Veris Residential: Hold Rating Maintained Amid Uncertainty and Discounted Trading Position

Michael Lewis, Truist Financial analyst, maintained a Hold rating for Veris Residential, lowering the price target to $15.00. The uncertain macroeconomic environment, sluggish job growth, and a 31% discount to net asset value (NAV) estimate, compared to a historical average of 26%, justify the cautious approach. Despite positive FFO estimates for 2025 and 2026, uncertainties around asset dispositions and Liberty Towers' stabilization keep the rating at Hold.

OFS Capital (OFS) reported its Q2 2025 earnings, showcasing a stable net investment income despite a decline in net asset value (NAV) per share. The company's Chairman and CEO, Bilal Rashid, highlighted that net investment income remained at $0.25 per share, a slight decrease from the prior quarter's $0.26 per share [1]. This stability was achieved despite a $7.8 million decrease in the value of the Pfanstiehl Holdings position, which contributed to a 9% drop in NAV per share to $10.91 [1].

Rashid emphasized OFS Capital's focus on improving net investment income over the long term. The company is exploring ways to monetize its minority equity investment in Pfanstiehl and rotate certain noninterest-earning equity positions into interest-earning assets. This strategic shift aims to balance near-term exits with realizing full value from the investment [1].

The company initiated a refinancing process for its $125 million unsecured notes maturing in February 2026. In July, OFS Capital completed a $69 million unsecured note offering in a leverage-neutral transaction. The new notes mature in July 2028, carry a 7.5% coupon, and have a 1-year no-call provision. OFS Capital intends to pay off a total of $94 million in August [1].

Despite the economic headwinds, OFS Capital maintained a cautious yet stable tone. Rashid acknowledged significant uncertainty surrounding tariffs and U.S. monetary policy, which may impact the portfolio companies. However, he expressed satisfaction with the portfolio quality and confirmed no new nonaccruals this quarter [1].

The company's CFO, Kyle Spina, reported that net investment income for the quarter was $3.3 million or $0.25 per share, down $0.01 per share from the first quarter. Top-line income increased by $181,000 quarter-over-quarter, but expenses rose by $363,000, leading to a slight decline in net investment income [1].

OFS Capital announced it would maintain its quarterly distribution at $0.34 per share for Q3 2025. Spina noted that the company continues to evaluate the level of its distribution in light of the current macroeconomic environment and the new cost of debt capital [1].

Rashid and Spina both emphasized OFS Capital's defensive positioning and operational flexibility, focusing on maintaining a diversified, senior-secured loan portfolio while navigating a challenging environment for new investments and M&A activity [1].

References:
[1] https://seekingalpha.com/news/4476668-ofs-capital-outlines-69m-note-refinancing-and-continued-focus-on-monetizing-pfanstiehl-equity