Veris Residential (VRE) Q3 Earnings call transcript Oct 31, 2024

Veris Residential Incorporated recently held its Third Quarter 2024 Earnings Conference Call, showcasing a robust performance amidst market challenges. In a call filled with optimism and strategic insights, the company's executives shared their thoughts on the company's operational performance, growth strategies, and future prospects.

Strategic Initiatives and Operational Excellence

Veris Residential reported a 17% increase in core FFO during the first 9 months of 2024, driven by a better-than-expected resolution of noncontrollable expenses and continued market rent growth. The company's strategic initiatives are aligned with its 3-pronged value creation plan, which includes debt reduction, operational optimization, and growth through capital recycling.

The company's portfolio, with an average age of 8 years, has maintained a strong 95.1% occupancy rate, reflecting the success of its operational strategies. Notably, the renewal growth remained stable at 6.5%, and new leases grew by 1.3%, above the national average of 0.9%.

Veris's operational performance was highlighted by the success of its AI-based leasing assistant, Quinn, which has effectively captured demand at the top of the leasing funnel and contributed to a 2% saving in payroll expenses compared to 2023. The use of technology and operational enhancements has been instrumental in improving Veris's operating margin to 67%, up from 57% at the beginning of 2021.

Market and Competitive Landscape

New York City's rental market continues to be a significant contributor to Veris's performance, with rents showing a 5.4% year-over-year growth in September. This demand, coupled with limited new supply and high barriers to entry, has driven strong performance in Veris's Jersey City and Port Imperial assets, recording blended net rental growth of 6.7% and 6.3%, respectively.

Financial Performance and Future Outlook

Veris reported a net loss available to common shareholders of $0.10 per fully diluted share for the third quarter of 2024, with core FFO per share at $0.17. The company's financial performance is underpinned by its strong operational results, strategic initiatives, and disciplined approach to capital allocation.

Looking ahead, Veris is raising its core FFO guidance range by approximately 7%, reflecting the favorable resolution of noncontrollable expenses and continued rental revenue growth. The company remains confident in its performance, citing its well-located Class A portfolio, strong operational results, and vertically integrated operating platform as key factors.

Conclusion

Veris Residential Incorporated's Third Quarter 2024 Earnings Conference Call provided a comprehensive overview of the company's financial performance and strategic initiatives. With a focus on operational excellence, growth, and value creation, Veris is well-positioned to navigate market challenges and capitalize on opportunities. As the company continues to optimize its portfolio, invest in technology, and maintain a strong operational performance, it remains a compelling investment proposition for the future.