Veris Residential’s Earnings Call: A Balanced Outlook for 2025

Veris Residential, Inc. ((VRE)) has held its Q1 earnings call. Read on for the main highlights of the call.

Veris Residential, Inc. recently held its earnings call, revealing a balanced outlook for the company. The call highlighted strong operational performance and strategic progress, particularly in asset sales and consolidation efforts. However, challenges such as market volatility, economic uncertainty, and specific property-level issues like Liberty Towers’ occupancy were also noted. While financial metrics showed improvement, the economic conditions pose potential risks to the company’s future performance.

Positive Start to 2025

Veris Residential reported a robust beginning to 2025, showcasing progress on corporate plans alongside solid operational and financial results. The company completed $45 million in non-strategic asset sales and has contracts for an additional $34 million in land sales, indicating a strong execution of its strategic objectives.

Consolidation of Jersey City Urby

The company completed the consolidation of a partner’s 15% stake in Jersey City Urby for $38 million, rebranding it as Sable. This transaction is accretive to earnings and is expected to generate operational synergies, enhancing the company’s financial performance.

Jersey City Market Outperformance

Veris Residential’s assets in Jersey City demonstrated strong performance, with a 4.2% new lease rental growth rate, surpassing the broader market in the Jersey City Waterfront. This indicates a competitive edge in the local market.

Increased Blended Net Rental Growth

The company reported an increased blended net rental growth rate of 4.8% in April, reflecting positive leasing trends and strong demand for its properties.

Technological Enhancements

Veris Residential introduced a new resident mobile app, which has been adopted by over 65% of units. This app offers improved functionalities and insights into resident engagement, enhancing the overall resident experience.

Stronger Financial Performance

The company’s core FFO per share was $0.16 for the first quarter, exceeding expectations and showing improvement from the previous quarter and year, highlighting its strong financial performance.

Market Volatility and Economic Uncertainty

Despite the company’s successes, persistent market volatility and economic uncertainty, particularly related to tariffs and trade policy changes, pose risks to its outlook.

Liberty Towers Occupancy Challenges

Liberty Towers faced occupancy challenges due to ongoing renovations, resulting in a lower occupancy rate of 80.5%, which could impact short-term revenue.

Increased Utility Costs

Higher utility costs, driven by a colder winter in the Northeast, led to a 3.5% increase in controllable expenses, affecting the company’s cost management.

Net Loss to Shareholders

Veris Residential reported a net loss of $0.12 per fully diluted share for the first quarter, compared to a net loss of $0.04 in the prior year, indicating challenges in achieving profitability.

Forward-Looking Guidance

Veris Residential maintained its guidance despite market volatility and economic uncertainty. The company aims to sell $300 to $500 million in non-strategic assets over the next 12 to 24 months. It also expects to achieve $1 million in operational synergies from the consolidation of Jersey City Urby. The company recorded a 3.2% same-store NOI growth and maintained its core FFO guidance at $0.61 to $0.63 per share, reflecting 2% to 5% growth over 2024. Additionally, Veris plans to reduce net debt to EBITDA below nine times by the end of 2026.

In conclusion, Veris Residential’s earnings call presented a balanced outlook with strong operational achievements and strategic progress. While the company faces challenges from market volatility and economic uncertainty, its financial performance and strategic initiatives indicate a positive trajectory. Investors should watch how Veris navigates these challenges and capitalizes on its growth opportunities.