Veris Residential, Inc. Q1 FY2024 earnings call

• Completed residential strategic transformation into a pure-play multifamily REIT and outlined a 3-pronged value creation approach.
• Secured a new $500 million credit facility and term loan, strengthening balance sheet and eliminating refinancing risk through 2025.
• Unlocked idle equity by selling properties like Harborside 5, 107 Morgan Street, and land sites, with net proceeds to be used for debt repayment.
• Northeast had 2% rental growth, Jersey City Waterfront market competitive with Class A rents discounted to Manhattan/Brooklyn.
• Same-store portfolio occupancy 94.1% as of March 31, with 4.6% net blended rental growth driven by renewals and new leases.
• Ranked #1 REIT in U.S. for online reputation by J Turner Research in March.
• Improved ISS corporate rating to subprime status and received ESG awards from WELL Building Institute.

The same-store portfolio, including Haus25 and The James, was 94.1% occupied as of March 31. The quarter saw a 4.6% net blended rental growth rate, driven by 7.2% growth in renewals and 2% growth in new leases. The average rent-to-income ratio was 12% in the first quarter. Core FFO per share was $0.14 for the first quarter, up $0.02 from the fourth quarter, driven by same-store NOI growth of 14.2% year-over-year.

• Increased core FFO guidance range to $0.50 to $0.54 per share, reflecting new credit facilities and debt repayment from sales proceeds.
• Expect same-store NOI growth to moderate from 2022 highs, with potential negative growth in Q2 due to tax appeals and noncontrollable expenses in H2.
• Intend to use facilities and proceeds from asset sales to refinance $528 million of mortgage debt, reducing outstanding debt by ~$170 million by year-end.

• Macro-economic uncertainty impacting rental growth and market conditions.
• Volatile credit markets affecting debt refinancing and capital allocation.
• Seasonality and lease rollover challenges impacting occupancy and rental growth.

Q: Steve Sakwa asked about top line growth and guidance.

A: Mahbod noted lap of tough comps, macro uncertainty, but spring leasing season improving, guidance reflective of full-year outlook.

Q: Eric Wolfe asked about guidance upside from new facilities.

A: Mahbod explained derisking debt maturity profile, asset sales contributing to ~$0.01 upside.

Q: Joshua Dennerlein asked about earnings benefit from initiatives.

A: Mahbod discussed AI leasing assistant saving time, holistic approach to revenue max, expense mitigate, capital invest.

Q: William Catherwood asked about capital for asset upgrades.

A: Amanda said sources include cash on hand, term loan, revolver, and business generating free cash flow.

Q: Michael Lewis asked about debt repayment and maturities.

A: Amanda explained order of repaying with cash, term loan, revolver, and details on specific maturities like SoHo loan and 145 Pat Street