in and or extent pay the to of anticipate that generative. through we to assets liquidity those the And are today, remaining contract now that. under We're down to potentially business now of choose that us liquidity that available To flow is cash coming assets a strength nonstrategic required closing also in somewhat we beyond itself the further position loans. having

to of pay choose we required to on those. as or gives something And so down extent do that a us source another well the to

Operator

Tom line of Next question with Catherwood the BTIG. comes from

William Catherwood

had million those, of million the all think some good that finish least $XX sales are at the morning, other you'll debt Amanda, you remaining that have remaining you refinance $XX roughly uses? under using of do to million reductions? earmarked at for still and everybody. or roughly you you remaining you Thanks, the that as you When of with have will $XXX-plus of cash. Maybe put go are Do for asset sales maturing. sources and mentioned Or some that starting the proceeds contract

Mahbod Nia

and I'll take okay, Amanda that's If that. in. can chime Tom, then

standpoint, from today, the a liquidity So also line. we have

binding under off there's coming nonstrategic the flow So be of there's said, liquidity, that's today. that. of now cash further about adding of could million and of surplus $XX the off flow and further assets sold cash operations, add to I that million $XX contract could operations potentially next to year coming that between assets also that

and accretive of that very could plenty could part. a capital. something coming I we'll a ultimately be and appropriate combination repayment. will are of sources be working determine the the in would best there being rates the And So Board determine available that's over highest the towards assume any where today, it be use that are work go things for with these one we'll think use of they rightly and be freed that months, could repayment up, debt -- that that's with but to capital Board to

William Catherwood

is run that think you're that you've period rebranding you rate? the you going year? through When And Or and that in Do it. costs run optimization still now period. of expense period, response during -- cycle question closer Mahbod, you've this the from phase. remaining transformation coming there some rebranding of gone to we're Steve's that that over in think mentioned to you to -- the we then, kind your through that that clean that moving severance line think Got to from this is transformation moving optimization G&A the

Mahbod Nia

year. to in savings to an next repayment to generally, settle to will that to take cost going cease obligations relation Rockpoint a little but you that will of to anticipated to how give about necessarily while the just result that the partnership example, so going exist talked had we and rebranding, to not with more It's regard we've in related

between second numbers those things, and through come just actually end work of takes next really through Some of into of half to the next such until our has time it then won't year back or seems factors and it probably year. also still an we And of which impact. outside now this at then point. have as but inflation, moderating to control be

look on would it lowest you down I down So run to you We've level is G&A. at as decade brought of metrics look a you the when right to various scale we're that it's only the looking guidance come manage a the difficult in which it since a gross is the what way say us appropriate median given there. most have is us, to peers lot. the assessing in the factor real rate to at a value, asset significant at if in us, which relative percentage But asset now G&A, terms to give at at the the and mid-cap is if base we actually look 'XXs, has really

there company control, And structure, have as that long where is but a you of outside give very reached allocation there go our some to a I And you will way, is stage that not inflation thing the to we been business gone mature capital so addressed. haven't rate it as purely more just right, The this of run factors cost and side phase, well. difficult that also reality through this is multifamily has mature potentially could a at we be other pushes stage. just as is the go, and think, combating are optimization say, pulls a

capital. a really having I necessarily size, But idle return $XXX for even that $XXX the So going dollars, be it appropriate that There company on and mentioned to joint is allocation meaningful, generating X still us. rents land X isn't only in even if the Harborside million rates. and the just you and side, that's and between million all ventures several hundred think are that million just And is an the capital of return. about land, over Harborside for revenue side as of generating much that's by predominantly our which isn't things driven a

the I it give so as can And think but do expense before of it's and is that well as difficult a a we things mature the capital other business going until driver to reaches then primary kind side be to allocation, state guidance. on

William Catherwood

that. one And appreciate I then Understood. me. for last

comes the that You've platform. ESG integrating company What's into and it obviously been and next at the to the forefront sustainability on front. when

obviously near-term You you But it to have have when a emissions either along portfolio. . anything any energy or modern CapEx else or that plans front? do reducing carbon comes consumption

Mahbod Nia

Yes. Everything I would say to date, the an approach remains initiative. ever-evolving the same, and it's

And to but down done we comes invested so everything return a we've on and different we of it based do evaluate everything continue number ultimately, capital. factors, to on

either to an invested capital payoff have that peers. be, Or, sense whereby seeking return to intangible on of we differentiates years whether there's for that or savings would when based result at payoff invested look to systems. to but heating an be a it and lesser rates the from degree, It and alternatives benefit so periods. comes there's us energy we know, it direct brand a business makes evaluate whatever on it return may X on retention really or traditional we'll a have and real example, the to that And that capital, alternative in a may it

decisions we dollar we or largely sufficient of that's we and a on on approach So based evaluate invested on the any capital CapEx that approach make spend. that not and spend, accordingly. presents the other whether is capital similar that team every CapEx a we actually return to return

Operator

Green Next from question Street. line Lu comes the Robin . with of

Unknown Analyst

local looking hearing further? adherence I policymakers on up on rules cranking question control just Are municipalities get on you assessing rules. Are you to timing to rent want are the the and rent down perhaps their maybe back at control. landlords

Mahbod Nia

for is is steps appropriate Difficult believe preserve necessary and across on we rent I comment we've portfolio. me our earlier, the ordinances that exemptions On. The available state necessary can from taken steps control only thing the I to to mentioned that. what which

within very townships New and so that's a property-specific jurisdiction-specific And very Jersey. thing, it's a --

goes done what on we've to where comment it's our only don't can portfolio. hard I I across broadly. comment that for know So on really me more

Unknown Analyst

do I you operating portfolio? to color then redemption the the drove when in guess preferred What on interest And pretty a healthy your at October. time LP Okay. still providing mind are across fundamentals redeem

Mahbod Nia

to that, their me comment Robin. hard on decision. Again, It's to

them. ask to the They've to chose need this You'd had it redeem to and ability at time. redeem

be for related hard the side, what but sort a sure. it's of, capital comment It requirement me some So I'm to for from I would guess, that to. their not

Operator

This concludes turn today's back Mahbod to question-and-answer I closing session. the to for would Nia like over comments. floor

Mahbod Nia

again due Thank We're very for for you, to forward strong and joining quarter today. everyone, look pleased to updating residential various report us another you in course.

Operator

concludes Thank you. This today's teleconference.

You may Thank lines for disconnect your at your you participation. this time.

Veris Residential (VRE) 26 Oct 232023 Q3 Earnings call transcript