VRE - Earnings call transcript Q3 2024 | Veris Residential, Inc.

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Operator

Good morning, and welcome to Veris Residential Incorporated Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to the General Counsel, Taryn Fielder. Please go ahead, ma'am.

Taryn Fielder

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

based estimates that quarterly assurance anticipated reports annual the results We these Although company's cannot the achieved. the would reflected be call filed factors you that to impact believe company. like assumptions, we the with statements we to and are refer Residential's on will SEC press I hand Amanda reasonable give Lombard, Veris who and for in risk Nia, Mahbod? to Chief the Officer, Financial is over by With Mahbod the Executive Officer. that, Chief joined release

Mahbod Nia

Thank Taryn, you, good morning, and everyone.

strong by and a growth, months NOI and pleased year. during are resulting rent core We core FFO the noncontrollable first expenses resolution the of driven of continued our market increase in in growth, X to report XX% quarter the better-than-anticipated FFO of another

mortgages build upon aligned $XXX corporate secured with our delivered steady utilizing plan. number XXXX. initiatives strategic continue this the in of quarter, progress X-pronged across We value making of an half the We our million creation facility no year, reducing to and during property first a debt the results year, the further now debt until maturities additional earlier level have of consolidated the refinanced remaining strong

$X.XX market third growth share growth the resulted XXXX, slowdown, uplift This the X We continue $X.XX of FFO of first NOI wider the net compared quarter operational core of as per to for of months realizing a in strong X.X% despite to third for X.X% in and achieve of quarter an results XX%. blended of rental XXXX.

A the further discuss of highly Class As last detail. confident X This the our raised Amanda XXXX, newer in months will is in performance which remain guidance, years, in amenitized, vintage our well-located age portfolio. reflected few we of average we toward look

X.X% rental leases Looking more for X.X%. retention our remained average new above Portfolio-wide, X.X% for by net blended the to performance, XX.X% grew closely months first the we quarter the XXXX. X.X% XX% of occupancy portfolio at maintained at growth stable our operational growth renewal and X.X%, with realized national X increasing as or of

wider recorded York national New highest XX% York growth Waterfront assets. factors, at demand proposition come supply, our the City strong our continued our assets. apartments, asking a coupled offer of which amenities. compelling area, Imperial September's and to of in advantage extremely has of rents year-over-year which value These limited with taking larger Port have City the and relative our performance for range New approximately from of new Jersey Historically, in units generally driven move-ins X.X%, have drive

accelerating second of rental of Jersey X.X%, blended portfolio growth quarter, Our recorded recorded net our X.X% City the Port while strong Imperial X.X%. growth portfolio in from equally

growth remains strong, portfolio per reached $X,XXX. home rental across As rent almost the average our

up and $XXX,XXX stands our revenue optimization our reduced including our changes operating per margin, enhancements improvement Our a a below across XX% beginning per continued average quarter expense organizational at of ongoing pursuit further ratio controllable the the a in testament and to person. well same from move-ins controllable our excellence expenses technologies, we've $XXX,XXX, peers. These stands of average at period, of XX%, XX%, processes. adoption from as In an of initiatives, from XX%, new reflected XX% of to or the nearly XXXX. improvements operational XX.X% the public structure the by remain ratio in percentage the underpinned our portfolio's home to income are of XXXX with our affordability which on We as focused XX% increase fourth at now operational of

to now continues assisting contributing of in highly Quinn, of leads inquiries. resident a In and expenses be to prospects demand residents staff year-to-date of and payroll a maintenance equating our converting X% Our effectively renewals basis, a with prospects, in to AI-based XX% the compared capturing Quinn to Quinn wide effective almost leasing assistant, range with day-to-day top requests, on to engaging Along with and saving funnel, over at September leasing interacts sent messages residents other alone, hours. XX,XXX XXXX. X,XXX

in resident September, addition well throughout of work year, look and peers. been experience continue thank XX public Veris' our the on to reputational company, an in like in reflected accretive initiatives our line pleased their have in We're portfolio, our our positive of I'd renovation dedication portfolio. enhancing apartment of the score, exceeding In incredibly on possible. to Towers, it we had margin, year, Liberty for proud improving floor achievement, and for these further to ranking sector-leading across our we three-pronged completed to We're standing Turner our approach investments ARA In value that have increased this extensive to which building renovations as ahead share XXX-unit City. hard a has making with impact amenity Earlier recycle our teams commenced J capital Research the in schedule. own the Jersey creation, steadily to within including this opportunities a overall

expect and to modern During on brand alone value we we This of invested and refreshed significantly high context, for Towers share from this put anticipated project this accretion a range. upon return to our X years, of the capital. take mid- completion, additional into a high FFO while enhancing X unit began an Liberty approximately the asset Upon To XX% renovations. expected would represent contribute $X.XX corridor to to generate end FFO is the core of unveiled core asset. teens guidance annual to also quarter, the of anticipated the XXXX per completion

score with and the earning ESG X-star third in has our rating that by I'm listed pleased Finally, consecutive residential to efforts, U.S. best Veris our share ESG score recognized again worldwide. the listed highest third been for once residential GRESB the

we've top Americas. a performers the in a leader designated the recognition regional as highlighting such, As listed in the been category, sector residential

on previously As included also a I'm performance and NAREIT Diversity We're provisions the facilities, discuss Amanda, X MidCap Award to to to our our our saving. recognized social going update in met with basis shared, the unlocking for have credit policies. provide by hand that, Impact sustainability proud point been over who will KPI it an margin guidance. With financial responsibility we've

Amanda Lombard

Mahbod. Thank you,

net For FFO $X.XX per $X.XX the for period and the same for per $X.XX was XXXX, year. the $X.XX of common loss to versus the last third quarter prior share available to third Core $X.XX the quarter was of of XXXX. diluted share net quarter a for loss compared shareholders third fully quarter in

ended Same-store was we quarter by for of reported months X interest NOI year-to-date. strong For X.X% growth, lower revenue lower XX, core growth the and the XX%, growth and FFO rental expense. property September driven X.X% expenses

in For XX up revenues XXXX. half growth as growth million the as stabilized market driven approximately outsized the the the by compared X.X%, revenues by and of quarter rent of first primarily year first Year-to-date, X% market of quarter, were same-store rent year-over-year year, House in were revenue up growth. from assets to last the driven and other $X.X

the X.X% and total side, were for expenses year. X.X% up quarter the for declined expense the On

to both renewed real relative insurance expectations. estate quarter and property finalized the expense which third Jersey This of is compared City as variability taxes, $X as in approximately we down driving Insurance favorably our to last million came significant quarter. in quarter is

run around first only of related $XXX,XXX of that third to the rate. the year, adjustments leaving bridging new the However, insurance amount, half reflects quarter and approximately the $XXX,XXX to to

addition, sequential this received reduction a saw of In basis $XXX,XXX final in relates $XXX,XXX, the we a City, tax XXXX. rate Similarly, from prior in reduction taxes on of a which to which bills for periods. quarter, Jersey resulted we X% approximately run

G&A Turning severance stock to trends, that relatively in Consistent at for and the overhead million. be expense After $X.X core with noncash quarter. compensation seasonal expect flat higher was we overhead. fourth adjustments will payments,

I'd X your draw to attention our changes like reporting. in addition, to In

joint management while the services income Management expenses real changed X management have that joint expenses. represent fees there We consolidated We of manage, or property ventures the earn the represent management fees this to and we portfolio. estate revenues. peers, did we to with manage costs X is nomenclature no real estate our our services to ventures from and costs to in we change and incur expenses we that all our of align property allocate income those how

Now on to our balance sheet.

maturity of debt XX, rate a all of a hedged effective X.X fixed As average of weighted and years weighted and/or interest X%. nearly of our average with was September

for EBITDA months to trailing debt the net XX.Xx. is XX Our

revolver. the the During we draw million with Towers Place and of a million on $XXX Signature quarter, repaid Liberty mortgages cash $XXX hand, on on for and loan term draws the

with We interest term of X.X%. cap million million on including have with hand. the $XXX revolver hedged of liquidity all $XX of and with a strike $XXX loan ended cash We the an million, of of the quarter rate

As as resolution revolver, approximately Mahbod a our hedging interest $X.XX same-store outperformance end in expense was $X.XX to unhedged. per and core of at FFO of or of positive noncontrollable result guidance favorable a are reflecting by as $X.XX NOI $X.XX mentioned, share, of result which had to X% range improvement the raising we of the we the expenses, assumed previously high $X.XX multifamily $X.XX of

results think from the it's QX QX to bridge I Looking the to end year, of our helpful guidance. to our

in in a the from resolution for of lower expenses Towers interest overhead in seasonality $X.XX loan expenses of debt combination The full core than expense repayment This, Liberty result coupon balance, X.X% fourth the being the quarter the third benefited the noncontrollable and outstanding combined resulting quarter of legacy and quarter. another of from typical FFO million favorable third. the $X.XX a debt a lower will second quarter of from $XXX the and from remaining with NOI in mortgage,

by growth. and the from our estate to points low also end to to by X% our driven growth in ranges to continued XX our and revenue the on resolution X% guidance of NOI to guidance same-store revenue We NOI tightening to are basis the up insurance raising X%. X.X% range reflecting same-store range The real taxes increase bring rental X.X% NOI same-store X.X% is

the in significantly low of from points and basis These changes points same-store at have expense at to end our the X% expectations improved XXX basis We also an XXX X.X% to end. X.X% result increase to NOI high of X.X%.

As growth and proposition. for that, With to near-term operator, platform high entry. combined peers strength of represents line the best-in-class limited with compelling in open integrated our please for our supply A and barriers another confident value Class commanding established quarter, the we markets positioned multifamily remain highest and the we continued that company average is in properties offers rent the Northeast, success. located close Veris the portfolio, on newest operating rate vertically with extremely quality well among The highest an questions. up

Operator

Our first Instructions] Sakwa from [Operator Steve Evercore. of question comes

Steve Sakwa

Mahbod, of just with to wanted off I I guess start kind your thoughts.

seeing softness sort and touched of prepared it off York the some your the seeing with we're just or city the fatigue rent maybe exposure. the what kind inability operators portfolio. on maybe parts in really just some to in multifamily remarks, across of I'm evidence You kind that of Jersey certain of of of either of just playing rents And curious you're push New

Mahbod Nia

the you for question. Steve, thank

markets mentioned and new, new product near-term my remarks, the And to river being then portfolio. extremely XX-plus area still -- from benefiting in percent discount with is to supply properties in the amenitized, quarter I any, was an strong we're strong our limited, As Manhattan. in at very growth also generally strongest the providing New actually benefiting very in tailwinds prepared our York exhibited a across the if highly from during really larger

that. the optimistic we're and and the pleased the some expect would you'll with We're Obviously, whole, positive. entering say very We're performance seasonally QX. confident very we're very on seasonal immune performance leasing not from in season, I a slowdown. going So about slower into so QX. But

Steve Sakwa

return, mentioned for you I dollar provide project? I project? about budget it or mean teens mid- the you Liberty what Maybe did I Secondly, targeted that high talked recollected, that missed spend have kind total capital overall, you to know Towers. overall I is on but ever guess, it of but don't an like

Mahbod Nia

over It's around the renovation programs, is but $XX million Steve. maybe what period, million a on to X-year spend touch X, we're that, around $XX these above looking

Steve Sakwa

for of renovations. lastly, of maybe to opportunities Great. And look then trying talked just you outside sort the about investment

fewer savings that JVs. the curious, Just of get you sort some from don't What having assets JV by maybe are maybe streamline just up is try I more consolidated, know the an how more and structures synergies as portfolio ownership expectations to that any more clean or perspective? going? if and And creates of process your

Mahbod Nia

at X any a in the within we're that's looking our Look, opportunities X.X, wide range and portfolio Yes. externally. approach moment the years, time consistent been of at with over really and last

Liberty there other and got so that, relatively opportunities. And the new bear any Towers to of are young, like product And investment portfolio. got other you've we've treat in is mind, we a it to a extent that very

so the aren't plan, effect some other then us shareholders. be or update it's asset. investment absolutely, those, on. And evaluate Nothing them ventures, extent to working oldest in the But regards decision, our With opportunities. identify there on to but our capital we're allocation would there ways. not that too we've we within ultimately opportunities like in to simplification some for simplification it's a certainly risk? That's profile, joint many It's the return many And for that said other the to the that we always benefit any portfolio. investment past, the good to possible that And what's today. execute it straightforward something what's is further there may

Operator

next Eric Citi. Our of question comes from Wolfe

Eric Wolfe

In for due is guess NAV to It expenses. the your you which a NOI multifamily large jump, supp, sequential saw I purposes. your lower give

accrued more down run curious to was whether or rate? next trying whether it true refunds anything like from nature would is in just quarter? that onetime I Or that tax a recurring in go I'm kind is understand effectively So of true-ups just expenses.

Amanda Lombard

Eric, of due in to that nature. so a is part onetime

And to million and in have we office on the the $X change $X.X prior of is So remarks, that taxes. to -- as have and the insurance you periods. in prepared of a about correctly earlier the insurance is as my non-controllables bit as identified, our related said I NOI the impact due little on resolution million of

basis, $XXX,XXX So reduction. run about a really on rate

Eric Wolfe

kind and like reduction that's then recurring $XXX,XXX just a to there of number. accurate? take a So we to Is take that could type in that number just get

Amanda Lombard

million and I think $X.X at on it million you'd want figure. number to a quarterly looking if that $X.X annualize you're to annualized add an then

Eric Wolfe

I change Or then All coverage just lower as renewal, insurance really anything guess, right. self-insurance And did like anything pricing. increased or the or that? of was just far as in it terms you

Amanda Lombard

just driven improved pricing Yes, it's by That's overall. really it.

Mahbod Nia

which say, a had much, We've a to looking -- of is significant very But look, from also that I XX% this XX% out this year-to-date. when you're we've at it couple I'd quarter, relevant now our years of think increases. and point taken margin, very margin. now is XX% I'd respectable

So have up it's the really with basis margin insurance get right the there XXX XXX, points on that's concentration our extent we to -- side. pack. on still side, the in and some But alone penalized worth just of given insurance City, we Jersey

but seeing couple seen down So But regions, the not this increases and we're happy year. all last scale seeing also you are to slightly see see industry we've that come the across of over the of it years. that across really not you're that

Operator

BTIG. of Tom from comes question Catherwood next The

William Catherwood

on for tools Amanda, do Maybe balance Kind this the earlier you year that the Mahbod have of kind out table? for phase sheet, next now the plan and is what overhaul? or the that you laid your on you've what of strategy other of options executed

Mahbod Nia

sheet capital we over -- a of Well, and we're manage time company available. and able have the on to financing approach to this its when adopting to our really for new the we flexibility in balance optionality be leaving table debt, as the lot

and selling having And we way. we're portfolio positive of so the a The of office in saw other now where the that is as erode, multifamily. highly cash we're obviously other you'd the come of meaningful high-yielding levered in expect earnings into transitioning We've come a you which lot growing. office side a transformation end position flow now high-yielding out were and out

And cash so there's flow.

similar be We able And so equity not that now the to as but a be still be can tied in equity path idle that of way. idle expense that ventures along pay identifying cash as have to of guarantees, be and extent equity Steve But and without with it of time, to to able to cleaned that tied discussion still that. that be capital then no a gives is we've debt, the And made and to it's pocket there's earlier, up interest costs by up to that, hundred recycling it's we when able then proceeds another the this and highest balance the that time, to million be have use the got, dollars use to determined revolver those decision our To construct sitting have an of equity. flexibility save up up us of the flexibility over have with capital. use be insignificant about extent sheet gives we'll we debt, allocation may ability to we've amount associated where that to joint mentioned down strengthening ourselves set continue that that if -- released, will best in land. that there's But with pay the of if but the repayment the continue significant over several some a and with us have Board. up freed down that's discussion

William Catherwood

Maybe to impairment this period impairment The that equity rules that in the took the following stringent land. don't asset necessarily tie near your hold term? quarter, a JV more in and on Or to are an a sell you a on that for hold period? comment idle asset it is change you're was change up in looking where

Amanda Lombard

Amanda. Tom, is this

the on it's not information that we a And have value a quarter say took venture. on joint I market negotiations asset. would related clarification asset. actually land due from So to that impairment we to And is that it's this and

William Catherwood

the sorry, last I'm one? what was

Amanda Lombard

venture. joint a in not It's

William Catherwood

And of XX Got -- only sale for The shops it. did in October, happened that it, then lead me. asset. that you the one last of had Park XX% push? Amanda. know I was you that Was Appreciate that at -- that

So your came little partner? that a bit was how led by us on that more sale Can reverse that to provide inquiry? was Or you a color be?

Mahbod Nia

you correctly As we're Tom, in say, venture. joint partner that a minority

So I transaction. that we supportive led we of the but were charge, wouldn't say

Operator

from Our Michael Securities. next comes question Truist Lewis,

Michael Lewis

XQ question of FFO to from first XQ. core bridge goes My back the to

kind math $X.XX like it here, or about in guidance Just looks the implies doing XQ. of your $X.XX

$X.XX from understand favorable in I $X.XX. -- period or the understand tax $X.XX XQ. I down So adjustments, prior

clear would think interest you me, us benefit would not the You XQ get again? expense Could just give much, that isn't right? mentioned I to overhead. as to if The more. kind XQ pieces from XQ the to of

Amanda Lombard

sure. that. I through Michael, take can you

of $X.XX $X.XX a the item. was core there, It's QX expense. from So FFO. resolution. about From interest That's non-controllables onetime

World So interest QX benefiting we Towers -- have the at we're low mortgage end Old from in in repaid expense and X.X% versus term coupon having May. rates our a debt loan at. because sits on of revolver And the and the where is June outstanding at Liberty also new

so about expense, million interest was $X.X $X.XX. of adds that around that And

So see in to $X.XX. And it go but to the something our slightly We is, fourth get our where and the both level in expenses, where our to also those overhead there, from costs typical. really there, quarter. comes up you're operating corporate that's guidance down then not seasonality down to

Michael Lewis

that saw may will reversing pay Okay. who seen the the New close renter this, York That fees. to lives don't apartment second And and you've I got if I makes I in anybody I council broker has knows that. then it. that rented saw be question, city but know sense. my

that have in New thoughts to, proposition or up fee rents and that if impact any know it, you've the guess don't your if Now whether in positive this would kind be seen my in or happens, I eat relative of first go pays York could New broker who York just up. of value again, the any that negative change around have portfolio? that

Mahbod Nia

performing several in which, York, that factors factor, be Yes. still New driving other rents extremely we -- there think Look, said, are I as but one is we well. would

a that so they single for And we in rents to meaningfully into York that to what over wouldn't and believe that has spillover the are. causing say above markets. potential trends isolated correlation But factor, some in rents that's I the New that the move one way as are rise there and our is already means

Operator

question-and-answer and remarks. I gentlemen, session. now concludes to Mahbod the our Ladies over will Nia, closing hand CEO, that for

Mahbod Nia

able strong everyone, Halloween. very pleased joining the us. you, like another and results I'd our look And that to for like for teams and this, again to We're forward quarter. next hard all commitment be you post updating us to allow report to we thank Thank Happy work quarter. to

Operator

and gentlemen, that Ladies now sir. concludes you you Thank you, lines. may today's attending, Thank your for event. disconnect and

Veris Residential (VRE) 31 Oct 242024 Q3 Earnings call transcript