Veris Residential, Inc. Q1 FY2025 earnings call

• Asset sales: Closed $45M of non-strategic asset sales and have $34M in binding land sale contracts, working towards selling $300 to $500M of non-strategic assets over 12-24 months.
• Joint venture consolidation: Acquired partner's 15% stake in Jersey City Urby for $38M, rebranded to Sable, expecting operational synergies. Realized $1M+ in run-rate savings from internalizing management.
• Operational results: Portfolio had 3.2% same-store NOI growth, 2.4% blended net rental growth. Excluding Liberty Towers, occupancy was 95.3%. Renovations at Liberty Towers started, with 40 units renovated and leased with over 20% gross rental uplift.
• Technology enhancements: Introduced a reimagined resident mobile app with improved functionalities for resident engagement and property management.

Veris Residential reported strong operational and financial results for the first quarter of 2025. They closed on $45 million of non-strategic asset sales and entered binding contracts for an additional $34 million of land sales. They completed the consolidation of their partner's 15% stake in the Jersey City Urby for $38 million, rebranding it to Sable. Same-store NOI grew by 3.2%, blended net rental growth was 2.4%. Excluding Liberty Towers, occupancy was 95.3% as of March 31st, up from 94.1% the prior year. Rental growth showed a gradual increase, with blended net rental growth rate reaching 4.8% through April 21st.

• Core FFO guidance reaffirmed at $0.61 to $0.63 per share, maintaining guidance due to market uncertainty from policy changes. Same-store NOI guidance reaffirmed. Expect third quarter same-store NOI to be weaker due to lapsing favorable tax and insurance adjustments. G&A expected to be flat with U-shaped expense pattern. Interest expense changes expected via debt repayments from sales proceeds.

• Market volatility: Elevated market volatility and economic uncertainty due to recent tariffs and trade policy changes, potential for weakened economic outlook, recession risk, and increased inflationary pressures. Impact on construction projects with potential cost increases and delays.

Q: Steve Sakwa asked about blended spread progression in January, February, March, and April, and renewal notice timing.

A: Anna Malhari responded that new leases turned positive in February, blended spread exceeded 4% in March and was 4.8% through April 21st. Renewal notices sent in mid-single digits through end of second quarter.

Q: Jana Galan asked about strategic focus and guidance concerns.

A: Mahbod Nia stated strategic focus is selling $300 to $500M of non-strategic assets and recycling capital. Guidance held due to macro uncertainty despite accretive transactions. Amanda Lombard added on same-store NOI guidance and lap of favorable adjustments in third quarter.

Q: Eric Wolfe asked about Urby acquisition process and cap rate.

A: Mahbod Nia discussed options considered with joint venture partner, cap rate including synergies. Amanda Lombard mentioned straight-line rent adjustments in fourth quarter affected Urby NOI.

Q: Tom Catherwood asked about Metropolitan at Forty Park valuation and Wall land use.

A: Mahbod Nia discussed package deal valuation, Wall land intended for multifamily use but details on units and development potential to be followed up.

Q: John Pawlowski asked about Liberty Tower occupancy and properties without full operating control.

A: Mahbod Nia said Liberty Tower occupancy improvement expected, properties without full control are immaterial and savings from internalizing management discussed.