Mahbod Nia has had a busy three years as CEO at Veris Residential, Inc. (NYSE: VRE). On his first day on the job back in March 2021, he announced that the company would be making a strategic shift to a pure-play multifamily REIT. What followed was a rapid transformation of the former Mack Cali Realty Corp. from a portfolio heavily concentrated in office to what is now a 100% multifamily REIT.
Despite challenges within the transaction market that included COVID-19 shutdowns, uncertainty around the future of office, and rapidly rising interest rates, Veris has successfully sold $2.5 billion of its non-strategic assets, primarily office, as well as three hotels and 14 land parcels, encompassing more than 50 total sales since the first quarter of 2021.
At the same time, the REIT grew its multifamily portfolio by nearly 2,000 units through the development and stabilization of four new properties and one acquisition. The Veris portfolio now consists of 22 Class A communities located in the northeast that total more than 7,622 units.
In addition to transforming its portfolio, Veris has been busy rebranding the company and rebuilding its operating platform, which involved putting new people, processes, and technology in place. “That has allowed us to really extract extremely high performance from our assets,” Nia says. Based on year-end 2023 financials, the firm achieved 2023 NOI growth of 17.6%, with annual rent growth of 11.0% and occupancies at 94.4% as of the fourth quarter.
Veris marked a milestone in exiting its office assets in January with the announcement that its last office asset, the 34-story Harborside 5 in Jersey City, was under binding contract to sell for $85 million. “It was not an easy process because of the nature of what unfolded in the office market. But they’ve now completed it, and what they have is a high-quality apartment portfolio at this point that’s performing quite well,” says Anthony Paolone, co-head of U.S. real estate stock research at J.P. Morgan.
The key question now is where does the firm go from here? “We think there’s more to do,” Nia says. “I wouldn’t say we are in a mature, optimized state at this point. A company that’s just completed a transformation like ours still has potential for continued outperformance through operational enhancements, balance sheet optimization and capital allocation.”
