Veris Residential, Inc.

Ladies and gentlemen, good morning and welcome to the Veris Residential Inc. fourth quarter and full year 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Taryn Fielder, General Counsel and Secretary. Please go ahead.

Good morning, everyone, and welcome to Varus Residential's fourth quarter and full year 2024 earnings conference call. I would like to remind everyone that certain information discussed on this call may constitute forward-looking statements within the meaning of the federal securities law. Although we believe the estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved. We refer you to the company's press release and annual and quarterly reports filed with the SEC for risk factors that impact the company. With that, I would like to hand the call over to Mahbad Nia, Veris Residential's Chief Executive Officer, who is joined by Amanda Lombard, Chief Financial Officer, and Anna Malhari, Chief Operating Officer. Mahbad?

Thank you, Taryn, and good morning, everyone. To begin, I'd like to take a moment to reflect on various residential's evolution since the reconstitution of our board and establishment of the Strategic Review Committee, or SRC, over four years ago. We successfully pivoted away from our office exposure, proactively executing large-scale asset sales at advantageous pricing and challenging market conditions, preserving significant value for our shareholders while accelerating various residential's successful transformation into a consistently top-performing pure-play multifamily REIT with core Class A properties concentrated in one of the top-performing residential markets in the U.S. Concurrently, management has worked closely with the board, the SRC, and the company's advisors to stay abreast of the state of the transaction market and related capital flows, as well as capital markets, as we evaluate all available avenues to maximize value for various residential shareholders. We recognize that despite our successful transformation, intrinsic value of our company is not accurately reflected in our share price today. Both management and the board are keenly focused on closing this gap to intrinsic value through measures including but not limited to the crystallization of assets at or close to the intrinsic value where opportunities exist to do so. Consistent with this approach, the company, in close coordination with the board, has developed various residentials 2025 corporate plans central to which is the proposed sale of approximately $300 to $500 million of select assets, which we believe we can achieve strong pricing at or near to their intrinsic value over the next 12 to 24 months, given their size, location, and buyer interest, despite the broader challenges in the investment market today. These assets comprise the majority of our remaining land bank, whose sale will be the primary catalyst for earnings accretion. The balance is a number of smaller multifamily assets, that are generally less efficient to operate and will be largely earnings neutral. We plan to use the proceeds from these dispositions to buy back up to $100 million of stock, taking advantage of the dislocations that exist between our public trading value and our intrinsic value on behalf of our shareholders, with the remainder of the proceeds being used to pay down debt, positioning the company to reduce its leverage to below nine times. Importantly, as we monetize these assets, we will maintain our ability to be nimble and to continue exploring any and all paths to further crystallize value for shareholders should opportunities arise to do so. Coming back to the year in review, 2024 marked another year of strong operational and financial results for various residential, as we continue to execute on our three-pronged approach for value creation, focused on ongoing operational outperformance through a number of platform and portfolio optimization strategies. capital allocation initiatives that deliver earnings accretion and create value, and the further strengthening of our balance sheet. For the full year, we delivered NOI growth of 6.9% and blended net rental growth of 4%, which contributed to a 13% increase in compared to 2023 and 38% compared to 2022. The solid performance supported our ability to raise our dividend meaningfully year over year by approximately 60%. We also refinanced over $526 million of mortgages in 2024, utilizing the corporate facilities secured earlier in the year and proceeds from select asset sales, reducing indebtedness by over $180 million, further strengthening our balance sheet, and leaving the company with no consolidated debt maturities until 2026. These results are a testament to our ongoing pursuit of strategic, operational, and financial excellence and the hard work and commitment of the various residential team to whom I am extremely grateful. Looking ahead, we remain focused on continuing to upgrade, enhance, and find efficiencies in our operating platform. Solidifying various residential's position as a leader at the forefront of innovation in the multifamily sector. Reimagining how multifamily properties are managed and how elevated resident experiences are curated. In parallel, we continue to invest in our properties, including Liberty Towers, and now also port side, where we see tremendous potential to generate compelling risk-adjusted returns on our invested capital while accreting future earnings. Before discussing our performance in more detail, a few comments on the broader market. Certain measures from the new federal administration, such as proposed fiscal policies, including potential tax cuts and deregulation, aim to stimulate economic growth and could establish the foundations for further rental growth supported by higher disposable incomes. In addition, tariffs are expected to create inflationary pressure on construction materials, resulting in higher construction costs. This, combined with more restrictive immigration policies that could reduce the available construction labor force, may further increase overall development costs and timelines, potentially hindering new multifamily developments and exacerbating the existing housing shortage. Ongoing economic uncertainty and inflationary pressures have resulted in the expectation of a higher for longer rate environment, which continued to weigh on the multifamily investment market, with 2024 investment volumes 35% below the historical average, albeit higher than 2023, during which the figure was 44% below the historical average. Certain supply-constrained markets are beginning to show improved liquidity for transactions under $200 million, while larger transactions are seeing more limited interest, with prospective buyers primarily value-add and opportunistic investors, and their resulting return expectations weighing on pricing. Core investors, who typically have lower risk tolerance and return expectations, continue to remain largely on the sidelines at this time, although there are some early signs that this may be beginning to change. Our key regions exhibit contrasting transaction market dynamics at this time, with Massachusetts maintaining relatively strong liquidity and cap rates hovering around 5%, while Jersey City continues to see relatively low liquidity, especially for larger transactions. Multifamily fundamentals remain intact, driven by the long-term structural housing shortage, elevated home ownership costs, favorable household formation trends, and limited near-term supply in select markets, including the Northeast. New York City and New Jersey led rental growth nationally in 2024, with 5% and 3.8% euro via growth respectively, well above the national average of 0.6%. In the last decade, Jersey City multifamily completions have outpaced the broader New York metro area, yet vacancy has steadily declined, demonstrating the robust demand that has consistently absorbed new supply. With renters comprising 74% of the population, and the population projected to grow by 8% to 15% over the next seven years, the market faces a potential housing shortage projected to be between 27,000 and 36,000 units. Currently, there are 10,000 units under construction in Jersey City, with the majority of supply concentrated in the Journal Square area and only three waterfront Class A projects totaling 2,800 units expected to deliver between 2026 and 2027, and only a single project of 385 units delivered in 2024. Our Jersey City and Port Imperial assets continue to benefit from their proximity to Manhattan and an increase in back-to-office mandates, with New York City office occupancy approaching pre-pandemic levels. This shift is reflected in our portfolio's out-of-state move-ins, which increased over 55% in the fourth quarter, including approximately 30% from New York, where residents are attracted by the quality of our assets and amenity offering and the compelling relative value proposition that they represent. Turning to operations, 2024 marked the third consecutive year that Various Residential achieved sector-leading, same-store NOI growth. For the full year, our Class A portfolio recorded NOI growth of 6.9% compared to an average of 1.6% for our peer group, blended net rental growth of 4%, and a further 160 base point improvement in our operating margin. For the first time since COVID, we began to see a return to ordinary seasonal trends in our portfolio, leading to a slight decline in occupancy compared to the previous quarter. As of year end, our portfolio was 94.6% occupied, excluding Liberty Towers, in line with Q4 2023, and 93.9% occupied, including Liberty Towers, where we are undertaking a value-add project that has resulted in an expected impact on occupancy. Our annualized blended net rental growth rate remains strong at 4% for the year, While this rate slowed as anticipated to 0.5% for the quarter and was driven by renewals of 4.7% offset by negative new lease growth, it outperformed the broader market, which saw average growth of 0% during the period. As we move into 2025, we have observed what we believe to be the beginning of a seasonal uplift in our net blended rental growth rate to 1.6% year-to-date, through February 20th, and 3% in February, with new leases turning positive. The average rent per home across our portfolio is now above $4,000, reflecting a 4.6% year-over-year increase and a 35% premium to our public peers, up from 30% at the beginning of 2021. Over the last four years, we have seen an 8.4% compounded growth rate of our average rents compared to 4.5% for the peer group. This sustained outperformance in rents across our portfolio demonstrates the quality of our highly sought-after properties. The affordability ratio across our portfolio stands at 12.9%. Underpinned by move-ins with an average income of $180,000 per person or $388,000 per home, a 17% increase from the fourth quarter of 2023. As we continue to optimize our portfolio, we remain focused on value creation through targeted investment across our properties. As noted earlier, last year we commenced an extensive renovation of Liberty Towers in Jersey City, and in January we began leasing newly refurbished units, realizing over 20% gross blended rental growth in line with our projections for these early units. We anticipate $0.06 accretion to core FFO once the renovations are complete, and the property is fully stabilized, and a meaningful uplift in the value of the property. In addition to renovations at Liberty Towers, we have identified an accretive value-add opportunity at one of our Boston assets, Portside One, where we intend to invest $2.5 million, including unit renovations, alongside an upgrade to corridors and select common areas. This investment is projected to generate a mid-teens return over a three-year period. Turning to our platform optimization efforts, we remain focused on continuing to achieve operational excellence as reflected in our operating margin, which has further improved to 66.8% from 65.2% a year ago and 57% at the beginning of 2021 and is now in line with our peers. Our platform enhancements, including operational improvements, the adoption of new technologies and changes to our organizational structure and processes, continues to have a positive impact on our results. This is evident in our Jersey City portfolio that has achieved over 40% rental growth since the beginning of 2022 compared to 13% across competing properties in the Jersey City waterfront market. Similarly, rents across our Boston portfolio outpaced their respective markets over the same period, most notably in 2024 when our rents increased by nearly 6% compared to an average negative 3% trade-out in the broader East Boston market. In parallel, our teams have done a phenomenal job of containing expense growth, which has remained below the peer group average during the past two years, despite ongoing inflationary pressures. Thanks to our technology initiatives, we are excited to introduce PRISM, our overarching approach to strategic technology implementation. Our strategy aims to enhance operational efficiency across the company by identifying precise opportunities for innovation, ensuring technology reduces friction for our stakeholders, including our employees, residents, and prospects. Using this approach, we evaluate and implement solutions that drive measurable returns from AI-powered tools to process automation, all while maintaining an elevated customer experience that prioritizes human interaction supported by technological solutions. To this end, in 2024, we introduced a hugely successful area leasing model to further leverage the proximity of our assets, and have recently expanded this initiative to our Jersey City maintenance teams. Additionally, building off the success of our virtual community and leasing assistant, Quinn, we've introduced a new AIT member, Taylor, who focuses on delinquency matters, providing reminders to residents about upcoming rent payments, late payments, and unpaid balances. These initiatives contributed to a 2% reduction in payroll expense in 2024, aiding our efforts to contain controllable expenses. Overall, through the combination of our dedicated, high-performing teams and strategic technology deployment, we were able to further reduce our controllable expenses as a percentage of revenue to 17.7%, from 18.3% in 2024 and 20% in 2022. As we start the new year, Various Residential does so from a position of strength. maintaining the flexibility to respond to evolving market conditions and opportunities that may arise with shareholders' best interests in mind. With that, I'm going to hand it over to Amanda, who will discuss our financial performance and provide an update on guidance.