1. Veris Residential sold Harborside land for $75 million, reducing debt. 2. Net Debt-to-EBITDA improved to 9.0x, a significant reduction since 2021. 3. The sale is expected to add $0.04 per share to Core FFO. 4. Year-to-date asset sales totaled $542 million, surpassing initial targets. 5. Company aims for debt reduction below 8.0x by year-end 2026.
FAQ
Why Bullish?
The debt reduction and increased Core FFO expectation generally support stock price growth. Historical trends show that debt reduction positively impacts REIT valuations, as seen in companies like AvalonBay Communities.
How important is it?
Strategic maneuvers like asset sales and deleveraging are crucial for a REIT's market position. The overall market's focus on balance sheet strength amplifies the importance of this news.
Why Long Term?
The changes affect long-term financial health, enhancing stability and shareholder value. Sustained improvements could foster investor confidence over time.
Veris Residential (NYSE: VRE) Completes $75 Million Sale of Harborside 8/9 Land Parcel
Veris Residential, Inc. (NYSE: VRE), a leading multifamily real estate investment trust (REIT) focused on the Northeast, has finalized the sale of its 4.2-acre Harborside 8/9 land parcel in Jersey City, New Jersey, for $75 million. This strategic move is expected to significantly enhance the company's financial position and reduce its debt levels.
Financial Implications of the Sale
Following this transaction, net proceeds are anticipated to be approximately $69 million. Veris Residential plans to utilize these funds to decrease its debt, which will result in a poised improvement of its Net Debt-to-EBITDA (Normalized) ratio from 10.0x in the third quarter to around 9.0x at year-end 2024. This marks a remarkable reduction of 53% in the company's debt metrics since 2021.
- Anticipated earnings accretion of approximately $0.04 per share of Core FFO on a run-rate basis.
- Remaining land bank is valued at approximately $35 million.
Strategic Comments from Leadership
Mahbod Nia, Chief Executive Officer of Veris Residential, remarked, "The sale of the Harborside 8/9 land parcel represents a significant milestone in the continued execution of our strategic plan to monetize non-strategic assets and further strengthen our balance sheet." Nia emphasized the importance of this transaction in achieving the company’s financial targets ahead of schedule, highlighting that Veris Residential has completed non-strategic asset sales totaling $542 million year-to-date, exceeding its original target of $300 million to $500 million.
Looking ahead, the company has raised its sales target to $650 million and is aiming to reduce its debt further to below 8.0x by year-end 2026.
Details of the Harborside Parcel
The Harborside 8/9 land parcel, located at 3 Second Street and 242 Hudson Street, is currently a large surface parking lot zoned for mixed-use development. Notably, Harborside 8 is approved for a 68-story tower featuring 680 residential units, while Harborside 9 is set for a 57-story tower that will include 579 units, incorporating a 15% affordable housing component.
Transaction Overview
Cushman & Wakefield represented Veris Residential in its sale to Panepinto Properties, effectively facilitating the transaction that aligns with the company’s long-term strategy. The Harborside development highlights the ongoing evolution of multifamily housing tailored to meet burgeoning urban demand.
About Veris Residential, Inc.
Veris Residential, Inc. is a forward-thinking REIT that focuses on owning, operating, acquiring, and developing premier Class A multifamily properties in the Northeast. With an emphasis on technology and an integrated operating platform, the company is committed to delivering a modern living experience while positively impacting the communities it serves. The management team, led by a proficient Board of Directors, is grounded in strong corporate governance and an inclusive culture.