Veris Residential’s newest properties include Haus25 at 25 Christopher Columbus Drive in Jersey City — Courtesy: Veris
By Joshua Burd
Kushner Cos. has made a bid to acquire Veris Residential Inc. after purportedly being rebuffed in its offer to manage the real estate investment trust’s portfolio of luxury apartments.
The privately held Kushner, which has amassed 4.5 million Veris Residential shares, said Thursday that it was prepared to acquire 100 percent of the outstanding shares of the Jersey City-based REIT at a price of $16 per share, according to a letter sent to the Veris board and made public Thursday. The unsolicited offer comes after Kushner says Veris has ignored its “attempts at fruitful engagement,” starting around three months ago, about working with the board and management to help address the company’s strategic and operational issues, including what it describes as a bloated cost structure, mismanagement and operational missteps at individual properties, most of which are in New Jersey.
The Wall Street Journal first reported the bid, valued at some $4.3 billion including debt, noting that a successful takeover of the Veris portfolio would add about 7,700 units to Kushner’s holdings.
“We would have preferred to engage in these discussions privately and directly with the Board but to date the Board has not shown a good faith willingness to discuss alternatives to the plan it has been attempting to execute for the last several years resulting in equity destruction of almost 46 percent,” Kushner Cos. Chairman Charles Kushner wrote in the letter. “Therefore, we have no choice but to make our proposals public so that we can make all Veris shareholders aware that there are more viable alternatives to the current and continuing path Veris is on.”
Veris, for its part, confirmed Friday morning that it had received the unsolicited bids from Kushner.
“Veris Residential’s Board of Directors is evaluating Kushner Companies’ latest proposals — in consultation with its financial and legal advisors — and will respond to these proposals in due course, just as it has carefully evaluated and responded to all other proposals Kushner Companies has put forth to date,” the company wrote in a prepared statement. “Consistent with its fiduciary duties, the Board will determine the best path forward with the interests of maximizing value for all Veris Residential shareholders in mind.”
Veris Residential, formerly Mack-Cali Realty Corp., has faced increasing pressure and scrutiny in recent years after much of its once-sprawling suburban office portfolio became obsolete. The REIT has shed virtually all of its traditional commercial assets and now focuses exclusively on luxury apartments, but only after a proxy battle in 2019 that sparked a management shakeup and a company rebrand late last year.
Kushner, one of New Jersey’s best-known multigenerational real estate firms, currently operates 20,000 apartments and has 10,000 units under development, the company said, making it well positioned to help streamline Veris Residential’s operations. It says it’s now one of the REIT’s six largest shareholders.
“As we presented to the Board in September 2022, it is our belief that the intrinsic value of Veris’ portfolio of real estate assets has been appreciably damaged over the last several years —to the tune of several hundred million dollars of shareholder value,” Kushner wrote. “Despite being a relatively small, geographically concentrated, regional REIT, Veris’ management team ran up $57 million of G&A costs in 2021, which is 10X the average G&A per unit of Veris’ peer group. The CEO of this small residential REIT lives in the UK. His previous experience, along with that of the COO, was oversight of an investment vehicle for European office buildings. Veris’ senior management team, along with the vast majority of the Board, frankly, has no operators, no developers, not even anyone with any recent management experience in multi-family residential.”
In a subsequent section of the letter, Kushner added:
“The bulk of Veris’ core assets are in New Jersey. As has been presented to the Veris Board, Kushner, unlike Veris’ management team and Board, are born and bred New Jersey multifamily real estate operators and developers. We have nearly 40 years of experience investing, managing, and developing in this competitive arena, generating billions of dollars in profits for our stakeholders. Kushner currently operates … on behalf of a diverse group of investors. We have spent decades building an organization led by talented on-the-ground executives who have successfully created value for investors in Veris’ core markets for decades.”
