Veris Residential, Inc. · NYSE:VRE
Veris Residential — Mack-Cali Realty — Investor Presentation (March 2018)
31 slides from Veris Residential's investor presentation, Mar 5, 2018
Slide 1: Forward-looking statements
2 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. Forward-looking statements can be identified by the use of words such as “may,” “will,” “plan,” “potential,” “projected,” “should,” “expect,”
Slide 2: 4Q 2017 Key Statistics
4Q 2017 Key Statistics Square Feet Office Space % Leased (Excl. Non-Core) GAAP Rental Rate Roll-Up (Excl. Non-Core) Cash Rental Rate Roll-Up (Excl. Non-Core) Operating Residential Units % Leased Residential Units In-Construction Residential Units/Keys 5,826 96.6% 1,944 Market Capitalization Net Asse
Slide 3: The New Mack-Cali: Transformation
5 Office buildings (excluding flex) Operating/In Construction Units (WO/JV) Operating/In Construction Units (Subordinate) Total Market Cap Weighted Average Interest Rate Interest Coverage Ratio FFO (Qtr.) 41 (64% Reduction) 7,228 (90% Increase) 542 (82% Reduction) $5.2 billion (33% Increase) 3.93% (
Slide 4: NOI Evolution
NOI Evolution 6 Total Portfolio NOI: $338M 49% of NOI from Residential & Waterfront Office Total Portfolio NOI: $350M(1) 38% of NOI from Residential & Waterfront Office Market NOI % Waterfront Office $108 31% Residential 24 7% Class A Suburban Office 28 8% Suburban Office 138 39% Flex 52 15% Total $
Slide 5: Residential – Portfolio Quality
Residential – Portfolio Quality 7 3,827 As of 4Q 2017, Roseland had a portfolio-wide percentage leased of 96.6% Roseland’s low volatility portfolio has leased within a 200 bps range over last three years and is supportive of higher loan-to-value debt Roseland’s portfolio will maintain an average age
Slide 6: Residential - Portfolio Evolution
Residential - Portfolio Evolution 8 2,079 3,319 1,721 4,940 1,839 5,639 2,568 5,614 3,063 5,826 1,944 2,895 7,410 7,410 3,827 1,498 Roseland has nearly eliminated its subordinated interests as it has continued to grow the size and ownership of its operating portfolio Y/E 2014 Portfolio Avg. Ownershi
Slide 7: Residential – Value Creation
Residential – Value Creation Estimated Value Creation from In-Construction Projects Projected NOI $51M Market Value of Projected NOI (avg. cap rate of 5.22%) $977M Less: Cost of Development - $732M Value Creation $245M Roseland Share $208M 9 Roseland’s In-Construction portfolio is forecasted to crea
Slide 8: Residential - Development Delivery and FFO Creation
Residential - Development Delivery and FFO Creation 10 2019E: $28.5 M 2020E: $38.0 M 2018E: $13.7 M 2017: $28.5 M Pictured: Monaco Jersey City +281% The growth reflected below is solely from Roseland’s current Operating and In-Construction portfolio Investor Presentation Economic Stabilizations Quar
Slide 9: Residential – Equity Requirements
Residential – Equity Requirements 11 Roseland Residential As summarized in the table below, Mack-Cali is planning on and expects to have excess capital sources available to achieve the following key objectives: Complete Roseland’s in-construction portfolio of 1,944 units Complete Roseland’s funding
Slide 10: Office – Rent Growth by Property Type
Office – Rent Growth by Property Type 12 Office rents show signs of renewed growth, increasing by 12.1% across key markets in 2017 Waterfront rents continue to climb as the Company focuses on its trophy assets As Waterfront rents continue to climb, re-leasing previously discounted prime office space
Slide 11: Office - Disposition Strategy & Statistics
($ in millions) Percent of Goal Buildings Building SF Avg. Base Rent Dispositions (2015-2017) $1,172 74% 120 13,951,574 $24.52 Under Contract/Negotiations 340 21% 28 2,669,882 20.45 Active Dialogue/Future Dispositions 78 5% 5 828,074 22.93 Total Dispositions $1,590 100% 153 17,449,530 $23.57 Remaini
Slide 12: Office – Post Disposition Portfolio
Office – Post Disposition Portfolio 14 4Q 2017 Investor Presentation Waterfront Suburban Avg. Base Rent Avg. Base Rent Building Location Total SF Leased SF % Leased + Escalations (3) Building Location Total SF Leased SF % Leased + Escalations (3) 101 Hudson Jersey City, NJ 1,246,283 1,246,283 100.0%
Slide 13: Office – Waterfront Leasing Prospects
Office – Waterfront Leasing Prospects 15 4Q 2017 Investor Presentation Building(1) Type/Industry Tenant Size (SF) Tours Timing Proposed Building Upgrades 101 Hudson FIRE Professional Svcs 10,000 - 35,000 3 4Q18 Lobby Renovation Elevator Upgrades New retail amenities Harborside 5 FIRE Professional Sv
Slide 14: Valuation - NAV
16 Valuation - NAV $ in millions (except per share amounts) Note: See appendix for additional information The company’s NAV estimate of $3.8B is further supposed using alternative valuation methodologies on page 8 NAV Calculation Net Value Range Rentable SF/ Apt Units Projected NOI (1) Cap Rate Gros
Slide 15: Valuation - Implied Stock Price
Office Portfolio Value Price-to-FFO Multiple Sensitivity 2018 Office Portfolio FFO(3): $1.51/share Valuation - Implied Stock Price Office FFO Multiple Office Company Value Per Share Roseland Value Per Share Implied Stock Value 11.00x $16.61 $15.61 $32.22 12.00x 18.12 15.61 33.73 13.00x 19.63 15.61 3
Slide 16: Geographic Breakdown of NAV
Mack-Cali’s residential and core office assets are concentrated in targeted urban markets and transit based locations, with approximately 65% of NAV along the Hudson Waterfront. Geographic Breakdown Investor Presentation Hudson Waterfront NAV ($) NAV (%) Office (Jersey City) $1,477M ~39% Residential
Slide 17: Regional Spotlight - Jersey City
Regional Spotlight - Jersey City 19 Mack-Cali and Roseland have a market leading residential & office portfolio along the Jersey City waterfront. Residential Units % Leased (12/31/17) Rent PSF (12/31/17) Marbella 412 96.6% $40.32 Monaco 523 96.0% 45.12 M2 311 98.4% 46.20 Urby 762 97.2% 57.55 Total 2
Slide 18: Jersey City: The New Scene
Jersey City: The New Scene 20 1st Most Livable City in the US Smartasset (2016) 1st Fastest- Growing Metro Area in NJ Forbes & CareerBliss 2nd Happiest City to Work in the US Forbes & CareerBliss 5th Best Public Transportation in the US Business Insider Top 5 US Cities for Millennials Niche & Forbes
Slide 19: Regional Spotlight - Port Imperial
Regional Spotlight - Port Imperial 21 The Port Imperial submarket provides unrivaled access to Midtown West and Hudson Yards ($17Bn Investment) via the NY Waterway Ferry. Port Imperial will further become a prime residential destination as companies migrate to Hudson Yards Operating In-Construction
Slide 20: Regional Spotlight - Overlook Ridge
Regional Spotlight - Overlook Ridge 22 Operating Properties Units % Leased (12/31/17) Rent PSF (12/31/17) Alterra at Overlook Ridge 722 96.5% $23.52 The Chase at Overlook Ridge 664 97.6% 26.76 Total 1,386 97.0% $23.07 2018 Target Start (Chase III) 326 Remaining Land 490 Investor Presentation Roselan
Slide 21: Repositioning - Harborside Cultural District
Repositioning - Harborside Cultural District The Company continues to invest in our Jersey City assets as part of a complete transformation project to create a cultural district at Harborside. 23 Lutze Biergarten Harborside Tower (JV with SJP Properties) New Retail, Dining and Event Space Re-Skin of
Slide 22: NJ Grows business incentive program
NJ Grows: Mack-Cali is well positioned to benefit from this business incentive program 24 Gross Annual Benefit/Employee Gross Annual Benefit/SF Urban Transit Hub Municipality $5,000 Transit-oriented development $2,000 Large numbers of new full-time jobs are eligible $500 – $1,500 251 to 400 $500 +$2
Slide 23: NJ Grows business incentive program
NJ Grows: Mack-Cali is well positioned to benefit from this business incentive program These are credits per employee offered by the State of NJ (NJS) to be applied against NJS Corporate Taxes Gross Annual Benefit/Employee Gross Annual Benefit/SF Urban Transit Hub Municipality $5,000 Transit-oriente
Slide 24: Definitions
26 Average Revenue Per Home: Calculated as total apartment revenue for the quarter ended December 31, divided by the average percent occupied for the quarter ended December 31, 2017, divided by the number of apartments and divided by three. Operating Communities: Communities that have achieved Proje
Slide 25: Income Statement – Quarterly Comparison
Investor Presentation 4Q 2017 $ in thousands Income Statement – Quarterly Comparison 27 4Q 2017 3Q 2017 2Q 2017 1Q 2017 4Q 2016 Office/Corp. Roseland Total REVENUES Base rents $101,995 $16,424 $118,419 $128,643 $133,017 $121,255 $126,744 Escalations and recoveries from tenants 10,802 510 11,312 16,3
Slide 26: Development Activity and Cash Flow Growth
Development Activity and Cash Flow Growth 4Q 2017 Note: Projected stabilized yield without the Marriott Hotels at Port Imperial is 6.27 percent. $ in millions (unaudited) Projected RRT RRT Nominal % Leased As of: Projected Projected Total Share of Stabilized Ownership As of 2/12/2018 Initial Occupan
Slide 27: Notes: Net Asset Value (Unaudited)
Notes: Net Asset Value (Unaudited) The year one cap rate, applied to the projected 2018 cash net operating income, is derived from the present value of periodic cash flows over five years and a terminal value based on stabilized income and a market cap rate, all discounted at an unlevered internal r
Slide 28: Notes: Net Asset Value (Unaudited)
30 4Q 2017 Notes: Net Asset Value (Unaudited) Valuations for properties planned for or undergoing a repositioning or repurposing utilize a projected stabilized net operating income for the asset upon completion of the repositioning/repurposing activities. After applying an estimated capitalization r
Slide 29: 2018 Guidance Roll Forward
2018 Guidance Roll Forward 31 4Q 2017 Low High 2017 Core FFO Per Diluted Share $2.23 $2.23 Same-Store Unlevered Operating NOI: Waterfront ($0.39) ($0.37) Other Office / Flex (0.01) 0.00 Residential 0.01 0.01 Subtotal ($0.39) ($0.36) Investment Activity Unlevered NOI: Development $0.23 $0.25 2017 Off
Slide 30: 2018 Guidance Assumptions
2018 Guidance Assumptions 32 Low High Assumptions Office Occupancy (% year-end leased) 84% 86% Office Same Store GAAP NOI Growth Post Sale Portfolio (18%) (16%) Office Same Store Cash NOI Growth Post Sale Portfolio (17%) (15%) Multifamily Same Store GAAP NOI Growth Post Sale Portfolio 3% 5% Straight
Slide 31: Assumptions
Assumptions Office Occupancy (% year-end leased) Office Same Store GAAP NOI Growth Post Sale Portfolio Office Same Store Cash NOI Growth Pos Sale Portfolio ‘Multifamily Same Store GAAP NOI Growth Post Sale Portfolio. Straigt-LineRent Adjustment FAS 141 Mark-to-Market Rent Adjustment Dispositions ase
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