Veris Residential Inc. is based at the company’s flagship Harborside campus in Jersey City — Courtesy: Mack-Cali
By Joshua Burd
Veris Residential Inc. has agreed to sell its iconic Harborside 1, 2 and 3 buildings in Jersey City for $420 million, in a deal that all but completes its exit from traditional commercial assets.
The real estate investment trust on Monday said it’s under contract to sell the buildings, which total nearly 1.9 million square feet and were once the centerpiece of the company’s office portfolio during its long run as Mack-Cali Realty Corp. It did not disclose the would-be buyer, but a source familiar with the deal identified the party as 601W Cos. LLC, a New York-based firm that is active in the Manhattan office sector.
Veris also announced Monday that it has completed its sale of 101 Hudson St., a nearly 1.25 million-square-foot office tower in Jersey City, for $346 million. The buyer is The Birch Group, a Nyack, New York-based investor that has become a key player in the New Jersey office sector in recent years.
“These are significant milestones in our transition to a pure-play multifamily company,” said Mahbod Nia, Veris Residential’s CEO. “I would like to thank the Veris Residential team for their perseverance and tenacity, which have allowed us to continue making progress on our strategic goals despite an extremely challenging market environment. Looking ahead, the sizable proceeds anticipated from these transactions provide the company with meaningful liquidity and optionality as we enter the next phase of our transformation.”
Cushman & Wakefield’s Andy Merin, Adam Spies, David Bernhaut, Gary Gabriel, Frank DiTommaso and Max Helfman co-brokered the sale of the Harborside buildings with CBRE’s Jeffrey Dunne, Bill Shanahan, Darcy Stacom, Roland Merchant and Stuart MacKenzie. Merin, Spies, Bernhaut, Gabriel and DiTommaso, along with C&W’s Kevin Donner, Ed Duenas and Ben Lushing, served as the sole broker in the 101 Hudson deal.
“The sale of 101 Hudson is a historic transaction, made even more significant due to the challenging investment sales environment, with deals of this size and caliber rarely closing in any markets across the country right now,” Merin said. “After months of hard work, we are thrilled to have arranged this momentous transaction on behalf of Veris, with this being one of the largest single-asset office sales in New Jersey history. We are grateful for our continued relationships with both Veris and Birch Group and look forward to continuing to help them execute on their business plans.”
The trade of Harborside 1, 2 and 3 follows a sweeping $75 million renovation of the overall campus, which includes other buildings and spans more than 4 million square feet along the Hudson waterfront. But it’s also the culmination of a pivot to luxury apartment buildings that is nearly a decade in the making, following the decline of the former Mack-Cali’s once-sprawling suburban office portfolio.
That transition accelerated when the REIT, under new leadership at the board and executive level, rebranded late last year to Veris Residential Inc. The company said that, following the close of Harborside 1, 2 and 3 and the anticipated stabilization of its new 750-unit Haus25 apartment building in Jersey City, multifamily will represent some 98 percent of its net operating income, up from 39 percent as of the end of the first quarter of 2021.
The Harborside deal is slated to close in the first quarter of 2023.
“With our exit of the office sector nearly complete, we intend to continue streamlining operations as we become a pure-play multifamily REIT with a more resilient cashflow profile,” said Tammy K. Jones, Veris Residential’s board chair. “In addition, notwithstanding the extraordinary market dislocation, the Strategic Review Committee and Board will be evaluating the best opportunities to unlock the substantial value that has been created for our shareholders.”