Veris Residential(US:VRE)2023-07-29 10:40Financial Data and Key Metrics Changes - For Q2 2023, the net loss available to common shareholders was $0.30 per fully diluted share compared to a net income of $0.29 per fully diluted share in Q2 2022 [18] - Core FFO per share was $0.16, an increase of $0.01 from the previous quarter, while core AFFO per share was $0.19 compared to $0.15 last quarter [21] - Same-store NOI increased by almost 22% quarter-over-quarter and nearly 19% year-over-year, driven by higher rents and successful tax appeals [22] Business Line Data and Key Metrics Changes - The Class A portfolio achieved a 12% rental growth, up from 11% in the first quarter, with same-store occupancy stable at 95.6% [9] - Average revenue per home increased to $3,734, a nearly 17% rise compared to the same period last year [10] - Same-store NOI growth guidance for the year was raised to 10% to 12% from the previous 4% to 6% due to higher-than-expected market rent growth [30] Market Data and Key Metrics Changes - The Jersey City and Port Imperial submarkets continue to outperform, with rents remaining over 30% below Manhattan and over 20% below Downtown Brooklyn [11] - The Class A portfolio commands a 50% rent premium over peers, with the gap widening by approximately 10% since mid-2022 [10] Company Strategy and Development Direction - The company is focused on closing assets under contract, repaying term loans, and enhancing operational capabilities while maximizing shareholder value [17][42] - The strategic transformation to a pure-play multifamily REIT is emphasized, with significant milestones achieved in asset sales and operational performance [5][15] Management's Comments on Operating Environment and Future Outlook - Management noted evidence of a pullback in rental rates as the company enters a typically slower leasing season, but remains optimistic about the portfolio's performance [9][34] - The company anticipates continued operational flexibility and value extraction from the portfolio following the redemption of Rockpoint's preferred interest [7][57] Other Important Information - The company reinstated a quarterly dividend of $0.05 per common share, signaling progress in its transformation and operational performance [8][61] - The company has reduced energy consumption by 24% over the years and achieved LEED Silver certification for Haus25, increasing the percentage of Green Certified portfolio to nearly 70% [13][14] Q&A Session Summary Question: Timing for closing nonstrategic assets and buyer financing concerns - Management expects to close nonstrategic asset transactions next year and has taken steps to mitigate transaction risks [33] Question: Future rent growth expectations - Management anticipates some moderation in rent growth due to entering a slower leasing season and high growth comparisons from last year [34] Question: Valuation of Rockpoint redemption - The redemption value of $520 million was based on a negotiated agreement reflecting the current market conditions and operational flexibility gained [36][38] Question: Same-store NOI growth guidance implications - Management indicated that the raised guidance reflects strong performance and expectations for the remainder of the year, despite potential challenges [40][59] Question: Strategic focus moving forward - The management team will focus on closing assets under contract, repaying debt, and exploring operational value extraction opportunities [42] Question: Use of capital between debt repayment, acquisitions, and dividends - The priority is to close on binding contracts and repay debt, with future capital allocation decisions to be made based on available opportunities [52] Question: Renewal rate increases and new lease growth expectations - Renewal rate increases are expected to land in the mid- to high single digits, lower than the previous quarter's 12% [54]