Veris Residential (VRE) Q2 2025 Earnings Call July 24, 2025 08:30 AM ET Speaker0Greetings and welcome to the Verus Residential Inc. Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.It is now my pleasure to introduce your host, Terren Fielder, General Counsel. Thank you. You may begin.Speaker1Good morning, everyone, and ...

Financial Data and Key Metrics Changes - Revenue increased by 2.7% compared to Q1 2024 [14] - FFO decreased to $0.40 per share, and AFFO decreased to $62.3 million [14] - Same property cash NOI was essentially flat [14] Business Line Data and Key Metrics Changes - The company signed over 300,000 square feet of new leases, with total leasing reaching just under 800,000 square feet [5][12] - New leasing to tenants over 10,000 square feet was well above historical averages [5] - The residential portfolio maintained a high occupancy rate of 99.1% with strong demand [13] Market Data and Key Metrics Changes - The Class A office portfolio maintained stable in-place and asking rental rates despite a higher vacancy market [6] - The multifamily portfolio experienced robust revenue growth, reflecting the appeal of high-end residential communities [6] Company Strategy and Development Direction - The company is focused on four avenues to restore and exceed pre-pandemic FFO: leasing existing office portfolio, redeveloping Barrington Plaza, converting Studio Plaza to multi-tenant use, and acquiring additional properties [7] - The company is optimistic about below-average office expirations in 2025 and 2026 [6] - A conservative financing strategy and a diversified tenant base are emphasized to manage through economic turbulence [8] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about potential economic slowdowns and the impact of higher interest rates on income [7][8] - The operating platform is built to withstand economic challenges, with a focus on quality buildings in supply-constrained markets [8] - Management remains cautious but optimistic about leasing activity and demand in the multifamily sector [6][35] Other Important Information - The company closed a non-recourse interest-only loan of $127.2 million at a fixed rate of 4.99% [11] - A $335 million secured office loan was refinanced at an effective fixed interest rate of 4.57% [11] Q&A Session Summary Question: Can you provide more detail on leasing and larger tenants? - Management noted strong demand across various industries, with positive absorption contributing to improved leasing metrics [19][20] Question: What are the pricing trends in multifamily? - Management clarified that asking rents have not changed since before the fire, but occupancy remains high, contributing to revenue growth [21][22] Question: Can you discuss the debt refinancing and rates? - Management indicated that securing loans has been challenging, but they are optimistic about achieving favorable rates for upcoming refinancings [28][30] Question: How is the absorption rate in the in-service portfolio? - Management acknowledged that while the overall portfolio shows positive absorption, the in-service portfolio's occupancy has slightly decreased [32][34] Question: Have you seen tenant fallout from macroeconomic uncertainties? - Management reported no significant impact on tenants from current economic conditions, but they are monitoring the situation closely [38][39] Question: What is the status of the Studio Plaza leasing? - Management confirmed that leasing demand and speed have exceeded expectations, with ongoing efforts to achieve reasonable occupancy levels [56][58] Question: What is the outlook for acquisitions? - Management expressed a focus on high-quality office buildings for future acquisitions, indicating a preference for the office market over multifamily at this time [70] Question: Can you comment on capital allocation for acquisitions versus share buybacks? - Management stated that while they have engaged in share buybacks, they prioritize direct acquisitions and include partners in opportunities to maintain relationships [74][75]