Veris Residential, Inc. · NYSE:VRE
Veris Residential — Mack-Cali Realty — Bank of America Merrill Lynch Conference September 2019
29 slides from Veris Residential's conference presentation, Sep 10, 2019
Slide 1: Bank of America Merrill Lynch Conference September 2019
Bank of America Merrill Lynch Conference September 2019
Slide 2: Forward-Looking Statements
This Operating and Financial Data should be read in connection with our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. Statements made in this presentation may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forw
Slide 3: Our Investment Strategy
Our Investment Strategy Value Proposition Access to New York & professional hubs, discount to NYC, room to grow as millennials start families, tax benefits Thesis NJ Waterfront transit hubs will experience unparalleled growth as more seek value, connectivity & space Strategy Dominate core submarkets
Slide 4: Dual Platforms Form One Strategy: The Waterfront
Dual Platforms Form One Strategy: The Waterfront Residential Office $5.6 billion Market Capitalization $3.6 billion Net Asset Value 11.4 million 7,984 97.7% 79.8% 8.7% 17.7% 1,947 6.07% Mack-Cali:$38.92 $45.00 Premium: 16% Market: Mack-Cali:$32.17 $33.00 3% $47.69 Market: Premium: 29% 12% 4 (1) (2)
Slide 5: Comprehensive Transformation
Comprehensive Transformation 2Q19 2Q15 (65% Reduction) (142% Increase) (96% Reduction) $93.0 million (550% Increase) $14.3 million $3.9 billion (44% Increase) (31% Reduction) (7% Increase) $46.5 million (14% decrease) (8% increase) (1) Includes Soho Lofts (377 units) (acquired April 1, 2019). Exclud
Slide 6: NOI Evolution – 40/40/20
NOI Evolution – 40/40/20 Through the executed disposition program, strategic acquisitions and residential development, the Company has and will continue to dramatically shift its NOI composition: NOI Composition (annualized) (1): Residential Portfolio Transformation: 2Q 2015 2Q 2019 Change 2Q 2015 T
Slide 7: NAV 2Q 2019
NAV 2Q 2019 (Unaudited) $ in millions (except per share amounts) 7 See footnotes and “Information About Gross & Net Asset Value (Unaudited)” on pages 23 and 24. To t a l Mac k - Ca li NA V $3 , 572 $4, 0 8 4$ 3, 118 A pp r o x im a t e N A V / S h a r e ( 1 00. 5M M s h ar e s ) ( 1 2 ) $35. 5 3 $ 4
Slide 8: Waterfront Concentration
Waterfront Concentration PSF/ Unit $355 Waterfront Holdings: GAV (1) $1,812M 8 Operating Office (2) 5,108,379 SF Fort Lee 7 Operating Resi 2,996 Units $1,489M $496,996 3 Operating Hotels 722 Keys $263M $358,442 Edgewater $992M 2 In-Construction Resi 1,423 Units $697,109 6,309 Units $481M $76,292 11
Slide 9: Two Platforms = One Strategy: The Waterfront
Two Platforms = One Strategy: The Waterfront Summary Valuation (1) Office Waterfront NAV (3) $988M GAV $1,889M MSF/ Units % NAV GAV (2) NAV Short Hills & Metropark $611M $302M $725M $442M Suburban/Other Total $3,572M 100% $7,902M GAV Waterfront Share NAV Waterfront Share Residential Waterfront GAV $
Slide 10: Waterfront: Residential Market Share
Waterfront: Residential Market Share The Company is the largest institutional owner of operating class A residential and developable land, controlling approximately 12% of the current market and 30% of the potential market Roseland Waterfront Operating Portfolio: Units 2,069 2,996 +927 Ownership 20%
Slide 11: Waterfront: Office Market Share
Waterfront: Office Market Share Office leasing velocity along the Waterfront has increased, with 1.5MSF of deals currently being toured. Mack-Cali is well blocks >100KSF positioned for large-scale tenants, as the Company controls 50% of Mack-Cali (1) LeFrak SJP Properties Goldman Sachs Bentell Kenne
Slide 12: Waterfront Value Proposition
Waterfront Va lue Proposition We believe that large mark-to-market gain and rents have room to grow while discount to those in Manhattan: still at a significant Financial District Harborside Residential: $50.00 PSF Office: $45.00 PSF Residential (1): 34% increase in disposable income Office: 35% ren
Slide 13: Successful 2018 Deliveries
Successful 2018 Deliveries The Company delivered 1,212 units to the marketplace in 2018, which are collectively 99.7% leased as of September 1, 2019, up from 96.0% as of May 26, 2019 • Highlighting this success is the absorption of RiverHouse 11. The property opened on July 6, 2018, stabilized withi
Slide 14: Waterfront Residential Development Outperformance
Waterfront Residential Development Outperformance The Company had record velocity on recent Waterfront deliveries (1,368 units): Total Waterfront Deliveries 1,368 - - - - 10.2% M2 311 Jersey City June 2016 6 Months 50 / Month 8.9% .. . . . . . . Urby 762 Jersey City March 2017 6 Months 120 / Month 1
Slide 15: Waterfront-Focused Development Pipeline
Waterfront-Focused Development Pipeline The Company’s next round of construction deliveries and near-term starts are heavily weighted towards Waterfront (80% of aggregate total project cost) In-Construction: Future Starts: Total Waterfront Pipeline: 1,423 Units 6,315 Units 7,738 Units 15 25 Columbus
Slide 16: Office Vacancy is in Our Best Assets
Office Va cancy is in Our Best Assets • • • • Mack-Cali will continue to invest in its best assets – current plan $153.6M As AFFO increases, we have and will allocate $30M per annum The Company has 1 MSF to lease to 92% stabilization In-place rents on the Waterfront are currently 22% below asking Ap
Slide 17: Harborside Transformation
Harborside Transformation Harborside is the center of live/work/play on the New Jersey Waterfront. Future investment will solidify its position and benefit lease-up efforts Today – 2019 Before – 2015 Photo by Ben Ganscos Master Planned Amenities: • • • • 13,000 sq. ft. Food Hall Lounge & game room V
Slide 18: Suburban Portfolio Repositioning - Core Only
Suburban Portfolio Repositioning - Core Only 18 suburban assets – 2.8 MSF – remain from September portfolio are 21% higher than 2015 rents in those markets 2015 portfolio. Rents in current 333 Thornall 7 Sylvan Way One River Center Core Suburban Markets: As of September 2015 As of June 2019 % Leased
Slide 19: Debt Profile
Debt Profile Management believes that utilizing Net Debt/EBITDA alone does not accurately express the real estate Loan to Value, as it ignores the composition of the underlying cash flow. 19 Company X Company Y Ta rget Office Leverage 7.8x 7.2x – 6.3x 12.0x – 10.6x 9.0x – 8.0x 6.25% 56% - 50% 5.25x
Slide 20: Drivers of Future Earnings Growth
Drivers of Future Earnings Growth Management believes that Waterfront lease-up opportunity and development deliveries can generate FFO growth of 41.3% Waterfront Occupancy Gains (1) Development Deliveries (2) Development Deliveries (2) 40% 35% 30% 25% 20% 15% 10% 7,065 Units (3) 5% 0% Near/Intermedi
Slide 21: Appendix
Appendix 21
Slide 22: Global Definitions
Global Definitions Average Revenue Per Home:Calculated as total apartment revenue for the quarter ended Operating Communities: Communities that have achieved Project Stabilization. September 30, divided by the average percent occupied for the quarter ended September 30, 2018, divided by the number o
Slide 23: Notes: Gross & Net Asset Value (Unaudited)
Notes: Gross & Net Asset Va lue (Unaudited) 1) Reflects 2Q 2019 Annualized Cash NOI for office assets; projected 12-month NOI for stabilized residential assets and the projected stabilized NOI for residential assets in-construction and lease- up. See Information About Net Operating Income on page 29
Slide 24: Notes: Gross & Net Asset Value (Unaudited)
Notes: Gross & Net Asset Va lue (Unaudited) 6) 7) Includes the Company's ownership interests in the Hyatt Regency Jersey City and two office joint venture properties. The value of land is based on a combination of recent or pending transactions for land parcels within our relevant markets and unrela
Slide 25: Development Activity & Future Cash Flow Growth
Development Activity & Future Cash Flow Growth $ in millions (unaudited) 2018 D e live r ies Signature Place at Morris Plains Metropolitan Lofts 145 Front Street at City Square Portside 5/6 RiverHouse 11 at Port Imperial To t a l 20 18 D e l i v e r i e s 2019 D e live r ies 100.0% 50.0% 100.0% 100.
Slide 26: Residential Calculator – Harborside
Residential Calculator – Harborside 1 Bedroom Househ old R e s i dent R e sident Annua l Househol d Inc om e Less: Income Tax (1) Federal FICA State Local Subt ota l : Inc om e T a x $150, 000 $150, 00 0 - - $200, 00 0 $200, 00 0 - - $ 250,000 $250, 0 00 - - 20.2% 6.7% 6.3% 3.6% 36. 8% ($30,290) (10
Slide 27: Residential Calculator – Hoboken
Residential Calculator – Hoboken 1 Bedro om Househ old R e s i dent Hobok e n R e s i dent A nnua l House hol d Inc om e Less: Income Tax (1) Federal FICA State Local Subtota l : Incom e T a x $150, 000 $1 50, 0 0 0 - - $200, 000 $ 200, 000 - - $25 0, 000 $250, 000 - - 20.2% 6.7% 6.3% 3.6% 3 6 . 8%
Slide 28: Residential Calculator – Port Imperial
Residential Calculator – Port Imperial 1 Bedro om Househ old Res i de nt R e s i dent A nnua l House hol d Inc om e Less: Income Tax (1) Federal FICA State Local Subtota l : Incom e T a x $150, 000 $ 150, 0 0 0 - - $200 , 000 $20 0, 00 0 - - $250, 000 $250, 000 - - 20.2% 6.7% 6.3% 3.6% 3 6 . 8% ($30
Slide 29: Information About Net Operating Income (NOI)
Information About Net Operating Income (NOI) $ in thousands (unaudited) Reconciliation of Net Income to Net Operating Income (NOI) Net I n c o m e Deduct: Real estate services income Interest and other investment loss (income) Equity in (earnings) loss of unconsolidated joint ventures General and ad
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