Veris Residential, Inc. Q3 FY2024 earnings call

• Strong NOI and core FFO growth: 17% increase in core FFO in the first nine months of 2024. Core FFO per share was $0.17 in Q3 2024 vs $0.12 in Q3 2023, up 42%.
• Refinancing: Refinanced $308 million of mortgages, no consolidated debt maturities until 2026.
• Regional performance: Jersey City and Port Imperial assets had strong rental growth; New York area had highest year-over-year asking rent growth at 5.4%.
• Operational improvements: Operating margin improved to 67%, controllable expenses reduced to 17.6% of revenue. AI leasing assistant Quint effective in capturing demand and reducing payroll costs.
• Renovation: Commenced renovation of Liberty Towers, expecting mid- to high teens return on invested capital.
• Awards: Recognized with 5-star ESG rating and MidCap Diversity Impact Award.

The company's multifamily portfolio maintained 95.1% occupancy with 4.6% blended net rental growth for the quarter and 4.8% for the first nine months of 2024. Jersey City portfolio had blended net rental growth of 6.7%, accelerating from 5.7% in the second quarter, while Port Imperial portfolio had 6.3% growth. Average rent per home across the portfolio reached almost $4,000. Operating margin stood at 67%, up from 57% in 2021. AI-based leasing assistant Quint contributed to 2% payroll savings and enhanced resident experience. Revenue contribution is primarily from the multifamily portfolio.

• Raised core FFO guidance range by approximately 7% to $0.59 to $0.60 per share.
• Raised same-store NOI guidance ranges from 3% to 5% to 5.4% to 6.2%, reflecting favorable resolution of noncontrollable expenses.
• Core FFO for Q4 expected to be lower than Q3 due to seasonality and overhead expenses; Q3 benefited from $0.02 from non-controllable expenses resolution and $0.02 from interest expense factors.

Forward-looking statements with no assurance of anticipated results. Refer to the Company's press release and annual and quarterly reports filed with the SEC for risk factors impacting the company. No specific operational risks discussed in detail during the call.

Q: Steve Sakwa asks about rent fatigue in the Jersey portfolio.

A: Mahbod Nia says the New York area is still strong with extremely limited near-term supply providing tailwinds to the portfolio.

Q: Eric Wolfe asks about the large sequential jump in multifamily NOI for NAV purposes.

A: Amanda Lombard says part of it is onetime due to the resolution of non-controllable expenses on insurance and taxes, with about $1.3 million of the $2 million change related to prior periods.

Q: Thomas Catherwood asks about idle equity in land and the shop sale at 40 Park.

A: Amanda Lombard explains the impairment is related to a land asset not in a joint venture; Mahbod Nia says the company is a minority partner in the joint venture for the shop sale and was supportive of the transaction.

Q: Michael Lewis asks about the core FFO bridge from Q3 to Q4 and broker fees in NY.

A: Amanda Lombard breaks down the FFO bridge factors; Mahbod Nia says broker fees in NY are not a major factor moving rents over existing trends.