Veris Completes Transition to Pure-Play Multifamily REIT

Veris Residential has sold the last office property at its massive Harborside development in Jersey City, completing the company’s strategic transition into a pure-play multifamily REIT.

Veris is in contract to sell Harborside 5, a 977K SF office tower at 185 Hudson Street in Jersey City, to 601W Cos. for $85M. According to the REIT’s Q4 earnings statement, the building is 35% leased.

Last April, Veris sold Harborside 1, 2 and 3, encompassing 1.9M SF at the Hudson Street complex known as Harborside Financial Center, to NY-based 601W for $420M.

Harborside 6, a 245K SF building at the corner of Christopher Columbus Drive and Washington Street, was sold last year to American Equity Partners. Last fall, Related Cos. acquired Harborside 4, an adjacent parcel on which it is planning to build a 750-unit luxury apartment tower.

Formerly known as Mack-Cali Realty, Jersey City-based Veris was once one of the largest office owners in New Jersey. When it rebranded as Veris Residential in 2021, the REIT began executing a plan to sell its non-multifamily assets, including office buildings in submarkets like the Hudson waterfront and Short Hills, NJ.

“We have successfully transformed the company from what was once a complex, predominately office REIT to a pure-play multifamily REIT,” said Mahbod Nia, Veris Residential’s CEO in an earnings call with investors last week.

“Over the past three years, we’ve accomplished a number of key strategic objectives, including $2.5B of non-strategic asset sales and the repayment of approximately $1B in net debt, delevering, derisking and strengthening our balance sheet,” Nia said. “We built a best-in-class vertically integrated platform.”

According to Nia, unlike many national markets that are facing a glut of near-term supply in multifamily, the Northeast is expected to see a modest 1.5% boost in inventory in 2024, well below the national average of 3.5%, “supporting the case for a continued normalization level of rental growth in our markets.”

Veris’ multifamily portfolio encompasses about 7,600 units across 22 properties in New Jersey, Boston, suburban New York and Washington DC. Almost half of Veris’ portfolio is located along the Jersey City waterfront, a market with limited supply and a pipeline only expected to deliver about 1,200 units over the next two years.

“Demand remains robust and vacancy rates are low, suggesting that new supply is likely to be absorbed much in the same way it has been during the past decade in which multifamily stock in Jersey City Waterfront has doubled to around 24,000 units, while rents have continued to rise,” Nia said, during the earnings call.

The Veris CEO noted that Class A apartment rents in Jersey City reflect a discount of about 40% compared to top Manhattan submarkets and downtown Brooklyn, while offering newer buildings, more space and a wider selection of amenities.

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